Question

A director of X Ltd. has given a guarantee of Rs. 500 for someone, yet he can become the director of another company.

• A. True
• B. False
• C. Partly true
• D. Partly false

Answer 1

Answer: (A)

True

According to the Companies Act 2013, the following conditions can be reasons for disqualifying a Director.

1. The Director is of unsound mind and stands so declared by a competent court.
   
2. The Director is an undischarged insolvent.
3. The Director has applied to be adjudicated as an insolvent and his application is pending.
4. The Director has been convicted by a court of any offence, whether involving moral turpitude or otherwise, and sentenced in respect thereof to imprisonment for not less than six months and a period of five years has not elapsed from the date of expiry of the sentence. Also any person who has been convicted of any offence and sentenced to imprisonment for a period of seven years or more, will not be eligible to be appointed as a director in any company.
5. An order disqualifying the Director for appointment as a director has been passed by a court or Tribunal and the order is in force.
6. The Director has not paid any calls in respect of any shares of the company held by him, whether alone or jointly with others, and six months have elapsed from the last day fixed for the payment of the call.
7. The Director has been convicted of the offence dealing with related party transactions under section 188 at any time during the last preceding five years.
8. A company in which the Director is a part of the Board has not filed financial statements or annual returns for any continuous period of three financial years.
9. The company has failed to repay the deposits accepted by it or pay interest thereon or to redeem any debentures on the due date or pay interest due thereon or pay any dividend declared and such failure to pay or redeem continues for one year or more