PUBLISHED IN THE
GAZETTE OF INDIA, PART II, SECTION 3(i), EXTRAORDINARY
Ministry of Finance
(Department of Company Affairs)
NOTIFICATION
New Delhi, the 21st October
, 2003
G.S.R. 830 (E).- In
exercise of the powers conferred by clause (b) of sub-section (1) of section 642 of the Companies Act, 1956 (1 of 1956),
the Central Government hereby makes the following rules to carry out the
purpose of clause (g) of sub-section (1) of section 274 of the said Act, namely
:-
1. Short title, commencement and extent.-
(1)
These rules may be called the Companies (Disqualification of Directors under
section 274(1) (g) of the Companies Act, 1956) Rules, 2003.
(2)
These rules shall come into force from the date of their notification in the Official
Gazette.
(3)
These rules shall apply to all public limited companies registered under the
Companies Act, 1956.
2. Definitions -
In
these rules, unless the context otherwise requires, -
(a) "Disqualifying
company" is the company in which the default has occurred on account of
which a director stands disqualified;
(b) "Appointing
Company" is the company in which an individual is seeking appointment as a
director, including re-appointment as director.
3. Disqualifications
under clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.-
(a) Whenever
a company fails to file the annual accounts and annual returns, as described in
sub-clause (A) of clause (g) of sub-section (1) of section 274, persons who are
directors on the last due date for filing the annual accounts and the annual
returns for any continuous three financial years commencing on and after the
first day of April, 1999, shall be disqualified.
(b) If
a company has failed to repay any deposit, irrespective of the enactment, rules
or regulations under which the deposits have been accepted by the companies, or
interest thereon, or redeem its debentures, or pay any dividend declared on the
respective due dates, and if such failure continues for one year, as described
in sub-clause (B) of clause (g) of sub-section (1) of section 274, then the
directors of that company shall stand disqualified immediately on expiry of
that one year from the respective due dates:
Provided that all the
directors who have been directors in the relevant year, from the due date to
the expiry of one year after the due date, will be disqualified:
Provided further that
disqualification on account of the reasons cited under this
Rule shall also apply to the reappointment as a director.
Explanation.- For the
purpose of this rule, it is clarified that non-payment of dividend referred to
in sub-clause (B) of clause (g) of sub-section (1) of section 274 due to the
reason of dividend not being claimed or kept in separate bank account as
required under section 205A of Companies Act, 1956 or paid into Investors
Education & Protection Fund as required under section 205C of that Act
shall not be deemed to be a failure to make payment of dividend.
4. Duty of Statutory Auditor to
report on disqualification.-
(a) It
shall be the duty of statutory auditor of the appointing company as well as
disqualifying company, as required under section 227(3)(f) to report to the
members of the company whether any director is disqualified from being
appointed as director under clause (g) of sub-section (1) of section 274 and to
furnish a certificate each year as to whether on the basis of his examination
of the books and records of the company, any director of the company is
disqualified for appointment as a director or not.
(b) It
shall be the duty of the statutory auditors of the "disqualifying
company" as required in section 227(3) (f) to report to the members of the
company whether any director in the company has been disqualified during the
year from being re-appointed as director, or being appointed as director in
another company under clause (g), of sub-section (1) of section 274.
5. Duty of company to intimate disqualification.-
Whenever
a company fails to file the annual accounts and returns, or fails to repay any
deposit, interest, dividend, or fails to redeem its debentures, as described in
clauses (A) and (B) of clause (g) of sub-section (1) of section 274, the
company shall immediately file a return in duplicate in Form 'DD-B', prescribed
under these rules for this purpose, to the Registrar of Companies, furnishing
therein the names and addresses of all the Directors of the company during the
relevant financial years:
Provided that names of
such directors who have been exempted from application of Section 274(1) (g) by
the Central Government, from time to time, shall be excluded.
Provided further that no
unusual abbreviations or short forms shall be used in filling up the Form
'DD-B', which shall give such details as may be necessary to distinguish and
identify each director without any ambiguity.
6. Failure to intimate disqualification shall render
director as officer in default.-
When
a company fails to file the Form 'DD-B' as above
within 30 days of the failure that would attract disqualification under Section
274(1) (g), officers of the company listed in section 5 of the Companies Act,
1956 shall be officers in default.
7. (a) Upon
receipt of the Form 'DD-B' in duplicate under Rule
5, the Registrar of Companies shall immediately register the document and place
one copy of it in the document file for public inspection.
(b) The
Registrar of Companies shall forward the other copy to the Central Government.
8. Names of the
disqualified directors on the web-site etc.-
(a) The Central Government shall place on the web-site of
the Department of Company Affairs the names and addresses and such other
details including names and details of the companies concerned, as may be
necessary, in respect of all the disqualified directors.
(b) The Central Government may also publicize the names of
disqualified directors in such manner as it may consider appropriate.
(c)
The Central
Government shall take such steps as may be required to update its web-site to
ensure that name of the person, in whose respect disqualification period has
expired after 5 years, is deleted from the web-site.
9. Duty of every
director.-
Every
director in a public company registered under the Companies Act, 1956 shall
file Form 'DD-A', prescribed under these Rules, before
he is appointed or re-appointed.
10. If any
question arises as to whether these rules are or are not applicable to a
particular company, such question shall be decided by the Central Government.
11. Punishment
for contravention of the rules.-
If
a company or any other person contravenes any provision of these rules for
which no punishment is provided in the Companies Act, 1956, the company and
every officer of the company who is in default or such other person shall be
punishable with fine which may extend to five thousand rupees and where the
contravention is a continuing one, with a further fine which may extend to five
hundred rupees for every day after the first, during which the contravention
continues.
12. On
the commencement of these rules, all rules, orders or directions in force in
relation to any matter for which provision is made in these Rules shall stand
repealed, except as respects things done or omitted to be done before such
repeal.
FORM 'DD-A'
Companies (Disqualification of Directors under
section 274(1)(g) of the Companies Act, 1956) Rules, 2003
Intimation
by Director
[Pursuant
to Section 274(1)(g)]
Registration No. of
Company ______________
Nominal Capital
Rs._____________
Paid-up Capital Rs.
_____________
Name of
Company__________________________
Address of its Registered
Office___________________
To
The Board of Directors
of
__________________________
I _______________
son/daughter/wife of _______________ resident of ___________________
director/managing director/manager in the company hereby give notice that I
am/was a director in the following companies during the last 3 years:-
|
Name of the Company
1......
2......
|
Date of Appointment
|
Date of Cessation
|
I further confirm that I
have not incurred disqualification under section 274(1)(g) of the Companies
Act, 1956 in any of the above companies, in the previous financial year, and
that I, at present, stand free from any disqualification from being a director.
or
I further confirm that I
have incurred disqualifications under section 274(1)(g) of the Companies Act,
1956 in the following company(s) in the previous financial year, and that I, at
present stand disqualified from being a director.
|
Name of the Company
1.......
2......
|
Date of Appointment
|
Date of Cessation
|
Signature
(Full
Name)
Dated this _________ day
of _________
FORM 'DD-B'
Report
by a public company
[Pursuant
to Section 274(1)(g) read with rule 5 of Companies (Disqualification of
Directors under section 274(1)(g) of the Companies Act, 1956) Rules, 2003]
Registration No. of
Company ______________
Nominal Capital
Rs._____________
Paid-up Capital Rs. _____________
Name of
Company__________________________
Address of its
Registered Office____________________
To
The Registrar of
Companies,
It is hereby reported
under section 274(1)(g) of Companies Act, 1956, that M/s. ___________ have
failed to (i) file the annual accounts and annual returns for the last three
financial years, or (ii) repay deposits or interest thereon on due date being
___________ or redeem its debentures on due date being _________ or pay
dividend declared by the company since __________ or both. The period of one
year has expired on ___________.
The name and address of
directors at the relevant period are as under :-
(a) Director's
name in full, without abbreviations
(b) Director's
name as per company's records
(abbreviations
may be expanded and shown)
(c) Address
of the Director :
- (i) Permanent
(ii)
Present
(d) Positions
held by the director in the last 5 years, prior to disqualification:
Signature
Designation*
Dated this _________ day
of _________
*State whether Director,
Managing Director, Manager or Secretary
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