Removal of Director's Disqualification - Legal Process

MCA had disqualified around 3.09 lakh directors that failed to comply with the regulations stated under section 164(2) (when a company has not filed financial statements or annual returns, for any three consecutive years, it will result in the disqualification of its directors for a period of five years) and 167(1)(a) (directors to vacate their office in a company upon incurring disqualification as per Section 164 of the Companies Act, 2013) of the Act. As a further preventive measure, the authority has blocked DIN of all the disqualified directors.

The main reason behind issuing Disqualified Director List was also that the Government was of the view that there are a large no. of SHELL Companies which were not complying any law and were also not filing their returns. Hence, all the directors of such shell companies were declared Disqualified. Now, there are three types of companies in which DISQUALIFIED DIRECTORS are exist –

• Defaulting Companies: having Active Status but Directors Disqualified because of Non Filing of their return
• Genuine Active Companies having genuine business but having disqualified status: Since the directors of these active companies were also directors of any other struck off or disqualified companies.
• Strike Off Companies, the directors of which ultimately got disqualified on getting struck off.

Again government took a step by introducing Condonation of Delay Scheme (CODS), 2018 utilizing its powers under section 403, 459 and 460. Under the said scheme DIN of disqualified director temporarily reactivated and given opportunity to file pending compliances with penalty to reactivate companies declared as Strike off. CODS was operational from 1st Jan to 30th april 2018