Rule 3 - Disqualifications under clause (g) of sub-section (1) of section 274 of the Companies Act, 1956 - Companies (Disqualification of Directors under section 274(1)(g) of the Companies Act, 1956) Rules,2003

Disqualifications under clause (g) of sub-section (1) of section 274 of the Companies Act, 1956 03. (a) Whenever a company fails to file the annual accounts and annual returns, as described in sub-clause (A) of clause (g) of sub-section (1) of section 274, persons who are directors on the last due date for filing the annual accounts and the annual returns for any continuous three financial years commencing on and after the first day of April, 1999, shall be disqualified. (b) If a company has failed to repay any deposit, irrespective of the enactment, rules or regulations under which the deposits have been accepted by the companies, or interest thereon, or redeem its debentures, or pay any dividend declared on the respective due dates, and if such failure continues for one year, as described in sub-clause (B) of clause (g) of sub-section (1) of section 274, then the directors of that company shall stand disqualified immediately on expiry of that one year from the respective due dates: Provided that all the directors who have been directors in the relevant year, from the due date to the expiry of one year after the due date, will be disqualified: Provided further that disqualification on account of the reasons cited under this Rule shall also apply to the reappointment as a director. Explanation . For the purpose of this rule, it is clarified that non-payment of dividend referred to in sub-clause (B) of clause (g) of sub-section (1) of section 274 due to the reason of dividend not being claimed or kept in separate bank account as required under section 205A of Companies Act, 1956 or paid into Investors Education Protection Fund as required under section 205C of that Act shall not be deemed to be a failure to make payment of dividend.