Disqualification of a Special Director appointed under SICA, 1985 in view of new Section 274 (1)(g) of the Companies Act, 1956 - Companies Law - 11 /2001

General Circular No.11 /2001 No.2/8/2001-CL.V Government of India Ministry of Law, Justice Company Affairs Department of Company Affairs 5th Floor, Shastri Bhavan, New Delhi-110001 Dated : 25th May, 2001 To 1. All Regional Directors 2. All Registrar of Companies 3. All Official Liquidators Subject:- Disqualification of a Special Director appointed under SICA, 1985 in view of new Section 274 (1)(g) of the Companies Act, 1956 Sir, The matter whether Directors appointed under Section 16(4) of the Sick Industrial Companies (Special Provisions) Act, 1985 by the Board for Industrial and Financial Reconstruction (Board) shall be liable to be disqualified under section 274(1)(g) of the Companies Act, 1956 has been examined in this Department in detail. Provisions of Section 16(5) of SICA, 1985 provide that the appointment of a Special Director appointed under Section 16(4) of said Act shall be valid and effective non-withstanding anything to the contrary contained in the Companies Act, 1956 or in any other law for the time being in force or in the memorandum and articles of association or any other instrument relating to the industrial company, and any provision, regarding share qualification, age limit, number of directorships, removal from office of directors and such like conditions contained in any such law or instrument aforesaid, shall not apply to any director appointed by the Board. In view of over-ridding effect of provisions of Section 16(5) of SICA over Companies Act, 1956 it is hereby clarified that Special Directors appointed under Section 16(4) of SICA shall not be liable to be disqualified for appointment as directors by virtue of Section 274(1)(g) of the Companies Act, 1956. Yours faithfully, (Thakur Sharan ) Under Secretary to the Government of India (Tel:.3389622)