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Removal of Directors Disqualification

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The Ministry of Corporate Affairs, disqualified around 200,000 directors, under Section 164(2)(a) of the Companies Act, 2013 (2013 Act). Section 164(2)(a) of the 2013 Act provides for disqualification of directors if the company has not filed financial statements or annual returns for a continuous period of three financial years (non-compliance ground). These disqualifications were carried out with the likely intent of cracking the whip on black money and as part of the Government's crackdown on shell companies. Resultantly, Director Identification Number (DIN) of the disqualified directors have been suspended. Suspension of a director's DIN is perhaps, on the understanding that disqualification under Section 164(2)(a) results in automatic vacation of the office of the disqualified director, under Section 167. Pertinently, such automatic vacation upon disqualification was not envisaged under corresponding provisions of the Companies Act, 1956 (i.e. Sections 274 and 283 of the 1956 Act). In petitions filed by various disqualified directors, the High Courts, have stayed the operation of the disqualification of the directors before them.

Process:

• 1. Drafting of Writ Petition.
• 2. Filing the matter with the High Court.
• 3. Appearance by Advocates and pleadings for the same.
• 4. Interim Order from the High Court
• 5. Filing the High Court Order and Pending Compliance Documents with Respective ROC.
• 6. DIN Activation and Removal of Disqualification.

Notes:

• 1. For getting your disqualification removed, you are not required to revive your company mandatory.
• 2. In cases of disqualification of multiple directors, only one common petition is required to be filed for the multiple directors.
• 3. The interim stay regarding removal of disqualification is obtained on the very same day on which the order is passed in the High Court for the same.
• 4. Once High Court order is passed in favour of removal of disqualification, the same shall not be revoked at any time thereafter in our opinion.
• 5. After Supreme Court order dated 6th August 2018, the High Court orders are available at present also for removal of disqualification.

The high court has passed the following order:

• 1. Till the next date of hearing, there shall be a stay of the notices dated 6th September, 2017 and 12th September, 2017 and any other notices or communications or lists received or published whereby the petitioners were declared disqualified as Director under Section 164(2)(a) of the Companies Act, 2013.
• 2. The DIN numbers as well as digital signatures of the petitioners shall be forthwith revived.

Time Period:

15-20 Days