{"id":11495,"count":1,"description":"Introduction\u00a0<\/b>\r\n\r\nSection 164 of the Companies Act, 2013<\/b> specifies the circumstances under which an individual becomes <\/span>disqualified from being appointed or reappointed as a director<\/b> of a company in India. The purpose of these provisions is to ensure that only qualified, responsible and legally eligible individuals serve on the Board of Directors. Before appointing any director, companies should verify that the proposed individual is not disqualified under Section 164, as appointing an ineligible person may result in legal complications, regulatory non-compliance and penalties. The disqualification provisions apply to both existing and prospective directors and cover matters such as unsoundness of mind, insolvency, criminal convictions, non-payment of share calls and defaults relating to company compliance. <\/span>Companies Act, 2013 \u2013 India Code<\/span><\/a>\r\n\r\nSection 164 contains two broad categories of disqualification. The first relates to the <\/span>personal eligibility<\/b> of the individual, including mental incapacity, insolvency and criminal convictions. The second relates to <\/span>company-related defaults<\/b>, such as failure to file financial statements or annual returns for a continuous period of three financial years, or failure to repay deposits, redeem debentures or pay declared dividends within the prescribed time. If these conditions are met, the concerned director may become disqualified from being appointed or reappointed in accordance with the law. Therefore, companies should conduct proper due diligence before making any Director Appointment and ensure all statutory requirements are satisfied.<\/span>\r\n\r\nFor example, if a proposed director is already disqualified because the company in which they serve has failed to file annual returns for three consecutive financial years, the new company should verify the director's eligibility before proceeding with the appointment. <\/span>Filing Point<\/b> assists businesses with <\/span>director eligibility verification, DIN, DSC, Director Appointment, DIR-12 filing and complete ROC\/MCA compliance<\/b>, helping companies appoint only legally qualified directors.<\/span>\r\n\r\nParagraph 1 \u2013 Personal Grounds for Disqualification Under Section 164<\/b>\r\n\r\nAn individual may be disqualified based on personal legal circumstances that affect their eligibility to serve as a director.<\/span>\r\n\r\nKey Grounds<\/b>\r\n
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  • Unsound mind<\/b> \u2013 A person declared to be of unsound mind by a competent court is disqualified.\u00a0<\/span><\/li>\r\n \t
  • Undischarged insolvent<\/b> \u2013 An individual who has not been discharged from insolvency cannot serve as a director.\u00a0<\/span><\/li>\r\n \t
  • Pending insolvency application<\/b> \u2013 A person who has applied to be adjudicated as insolvent may become disqualified in specified circumstances.\u00a0<\/span><\/li>\r\n \t
  • Criminal conviction<\/b> \u2013 Certain convictions involving imprisonment may result in disqualification.\u00a0<\/span><\/li>\r\n \t
  • Non-payment of share calls<\/b> \u2013 Failure to pay share call money for the prescribed period may attract disqualification.\u00a0<\/span><\/li>\r\n \t
  • Court or Tribunal order<\/b> \u2013 Disqualification may arise where a competent authority has passed an applicable order.\u00a0<\/span><\/li>\r\n<\/ul>\r\nParagraph 2 \u2013 Company-Related Grounds for Disqualification<\/b>\r\n\r\nDirectors may also face disqualification due to defaults committed by the company in which they serve.<\/span>\r\n\r\nImportant Grounds<\/b>\r\n
      \r\n \t
    • Non-filing of annual returns<\/b> \u2013 Failure to file annual returns for three continuous financial years.\u00a0<\/span><\/li>\r\n \t
    • Non-filing of financial statements<\/b> \u2013 Default in filing financial statements for three consecutive financial years.\u00a0<\/span><\/li>\r\n \t
    • Failure to repay deposits<\/b> \u2013 Default in repayment of public deposits where applicable.\u00a0<\/span><\/li>\r\n \t
    • Non-redemption of debentures<\/b> \u2013 Failure to redeem debentures on time.\u00a0<\/span><\/li>\r\n \t
    • Non-payment of declared dividend<\/b> \u2013 Continued default in paying declared dividends.\u00a0<\/span><\/li>\r\n \t
    • Failure to comply within prescribed period<\/b> \u2013 Statutory defaults remaining uncorrected may result in disqualification.\u00a0<\/span><\/li>\r\n<\/ul>\r\nParagraph 3 \u2013 How Can Companies Avoid Director Disqualification?<\/b>\r\n\r\nProper compliance and due diligence help companies appoint and retain eligible directors.<\/span>\r\n\r\nProfessional Tips<\/b>\r\n
        \r\n \t
      • Verify eligibility before appointment<\/b> \u2013 Conduct proper background checks.\u00a0<\/span><\/li>\r\n \t
      • Maintain ROC compliance<\/b> \u2013 File annual returns and financial statements on time.\u00a0<\/span><\/li>\r\n \t
      • Complete DIR-3 KYC<\/b> \u2013 Ensure every director keeps the DIN active.\u00a0<\/span><\/li>\r\n \t
      • Monitor statutory deadlines<\/b> \u2013 Avoid compliance defaults.\u00a0<\/span><\/li>\r\n \t
      • Maintain proper Board records<\/b> \u2013 Keep statutory registers and meeting records updated.\u00a0<\/span><\/li>\r\n \t
      • Consult professionals<\/b> \u2013 Expert advice reduces legal and compliance risks.\u00a0<\/span><\/li>\r\n<\/ul>\r\nHow Filing Point Helps with Director Appointment<\/b>\r\n\r\nFiling Point<\/b> provides complete support for <\/span>Director Appointment<\/b> and corporate compliance across India.<\/span>\r\n\r\nOur experts assist with <\/span>director eligibility verification, DIN application, DSC procurement, Board resolutions, DIR-12 filing, annual ROC compliance and statutory documentation<\/b>. We help businesses verify that proposed directors satisfy the requirements of <\/span>Section 164 of the Companies Act, 2013<\/b>, ensuring legally compliant appointments and smooth corporate governance.<\/span>\r\n\r\nFrequently Asked Questions (FAQs)<\/b>\r\n
          \r\n \t
        1. What is Section 164 of the Companies Act, 2013?<\/b><\/li>\r\n<\/ol>\r\nSection 164 specifies the grounds on which a person becomes disqualified from being appointed or reappointed as a director.<\/span>\r\n
            \r\n \t
          1. Can an insolvent person become a director?<\/b><\/li>\r\n<\/ol>\r\nGenerally, an undischarged insolvent is disqualified from serving as a director under Section 164.<\/span>\r\n
              \r\n \t
            1. Can criminal conviction lead to disqualification?<\/b><\/li>\r\n<\/ol>\r\nYes. Certain convictions involving imprisonment may result in disqualification, subject to the provisions of the Companies Act.<\/span>\r\n
                \r\n \t
              1. Can company compliance defaults disqualify a director?<\/b><\/li>\r\n<\/ol>\r\nYes. Continuous defaults such as non-filing of annual returns or financial statements may result in disqualification under Section 164.<\/span>\r\n
                  \r\n \t
                1. Does non-filing of annual returns affect directors?<\/b><\/li>\r\n<\/ol>\r\nYes. Persistent non-compliance by the company can result in director disqualification under the applicable provisions.<\/span>\r\n
                    \r\n \t
                  1. Can a disqualified person be appointed as a director?<\/b><\/li>\r\n<\/ol>\r\nNo. A person who is disqualified under Section 164 should not be appointed or reappointed as a director unless they become eligible in accordance with law.<\/span>\r\n
                      \r\n \t
                    1. How can companies verify director eligibility?<\/b><\/li>\r\n<\/ol>\r\nCompanies should review statutory records, verify DIN status and conduct appropriate due diligence before appointment.<\/span>\r\n
                        \r\n \t
                      1. Can Filing Point help verify director eligibility?<\/b><\/li>\r\n<\/ol>\r\nYes. Filing Point assists with <\/span>director eligibility verification, DIN, DSC, DIR-12 filing and complete Director Appointment and ROC compliance<\/b>, helping companies appoint legally qualified directors.<\/span>\r\n\r\nConclusion\u00a0<\/b>\r\n\r\nSection 164 of the Companies Act, 2013<\/b> lays down important <\/span>disqualification criteria<\/b> to ensure that only eligible individuals serve as company directors. These include personal grounds such as <\/span>insolvency, unsoundness of mind and certain criminal convictions<\/b>, as well as company-related defaults like <\/span>non-filing of annual returns and financial statements<\/b>. Before appointing a director, companies should carefully verify eligibility and maintain regular statutory compliance to avoid legal complications. <\/span>Filing Point<\/b> provides end-to-end assistance with <\/span>director eligibility checks, DIN, DSC, DIR-12 filing, annual ROC compliance and Director Appointment services<\/b>, ensuring every appointment is completed accurately and in full compliance with the Companies Act, 2013.<\/span>","link":"https:\/\/filingpoint.com\/consultants\/india\/what-are-the-grounds-for-disqualification-under-section-164\/","name":"What are the grounds for disqualification under Section 164?","slug":"what-are-the-grounds-for-disqualification-under-section-164","taxonomy":"post_tag","meta":[],"yoast_head":"\nWhat are the grounds for disqualification under Section 164? - Best Company Registration | Tax Filing Services in Chennai, India<\/title>\n<meta name=\"description\" content=\"Call Filing Point 72999-72500. 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