Delhi: The Department of Company Affairs (DCA) has
now clarified that default of privately-placed bonds or
debentures or debt instruments by public financial institutions
(PFIs) will not be considered as default to disqualify
directors as prescribed under the Companies Act.
department has been receiving representation from PFIs
on the issue. This clarification is in continuation with
our earlier clarification on the disqualification of directors
under Section 274(1)(g) of the Companies Act, 1956,
say DCA officials.
year, the department had clarified that nominee directors
appointed on the boards of public companies and other
concerns assisted by PFIs are exempted from the provisions
of Section 274(1)(g).
section states that a director of a public company, which
has defaulted in filing annual accounts and returns, is
disqualified to be appointed as a director of other public
companies for a further period of five years from the
date on which the public company has defaulted.
similar disqualification is attracted when the company
defaults in repaying the deposits or interests thereon
on due date or in failing to redeem its debentures on
due date or in the payment of dividends.
had also clarified that nominee directors appointed on
the boards of public companies or assisted companies by
the central or state governments and banking companies
are also exempted from this clause.