The Tax Publishers

Settlement Schemes vis-a-vis Disqualification of Directors under Section 164(2)(a)

Pragya Lalwani

Since non filing of annual statutory documents lead to disqualification of director associated with such defaulting company under section 164(2)(a), it has become a major concern for corporate world to come out of such menace. In such a situation, launching of schemes by the Government providing a window to defaulting companies to file their delayed annual documents and become compliant, is a boon. This article reads about the provision of section 164(2)(a) and schemes launched by the Government from time-to-time in this respect providing relief to defaulting companies and their directors so as to condone the delay.

1. Background

Section 164(2)(a) of Companies Act, 2013 provides for one of the ground due to which directors may be disqualified of being appointed as such in any company, i.e., non filing of financial statements or annual returns for continuous period of three financial years. The provision of section 164(2)(a) is applicable to all companies including the private companies which was not so under Companies Act, 1956. Further, section 167(1)(a) inter alia contains that office of a director would become vacant in case he incurs any of the disqualifications specified in section 164. MCA has recently published the list of disqualified directors under section 164(2)(a) of the Companies Act, 2013. On the representations received on issues arisen, Government has launched the Company Law Settlement Scheme for filing the statutory documents with MCA. Further, on 29-12-2017, condonation of Delay Scheme, 2018 has been introduced by MCA which is also discussed in this Article.

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