Removing Disqualification of Directors- without revival of the company

Overview

With the introduction of Condonation of Delay scheme 2018, it becomes an opportunity to Disqualified Directors to remove their Disqualification. Although, after the scheme, there are many questions that have evolved in the mind of professionals and corporates. In this article, we will let you know about the endeavor to solve those queries such as removing the Disqualification of Director especially in a situation when:

• If a person having Directorship in Struck off Company / Companies only.
• If a person having Directorship in Struck off and Active Company both
• If a person having Directorship only in Active Companies.

What are the steps to remove the Disqualification of Director?

* When a person has Directorship in “Struck Off Companies”

Firstly, there is no process prescribed under companies Act 2013 for the removal of Disqualification of Directors.

Secondly, the Ministry of Corporate Affairs came out with a scheme “Condonation of Delay scheme, 2018” as there is no way prescribed under companies Act 2013.

A person by getting this scheme if made compliance as per the scheme his disqualification shall be removed by the ROC. However, after the scheme, a person has Directorship in the “Struck off Company” not able to get his disqualification removed. This CODS is applicable on all the Defaulting companies (Other than the companies which have been struck off).

Third, Because of the reason, struck off company cannot get the CODS 2018. Although, they have the  following ways:

1. For filing an application with NCLT for a revival of a company, if received revival order from NCLT then avail the CODS 2018.
2. In case, the Director does not want to revive the company, however, want to remove the disqualification. Then file a writ petition with “Hon’ble High Court”

* If a director doesn’t want to revive the company, however, want to remove the disqualification of Director.

In this Situation:

1. Due to non- filing of a financial statement or Annual return with ROC, company has been struck off by the ROC.
2. As the company not having any business from the previous 3 financial year or directors do not want to continue the business in the company, Directors do not want to file an application with NCLT for the revival of the company.
3. Directors want to avail the CODS scheme to remove their disqualification, although due to strike off status, they are not able to do so.
4. Directors want to close/strike off the company voluntarily also if an opportunity given to them.

Decision of the High Court

The Honourable High Court has passed the following order on the basis of the above-mentioned fact. The court directs as under:

Below are the documents that a company shall file along with the application with Registrar of companies in hard copies.

1. The petitioner may file all the requisite returns in relation to the company to avail the CODS-2018.
2. The petitioner may also file the necessary resolutions for voluntarily striking off the name of the company as per the requirement of section 248 (2) of the Act.
3. The petitioner will also make a necessary application under CODS-2018 along with the requisite charges. (CODS form with fees Rs. 30000/-)

According to the above-mentioned order, documents shall be filed in Hard copies with Registrar of Companies.

After filing, ROC shall scrutinize the document and if the same is found to be in order for strike off u/s 248 (5) or availing benefits of CODS- 2018.

The removal of a company from the register under section 248 (1) will be deemed as striking off the company and application under CODS-2018 will be sympathetically considered by the Registrar.