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

Which of the following persons is NOT disqualified by Section 196(3) from being appointed or continuing as managing director, whole-time director or manager?

A person aged 24 is not disqualified. Section 196(3) only bars those below twenty-one years, those who have attained seventy (subject to a proviso), insolvents, persons who compounded with creditors, and those sentenced to more than six months. A 24-year-old falls in none.

  1. AA person aged 24 yearsCorrect
  2. BA person who has at any time been adjudged an insolvent
  3. CA person who has at any time made a composition with his creditors
  4. DA person convicted by a court and sentenced for a period of more than six months

Explanation

Section 196(3) bars those below 21 or at 70 or above, insolvents, those who suspended payment or compounded with creditors, and those convicted and sentenced to more than six months. A person of 24 is above the minimum age of 21 and meets no other disqualification, so he is eligible.

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