COMPANY LAW Impact of Disqualification by MCA on a Director’s Career

Impact of Disqualification by MCA on a Director’s Career

Impact of Disqualification by MCA on a Director’s Career

What is the impact of Disqualification by MCA on a Director’s Career

  • If you are a company director, you should be aware of the provisions of the Companies Act 2013, which could result in your directorship being suspended for 5 Years.
  • If a firm fails to file its financial statements and other essential paperwork for three years in a row, it may be struck off the ROC's register and its directors may be disqualified for five years.
  • The MCA's goal here is to combat the threat of black money created through shell businesses.
  • But these acts could have a significant influence on the careers of directors, as a five-year directorship ban could be quite costly.

How disqualification could  impact of Disqualification by MCA a director's career mentioned here :

  • MCA has declared clearly that directors who are disqualified are prohibited to serve on the boards of any other firm for a period of five years. This could result in a five-year banishment from a prestigious business career.
  • Even after the directors have been disqualified, the company's liability remains with the directors.
  • Due to non-compliance with RoC requirements, the directors may face severe penalties.
  • If a director continues to serve on the board after being disqualified, he or she faces a year in prison and a fine of between Rs. 1 lakh and Rs. 5 lakh.
  • After disqualification, the director's position becomes vacant.

Summing Up 

  • We can say that directors' disqualification not only puts an end to their careers, but it also exposes them to penalties and, in some cases, imprisonment.
  • To avoid all of these penalties and disqualifications, directors should make sure that all of their company's relevant documents are submitted to the RoC and that they follow all of the Companies Act's rules.
  • If any director feels that their disqualification from directorship was arbitrary, they can seek legal advice on how to have the disqualification lifted.
  • There are numerous options for removing director disqualification, and a legal company could aid him in determining which one is best for him.

New amended the Companies (Appointment and Qualification of Directors) Rules, 2014 

  • MCA has published the Companies (Appointment and Qualification of Directors) Amendment Rules, 2022, which amend Rule 8, Rule 10, Annexure, Form DIR-2, FORM NO. DIR-3 of the Companies (Appointment and Qualification of Directors) Rules, 2014, to apply to a person applying for a Director Identification Number who is a national of a country with which India shares a land border.

Disclaimer: The content of this post isn't considered to be professional or legal advice, We aren't responsible for any damages arising from your access to the location content & must not be relied on or used as a substitute for legal advice from a lawyer professional in your jurisdiction. CARajput is among India's big digital compliance services platform which committed to helping people have started & developed their businesses. We had started with the goal of creating it easier for start-ups to start out their business. Our main aim is to assist the businessman with applicable laws & regulations compliance and providing support at each & every level to make sure the business stays compliant and growing continuously. For any query, help or feedback you may in touch on singh@carajput.com or Call or what’s-up on 9-555-555-480

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