Skip to main content

DISQUALIFICATION OF OVER 300000 DIRECTORS MCA Calls Meet to Examine Grey Areas in Cos Act

DISQUALIFICATION OF OVER 300000 DIRECTORS  MCA Calls Meet to Examine Grey Areas in Cos Act
Ministry officials to also frame govt response as several debarred directors have moved court After several directors went to courts against their debarment by the government, the ministry of corporate affairs has called an urgent meeting to discuss if there are “grey areas“ in the Companies Act that need to be addressed.
A meeting of senior officials has been called on Monday to not just frame government response to these litigations but also to address any such grey area.The ministry in September cancelled registration of over 200,000 defaulting companies and, by extension, it had also debarred over 300,000 directors of companies.The amended Companies Act that came into effect in 2014 has provision for deregistering companies that fail to file returns.
Moreover, Section 164 of the Act provides that any person who is or has been a director in a company which has not filed financial statements or annual returns for any continuous period of three financial years shall not be eligible for reappointment as a director in that company or appointed in other company for a period of five years from the date on which the said company fails to do so.
With many such directors approaching courts, the government will review the provisions.“There are grey areas we have to get a clarity on,“ a senior official said. If the government finds merit in the arguments against the clarity in law, it can bring in a clarification in the form of a circular. “We do not want to unnecessarily burden the judicial system with endless litigations if some of the matter can be sorted out by issuing a clarification.But we still have to discuss this,“ the official added.
The high courts of Delhi and Madras have given notices to the corporate affairs ministry and the registrar of companies (RoC) on petitions challenging the disqualification of more than 300,000 directors.
Various corporate bigwigs including Pawan Goenka, managing director of Mahindra & Ma hindra Ltd, have managed to get an interim relief from court following their disqualification.Section 274 of the Companies Act of 1956 was limited to dealing with disqualification of directors of public limited companies. However, the Act was amended bringing in its purview private entities as well in 2014 through the Companies Act of 2013.
Another senior government official clarified that since a director gets disqualified “under the operation of law“, no notices were required to be sent to them but only to the non-compliant companies.Following the disqualification by corporate affairs ministry, directors have been barred from using their digital signature to sign any document.
The National Stock Exchange, taking note of the development, has also asked about 200 listed companies to consider whether directors who have been disqualified by the ministry should continue on their boards.Any person disqualified under Section 164(2) of the Companies Act, 2013 is advised not to act as director during the period of the disqualification and not to file any document or application with MCA as the same shall be summarily rejected, the corporate affairs ministry had said in a notice.
The Economic Times, New Delhi, 30th October 2017


Popular posts from this blog

Shrinking footprints of foreign banks in India

Shrinking footprints of foreign banks in India Foreign banks are increasingly shrinking their presence in India and are also becoming more conservative than private and public sector counterparts. While many of them have sold some of their businesses in India as part of their global strategy, some are trying to keep their core expertise intact. Others are branching out to newer areas to continue business momentum.For example, HSBC and Barclays Bank in India have got out of the retail business, whereas corporate-focused Standard Chartered Bank is now trying to increase its focus on retail “Building a retail franchise is a huge exercise and takes a long time. You cannot afford to lose it,” said Shashank Joshi, Bank of Tokyo-Mitsubishi UFJ’s India head.According to the Reserve Bank of India (RBI) data, foreign banks’ combined loan book shrunk nearly 10 per cent from Rs 3.78 trillion in fiscal 2015-16 to Rs 3.42 trillion last financial year. The banking industry, which includes foreign banks…

RBI rushes in to prop up falling rupee

RBI rushes in to prop up falling rupee India’s central bank reportedly intervened in the currency markets on Monday to prevent a further slide in the local unit, which breached the 67 mark to a dollar for the first time in 15 months amid a widening trade gap and runaway import bills fuelled by high crude-oil prices. Some state-owned banks were seen selling dollars aggressively, interventions that market dealers attributed to the central bank’s strategy to stem the decline of the Indian rupee against the US currency. The rupee is the worst performing among a dozen Asian monetary units in the past three months. It lost 4.25 per cent to the dollar during the period, show data from Bloomberg. On Monday, the Reserve Bank of India (RBI) is said to have sold about Rs 800 million collectively on the spot and exchange traded futures markets, dealers said. An email sent to RBI remained unanswered until the publication of this report. The currency market has seen such a strong central bank interven…

GST Refund of Rs 20,000 Cr Pending: Exporters’ Body

GST Refund of Rs  20,000 Cr Pending: Exporters’ Body Refund of over Rs 20,000 crore on account of Goods and Services Tax (GST) is pending with the government with more than half the amount stuck as input tax credit, Federation of Indian Export Organisations said on Tuesday. While claims over Rs7,000 crore were cleared in March, the amount was Rs 1,000 crore in April.However, after exporters’ request, the GST council and tax department are organizing a second phase of Special Refund Fortnight starting May 31, which will enable exporters to draw their refunds at a speedy pace. Many exporters have been unable to file the refund of input tax credit due to technical glitches, exports and claim happened in different months. The major challenge lies on ITC refund especially because the process is partly electronic and partly manual which is cumbersome and add to the transaction cost, the exporters’ body said. On IGST, refunds are getting delayed due to airline and shipping companies not submitt…