MCA had disqualified around 3.09 lakh directors that failed to comply with the regulations stated under section 164(2) and 167(1)(a) of the Act. As a further preventive measure, the authority has blocked DIN of all the disqualified directors. After the action was taken, many aggrieved directors and company came out seeking a solution for the same. As a result of which, the ministry came out with ‘Condonation of Delay Scheme’ wherein it provides a chance to file the necessary documents and safeguard their current position.


Condonation of Delay Scheme:

Under section 8 of the Act, every registered company of India has to file their financial returns each year with MCA. Under Act 2013, any company or the director of such company has failed to do the same for last 3 years could be disqualified on the same grounds , wherein the company would get the status of ‘Strike off’ from ‘Active’ and for any director, it would lead to its disqualification . CODS was operational from 1st Jan to 30th april under which temporary activation of DIN would take place and he/she can file all the required documents under the scheme. Failing to do so would lead during this period, would lead to disqualification of director for coming 5 years.


Eligibility criteria to be Disqualified:

If a person —

  • has failed to file financial statements or annual returns for consecutively for 3 financial years; or
  • has not repaid the deposits taken or paid interest or redeemed any debentures, such failure to pay or redeem has taken place for one year or more,

He/she shall also not be eligible to be re-appointed as a director of that company or any other company for a period of 5 years from the date.


Appointing New Directors Temporarily:

The immediate action to be taken up by the promoters after the disqualification of a director is to file the overdue returns. Hence, once the Directors of a company are disqualified, they would will be barred from filing any outstanding MCA annual returns in order to make the agreement up to date. Thus, the existing Directors are supposed to execute resolutions for the assignment of the new Directors in the organisation. As the existing Directors are disqualified or not eligible, they are also barred from digitally signing the new director appointment application for filing with MCA.

To avoid the same, the Directors together with a Professional would have to advance to the concerned Registrar of Companies for the appointment of Director through the MCA back end.