30 December 2015
Section 196 contains separate set of disqualifications for MD/WTD Does that mean that Section 164 is not applicable to MD/WTD? For eg even if a person is of unsound mind ( as contained in 164) he can still be a MD under sec 196
30 December 2015
Thanks for the reply Pratik. If this is the case then why separate set of disqualifications are included in Section 196 keeping some points same such as undischarged insolvent. Further if a person becomes disqualified under section 164 there is no point of having disqualifications under section 196 as he wont even reach till 196.
30 December 2015
If you have read it clearly, you would not have raised this query. Section 164 talks about basic qualification whereas 196 talks about additional qualification for MD and WTD which are over and above section 164. (though insolvent point is common).
Further, if you see the difference in 'Convicted by Court in offence', 164 has exemption that if such person has been convicted by court for any offence and if 5 years has already elapsed, then 164 won't applicable to this person. However, he won't be able become MD/WTD u/s 196 because 196 has stricter qualification ("has AT ANY TIME been convicted by a court of an offence and sentenced for a period of more than six months).
In short, 196 has additional qualification (except insolvent point) than Section 164 and it is basic principle that MD/WTD are also a director and hence, before appointing them, the company has to look at 164.
30 December 2015
I m aware of these facts Pratik. But what I am trying to say that instead of making a separate section for this they should have included these points (as a proviso or as a subsection) in Section 164 only. I just wanted to know the rational behind the separate section. Anyways thanks for your help.
CAclubindia
