Professional Documents
Culture Documents
LAW IN BRIEF
Disqualifications for vacation of office/ appointment/re-appointment of
Director (including Whole Time Director)
Vacation of office of Director
1. As per Section 167 of the new Act, among others, the office of the director shall
become vacant in case:
A person incurs any of the aforesaid disqualification as specified in Section
164; or
If a person is convicted by a court of any offence, whether involving moral
turpitude or otherwise and sentenced in respect thereof to imprisonment
for not less than six months.
This shall apply even if he has filed an appeal against the order of such
court.
Not eligible for appointment/ reappointment as director { Disqualification}
2. As per Section 164 of the new Act a person shall not be eligible for appointment
as a director of a company if:
SHORT COMMENTS
The above provisions under the new Act have been made effective from 1st
April 2014
The scope of offence in section 167 has been made wider by covering
moral turpitude or otherwise instead of only moral turpitude as stipulated
in section 283 of erstwhile Companies Act 1956.
WTD of a public limited company who had been convicted by a court under
criminal law/s before 1st April 2014 does not invoke moral turpitude hence
he was not disqualified under the erstwhile Companies Act 1956.
However, even if it is interpreted that the scope of the section has been
enhanced under the new Act and he should be covered now, still it can be
argued that the conviction had taken place before 1st April 2014 when the
new Act was not in force.
In the event conviction is upheld in appeal in SC, now, then he may have
to vacate his office even if he moves SC for higher remedy {Akin to
appeal}.
But it can be argued there cannot be any appeal because matter is in SC,
and a review petition will be filed and thereafter, if required curative
petition will be filed in SC. It can therefore be stated that such petition is
not appeal and any review/ curative petition indicates that matter has not
been finally disposed of under law. Therefore until such petition is disposed
off he shall not vacate his office.
This can be further argued due the words in section 164 that where any
appeal or petition is preferred or further appeal or petition is preferred
against order or sentence, disqualification shall not take effect until such
further appeal or petition is disposed off.
Conclusion