No right to exist – defaulter Companies; Directors too face axe


The Ministry of Corporate affairs have issued clear notification, and hosted on its website ( showing list of the defaulter Companies and Directors. The list consists of around more than 200,000 shell companies to whom Public notice of strike off has been issued by the Ministry of Corporate Affairs.

Consequently, Directors of those companies have been disqualified/barred to be appointed as the director of any company for a period of five years. The office of such directors is vacated immediately with this notification.

Why this strong action – Compliance angle:

The provision of Companies Act, 2013 are reproduced:

Section 248 (1) where Registrar of Companies has reasonable cause to believe that:

  • A company has failed to commence its business within one year of its incorporation.
  • A company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any application within such period for obtaining the status of a ‘dormant company’* under section 455.
  • The Registrar shall send a notice to the company and all the directors of the company, of his intention to remove the name of the company from the register of companies and requesting them to send their representations along with copies of the relevant documents, if any, within a period of thirty days from the date of the notice.
  • At the expiry of the time mentioned in the notice, the Registrar may, unless cause to the contrary is shown by the company, strike off its name from the register of companies, and shall publish notice thereof in the official gazette of this notice, the company shall stand dissolved.
  • The Registrar, before passing an order shall satisfy himself that sufficient provision has been made for the payment or discharge of its liabilities and obligations by the company within a reasonable time and, if necessary, obtain necessary undertakings from the managing directors, director or other persons in charge of the management of the company.
  • Nothing in this section shall affect the power of the tribunal to wind up a company, the name of which has been struck off from Registrar of Companies.

*Section 455 of companies act, 2013 says that where a company is formed and registered under this act for a future project or to hold an asset or intellectual property and has no significant accounting transaction, such a company or an inactive company may make an application to the Registrar in such manner as may be prescribed for obtaining the status of a dormant company and the Registrar on consideration of the application allow the status of a dormant company and issue a certificate in such form as may be prescribed to that effect.

Disqualification of Directors:

As per section 164(2) of Companies act, 2013 No person who is or has been a director of a company which:

  • has not filed financial statements or annual returns for any continuous period of three financial years; or
  • 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,

shall be eligible to be reappointed as a Director of that company or appointed in other company for a period of five years from the date on which the said company fails to do so.



Law provides for strict action against people resorting to wrong practices of having double/multiple Director Identification Number (DIN). As per section 155 of Companies Act, 2013 no individual, who has already been allotted a DIN, shall apply for, obtain or possess another DIN. If any individual or director of a company contravenes the provisions of section 155 of Companies Act, 2013 such individual or director of the company shall be punishable with imprisonment for a term which may extend to six months or with fine which may extend to fifty thousand rupees and where the contravention is a continuing one, with a further fine which may extend to five hundred rupees for every day after the first day during which contravention continues.


As per prudent practice, we are of the opinion that aggrieved people/directors should take appropriate resolution which may include approaching NCLT. A petition in this regard may be filed under the Companies Act, 2013. Our law firm has been approached by the clients to regularize their affairs.;