Section 274 - Disqualifications of directors.
(1) A person shall not be capable of being appointed
director of a company, if:-
(a) he has been found to be of unsound mind by a Court of
competent jurisdiction and the finding is in force;
(b) he is an undischarged insolvent;
(c) he has applied to be adjudicated as an insolvent and his
application is pending;
(d) he has been convicted by a Court 2[ of any offence
involving moral turpitude and sentenced in respect thereof to imprisonment for
not less than six months, and a period of five years has not elapsed from the
date of expiry of the sentence:
(e) he has not paid any call in respect of shares of the
company held by him, whether alone or jointly with others, and six months have
elapsed from the last day fixed for the payment of the call; or
(f) an order disqualifying him for appointment as director
has been passed by a Court in pursuance of section 203 and is in force, unless
the leave of the Court has been obtained for his appointment in pursuance of
that section.
(2) The Central Government may, by notification in the
Official Gazette, remove:-
(a) the disqualification incurred by any person in virtue of
clause (d) of sub- section (1), either generally or in relation to any company or companies specified in the
notification; or
(b) the disqualification incurred by any person in virtue of
clause (e) of sub- section (1).
(3) A private company which is not a subsidiary of a public
com- pany may, by its articles, provide that a person shall be disqualified for
appointment as a director on any grounds in addition to those specified in sub-
section (1).
In addition to above disqualifications the provision of Section 274(1) (g) was inserted by the
Companies (Amendment) Act, 2000 w.e.f. 13-12-2000. The provision states as
follows:-
A person shall not be capable of being appointed director of
a company, if such person is already a director of a public company which:-
(A) Has not filed the annual accounts and¹ annual accounts
for any continuous three financial years commencing on and after 1st day of
April 1999;
(B) Has failed to repay its deposit or interest thereon on
due date or redeem its debentures on due date or pay dividend and such failure
continues for one year or more.
Provided that 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 return 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 sub clause (B).
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