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CMA Intermediate · Business Laws and Ethics · Directors - Role, Responsibilities, Qualification, Appointment, Removal, Remuneration and Powers

Meera is a director of Kaveri Textiles Ltd. The company is in the position of not having filed its financial statements or annual returns for three continuous financial years. What is the consequence for Meera under the Companies Act, 2013?

Meera is disqualified for five years. A director of a company that has not filed financial statements or annual returns for three continuous financial years cannot be re-appointed in that company or appointed in another company for five years from the date of the company's default.

  1. AShe is disqualified from appointment or re-appointment as a director for five yearsCorrect
  2. BShe is disqualified for one year only
  3. CShe is disqualified for life
  4. DShe is not affected because only the company is liable

Explanation

A person who is or has been a director of a company that has not filed financial statements or annual returns for any continuous period of three financial years is not eligible to be re-appointed in that company or appointed in other companies for five years. The default is personal to directors, not only to the company.

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