TaxTMI 
TaxTMI 
Disqualification of Directors under Section 274(1)(g) of the Companies Act, 1956 - Clarification
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.... (w.e.f. 13-12-2000) and a new clause (g) was inserted to sub-section (1) of this Section. Through this clause a director of a public company, which has made defaults in filing of annual accounts and annual returns and in repaying deposits/interests thereon on due date or redeeming its debentures on due date or in paying dividend for period specified in that Section, is disqualified to be appointed as director of other public companies for a period of five years from the date on which such public company(ies) so defaulted. 2. A high proportion of the companies had been defaulting in filing the annual accounts and annual returns and a large number of companies were defaulting in repayment of deposits/interest thereon and in redempti....
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.... statutes of some of the Public Financial Institutions and the special situation of the nominee directors of Public Financial Institutions/Banks and the nominees of Central and State Government companies. 5. The Government has decided to (i) clarify the legal position in respect of the Public Financial Institutions/Banks having non-obstante clause in their statute (ii) to give some relief to the nominees of the Public Financial Institutions/Banks/Central and State Government; and (iii) to exempt Government Companies from the applicability of the provisions of Section 274(1)(g) of the Companies Act, 1956. 6. While considering the applicability of the provisions of Section 274(1)(g) of the Companies Act, 1956, the Government has taken i....
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.... 49 of the Listing Agreement introduced by the SEBI. The Nominee Directors are expected to study these provisions of corporate governance and have them implemented. (ii) Ensure that the operations of the company are conducted in consonance with public policy. (iii) Ensure strict compliance in letter and spirit of all the statutory provisions in particular the provisions of the Companies Act and the regulations, clarifications etc. issued there under. It is the duty of the nominee directors to fully acquaint themselves in the relevant provisions of the Company Law and ensure that measures are instituted to monitor and certify that these statutory provisions are being observe....
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....to closely monitor the participation by the Nominee Directors in the Boards/Committees as above and to ensure that they are discharging their responsibilities as listed out above. In case any Nominee Director is failing to discharge his/her responsibilities the Institutions are expected to take steps to replace him/her. The Institutions are also expected to send a six monthly report to the Department of Company Affairs (ROC) bringing out the steps taken by them to ensure that their Nominee Directors are discharging their responsibilities. The Financial Institutions should also in a separate section of their Annual Report clearly bring out the measures instituted by them to ensure that the system of Nominee Directors is fun....