04 November 2011
Dear Sir, My query relates to default under section 274 1(g).
Suppose XYZ Ltd has not filed its annual accounts and annual returns from the year 2004 - 2005 to till date i.e. 2010-2011. Three directors were appointed as Additional Director on 02.07.2007 and the already existing directors resigned on 02.07.2007. i.e. to say on 02.07.2007 the Board of Directors of XYZ ltd comprised of three Additional directors. AGM of the company for the year 2006-07 was on 29.09.2007.
on 29.11.2007 all the 3 directors stand as disqualified u/s 274 1g. The Company plans to complete its annual filing now. So my question is from what date will the default of 5 years begin?
The section reads as "such person shall not be eligible to be appointed as a director of any other public company for a period of five years from the date on which such public company, in which he is a director, failed to file annual accounts and annual returns under sub-clause (a) or has failed to repay its deposit or interest or redeem its debentures on due date or pay dividend referred to in clause (b).
Will their default begin from 29.11.2007 and end on 29.11.2012 or Will their default begin from 29.11.2010 and end on 29.11.2015 or Will their default begin from 29.11.2004 and end on 29.11.2009
05 November 2011
Kamna..... If you would see the important lines and word to emphasis while reading and interpreting this section is "shall NOT BE ELIGIBLE to be appointed as director of any other PUBLIC COMPANY for a period of 5 years FROM THE DATE ON WHICH SUCH PUBLIC COMPANY in which he is a director FAILED TO FILE ITS ANNUAL ACCOUNTS AND ANNUAL RETURN.....
Now if you read the BOLD words it say....NOT BE ELIGIBLE FOR PUBLIC COMPANY FROM THE DATE ON WHICH SUCH PUBLIC COMPANY FAILED TO FILE ITS ANNUAL ACCOUNTS AND ANNUAL RETURN.....
So it means your directors default will be counted from the date your company defaulted in filing annual return and balance sheet....and hence it begins fron 2004-2009.
One important and a big loophole in this section is that if you file even a single Balance sheet or annual return even for one year in every 5 year you will save your Directors from this default....because this section talks about annual return AND Balance sheet for continous 5 years......
CAclubindia
