can a director of a public company tht has defaulted and is thus disqualified u/s 274(1)(g) be appointed as a director in a private company?? is such a director disqualified for appointment only in OTHER PUBLIC COMPANIES or ANY OTHER COMPANY..
nirmala mehta (Chartered Accountant) (57 Points)
13 May 2008can a director of a public company tht has defaulted and is thus disqualified u/s 274(1)(g) be appointed as a director in a private company?? is such a director disqualified for appointment only in OTHER PUBLIC COMPANIES or ANY OTHER COMPANY..
Budha
(30 Points)
Replied 13 May 2008
yes he can be appointed as director of pvt ltd. company, the restriction applies for being director of public limted company.
CA Chaitanya
(PRACTISING CA)
(4283 Points)
Replied 14 May 2008
He can be appointed as a director of a Private company. He is disqualified to be appointed as a director of a public company.
Chaitanya
CA NP Mathi Lingan
(Practising Chartered Accountant)
(98 Points)
Replied 27 May 2008
Dear Nirmala,
Sec 274(1) starts with the opening statement that "A person shall not be capable of being appointed director of a company, if - ..."
It does not distinguish between a Pvt co and a Public co.
Clause(g) additionallay states that ".... such person shall not be eligible to be appointed as a director of any other public co for a period of 5 years...."
So I interpret that, when the default continues such person cannot be appointed as a director in any co's and when the default is made good, such person can be appointed as a director in a pvt co but he can be appointed as a director in a public co only after a period of 5 years from the date of such default.
Is there any one agreeing to my interpretation?
nirmala mehta
(Chartered Accountant)
(57 Points)
Replied 09 June 2008
274 (1)(g)
A person shall not be capable of being appointed as a director of public company if he is already a director of a public company which has failed to repay its deposits or interest thereon....and such failure continues for one year or more
in the above situation which directors are disqualified..
*person who was a director when the default was committed and also continued for one year & beyond
*person who was appointed after the default was committed and continued to be in office beyond 1 year from the date of default.
*person who resigned before the expiry of one year
* a person who was appointed after the expiry of one year frm the date of default
CA NP Mathi Lingan
(Practising Chartered Accountant)
(98 Points)
Replied 10 June 2008
Dear Nirmala!
274(1)(g) clearly says that at the time of appointment such person should not be a director in the defaulting co as mentioned in sub clause (A) and (B).
The offence should be a continuing offence, i.e at the time of appointment if the offence is made good then he will not be disqualified for appointment.
To the best of my knowledge the solution to your questions may be as follows:
*person who was a director when the default was committed and also continued for one year & beyond
The qualifying default is only when the offence is continuous for one year or more, therefore if he is a director after the expiry of 1 year from the due date for payment then he will be disqualified for appointment as a director in other Co's.
*person who was appointed after the default was committed and continued to be in office beyond 1 year from the date of default.
While at the time of appointment such failure to pay already exceeded 1 year from the due date then such director is disqualified for appointment as a director in other Co's.
*person who resigned before the expiry of one year
Before the expiry of 1 year the default is deemed not to have committed as the act says only when the failure continuous for 1 year or more, therefore the person is not disqualified.
* a person who was appointed after the expiry of one year frm the date of default
After the expiry of one year from the due date for payment it becomes a qualifying offence under the Section and hence whoever is a director during the period becomes disqulaified from being appointed as a director in other Co's.
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