section 164(2) of companies act 2013
Detailed Analysis of section 164(2) of companies act 2013- Disqualification by reason of a default made by a company
A person who is or has been director of a company shall be disqualified from being reappointed as a director of that company or appointed in any other company for a period of 5 years, from the date on which his company fails to
- filled financial statements or annual returns for any continuous 3 Financial years; or
- has failed to repay the deposits accepted by it or pay interest thereon or to redeem any debentures on the due date or pay the interest due thereon or pay any dividend declared and such failures continue for 1 year or more.
Important
- If after the disqualification attracted as per section 164(2) attracted, the default is made good by the company, the director shall continue to be disqualified till 5 years have not elapsed from the date of section 164(2) attracted.
| F.Y. | Financial Statements | Annual return | Default/ No default |
| 2016-17 | Yes | No | Default |
| 2017-18 | No | yes | Default |
| 2018-19 | Yes | No | Default |
| In that case directors are disqualified | |||
Proviso to section 164 (2) of companies act 2013
Provided that where a person is appointed as a director of a company which is in default of clause (a) or clause (b) of section 164(2), he shall not incur disqualification for a period of 6 months from the date of his appointment.
Exemptions
Section 164(2) is not applicable to government companies if it has not default in filling financial statements under section 137 or Annual Return under section 92 of the companies act.
