Section 274 (1) (g) of the companies act, 1956
n v sudhakar
(Querist) 15 September 2011
This query is : Resolved
Whether it is applicable to Private Limited Company?
Submission of declaration by one of the director under above clause -
1. is it the responsibility of director on his own to send the declaration? If so to whom he has to send, whether to the company or to the auditors of the company
or
2. the company has to send declaration form to the director to fill in and send.
What is the role of the Auditor in this particular clause. (There was a dispute going on among directors of one company. The auditors have commented like this in their audit report: " Mr ______ has not produced written representations as to whether or not the companies in which he is a director as on 31st March, 2010 had defaulted in terms of section 274 (1) (g) of the Companies Act, 1956. In the absence of this representation, we are unable to comment whether Mr _______ is disqualified from being appointed as director under clause (g) of sub section (1) of section 274 of the Companies Act, 1956. As far as other directors are concerned, on the basis of the written representations received from such directors, and taken on record by the board of directors of the company, we report that none of the remaining directors are disqualified from being appointed as a director in terms of clause (g) of sub section (1) of section 274 of the Companies Act, 1956.)
An early reply is requested.
Regards
N V Sudhakar
Raj Kumar Makkad
(Expert) 16 September 2011
Post your query a proper site:
www.taxguru.com
M V Gupta
(Expert) 18 September 2011
The proviso to Sec.274(1)(g) of the Companies Act, 1956 makes it clear that a person who is already a director of a public company which has failed to file its annual accounts etc would not be eligible to be appointed as Director of any other Public Company. Therefore it is clear that the disqualification contained in cl.(g) of the section does not apply to Pvt companies.
Guest
(Expert) 18 September 2011
Sec. 274(1)(g) applies to the Public Limited Companies and not on Private Limited Companies.
About Duty of Statutory Auditor to report on disqualification, you may like to refer to the rules called as the "Companies (Disqualification of Directors under section 274(1)(g) of the Companies Act, 1956) Rules, 2003", as notified vide G.S.R. 830 (E) on 21st October, 2003, and published in the GAZETTE OF INDIA, PART II, SECTION 3(i), EXTRAORDINARY.
Rule 4 of the said rules specify the duty of Statutory Auditor to report on disqualificationas follows:
(a) It shall be the duty of statutory auditor of the appointing company as well as disqualifying company, as required under section 227(3)(f) to report to the members of the company whether any director is disqualified from being appointed as director under clause (g) of sub-section (1) of section 274 and to furnish a certificate each year as to whether on the basis of his examination of the books and records of the company, any director of the company is disqualified for appointment as a director or not.
(b) It shall be the duty of the statutory auditors of the "disqualifying company" as required in section 227(3)(f) to report to the members of the company whether any director in the company has been disqualified during the year from being re-appointed as director, or being appointed as director in another company under clause (g), of sub-section (1) of section 274.
