REMOVAL OF DIRECTORS DISQUALIFICATION

Reasons for Directors Disqualification- Following are some of the reasons for disqualification of a director:
1. Any director who has applied for adjudication as an insolvent or his application is still pending.
2. In case the court or Tribunal has earlier passed an order to disqualify the director for his appointment.
3. Further, if the director hasn’t paid any calls in regards to the respective shares of a company held by him, whether alone or jointly.
4. It applies to a director who is the part of the board but hasn’t filed annual returns or financial statements for consecutive three financial years.
5. A director convicted by the court of any offence, thereby sentenced to imprisonment for not less than six months.
6. Moreover, a person who was convicted of any offence and sentenced to seven years in prison or more shall not be eligible to get appointed as a director in any company.
7. If the company fails to repay the accepted deposits, redeem any debentures on the due date, pay the interest due or pay any dividend declared for one year or more.
8. In case, the director is of unsound mind, and a competent court confirms the same.
9. Besides, it pertains those directors who have been convicted of the offence related to party transactions under section 188 during the last preceding five years.
10. Lastly, the court has the authority to disqualify a director who is an undischarged insolvent.

Procedure for Removal of Director Disqualification-

The process of removal of director disqualification on the basis of two below mentioned cases;
1. In case when company was functioning
2. In case when company was not functioning
Case 1: When Company was functioning:
i) In this case, application will be filed before NCLT;
ii) Overdue Documents as per Section 403;
iii) e-CODS on MCA21 portal.
Case 2: When Company was not functioning:
i) In case company ceases to carry out its operations, petition will be made with High Court;
ii) Overdue Documents as per section 403;
iii) e-CODS on MCA21 portal

Steps to be followed for Removal of Director Disqualification:

1. In the first step we will draft a writ petition which will be subsequently filed with the high court;
2. An advocate will appear for the pleadings;
3. High Court will give the interim order;
4. Thereafter order of the High Court will be filed with the registrar of Companies along with the pending compliance documents;
5. DIN will be activated and disqualification will be removed

Information required in correspondence to the said Writ Petition:

1. Memo of parties to the petition comprising the name, designation, address, etc.;
2. A Notice of Motion with an urgent application;
3. Explain the factors which lead to the non-compliance of filing of statutory documents;
4. Also, include a synopsis of the list of date and events;
5. Current status of the company and directors seeking restoration;
6. A list of all the companies in which the appellant is the director;
7. A copy of Press Release or Impugned Notice which the ROC has issued, listing all disqualified directors;
8. Stay application under Section 151 of CPC;
9. And a Prayer clause to discard the publication issued by the ROC.

Steps to be followed under (Condonation of Delay) e-COD scheme on MCA Portal:

1. Firstly, the disqualified directors need to file the due statutory documents with ROC to temporarily activate their DIN.
2. It requires the defaulters to file pending documents along with the statutory fee as inscribed under Companies Act, 2013.
3. Thereby, the disqualified companies apply online under Condonation of Delay by filing e-CODS, 2018 form and pays a fee of ₹30,000/-.
4. Those directors who fail to leverage the opportunity and do not submit the due statutory documents with the specified fee until the expiry of the CODS scheme got disqualified again. Thus, MCA deactivated the DIN of defaulter directors.
5. Whereas, the defaulting companies that got struck off by the Registrar of Companies, they can only activate their director’s DIN after the NCLT issues an order to revive the company.
6. After NCLT passes the order; the ROC shall raise a ticket on MCA21 portal by (CRF) Change Requirement Form. Further, it uploads a copy of the NCLT order on the portal. After validating the truth, ROC will reactivate the DIN of the disqualified director.