Director’s Disqualification Removal

Directors disqualification removal with respect to FEMA (Foreign Exchange Management Act) specifically relates to the process of reinstating a disqualified director in a company that is involved in foreign exchange transactions or has non-resident shareholders or investments. It is important to note that FEMA primarily deals with foreign exchange transactions, and director disqualification is mainly governed by the Companies Act, 2013, and its rules.

Disqualification of Directors:

Under the Companies Act, certain conditions or events can lead to the disqualification of a director. Some common reasons for director disqualification include:

1- Failure to file financial statements or annual returns with the Registrar of Companies (RoC) within the prescribed timelines.

2- Non-compliance with any of the provisions of the Companies Act.

3-Conviction of an offense related to the promotion, formation, or management of a company.

4- Insolvency or being declared bankrupt.

Process of Director’s Disqualification Removal:


The process of removing director disqualification typically involves:


1) Rectification of Non-Compliance:The disqualified director must rectify the non-compliance or default that led to the disqualification. This may involve filing pending financial statements, annual returns, or resolving any other non-compliance issue.

2) Application to National Company Law Tribunal (NCLT):The disqualified director can apply to the National Company Law Tribunal (NCLT) for removal of disqualification. The application should include the necessary details and documents supporting the rectification of the non-compliance.

3) NCLT Order:Based on the merits of the case and the supporting documents, the NCLT may pass an order reinstating the director and removing the disqualification. The order will be communicated to the RoC, and the disqualified director will be restored as an active director in the company’s records.

Relation to FEMA

FEMA does not directly govern the process of director’s disqualification or its removal. FEMA primarily focuses on foreign exchange transactions, foreign investments, and related compliance requirements. Director disqualification removal is a legal process under the Companies Act, and FEMA does not have a direct role in it.

Directors disqualification removal is a legal process governed by the Companies Act, 2013, and the NCLT. It allows disqualified directors to rectify non-compliance issues and apply for reinstatement through the NCLT. FEMA, on the other hand, focuses on foreign exchange transactions and compliance requirements related to foreign investments. It is essential for disqualified directors and companies to seek legal advice and follow the prescribed procedure under the Companies Act to resolve director disqualification issues.

G Akshay Associates