Director Disqualification Under Section 164(2)(a): What Happens and How to Fix It

Director disqualification under Section 164(2)(a) catches people who had no idea it was coming. There is no notice, no hearing and no order. A company misses three years of annual filings, and on the last day of the third year every one of its directors is disqualified for five years by operation of law. Most find out months later, when a DSC stops working, a bank flags it during due diligence, or an auditor asks for a DIR-8 that cannot honestly be signed.

The detail that matters most is also the one most commonly reported wrongly: a disqualified director does not vacate the board of the defaulting company. They vacate every other board they sit on. That single distinction decides who can still sign the pending filings, and it is worth understanding before anyone resigns from anything.

What triggers disqualification under Section 164(2)

Section 164(2) of the Companies Act, 2013 disqualifies a person who is or has been a director of a company which:

• Clause (a) — has not filed financial statements or annual returns for any continuous period of three financial years; or
• Clause (b) — has failed to repay deposits accepted by it or pay interest on them, to redeem debentures on the due date or pay interest due on them, or to pay any declared dividend, and that failure continues for one year or more.

The consequence in both cases is the same: that person is not eligible to be re-appointed as a director of that company, or appointed in any other company, for five years.

Three points about clause (a) that get missed. It is financial statements or annual returns — either one, for three continuous years, is enough. The three years must be continuous, so a gap year of compliance resets the count. And it applies to a person who is or has been a director, which is why resigning after the default has run does not help.

When the five years starts

The disqualification operates automatically. It attaches on the completion of the third continuous year of default, not on the date the Registrar publishes a list, not on the date a DIN is flagged, and not on the date anyone is informed.

This matters in both directions. If you are counting backwards to see when the five years ends, count from the default, not from the publication. And if you are looking at a company three months into its third year of non-filing, the disqualification has not happened yet — there is still time to file and stop it. That window is the single most valuable thing on this page.

What Section 167(1)(a) actually does

Section 167(1)(a) says the office of a director becomes vacant if he incurs any disqualification under Section 164. Read alone, that would empty every board he sits on, including the defaulting one — and would leave nobody able to sign the overdue filings. A proviso inserted by the Companies (Amendment) Act, 2017 with effect from 7 May 2018 fixes exactly that. Where the disqualification is incurred under Section 164(2), the office becomes vacant in all companies other than the company which is in default.

Company	What happens to the directorship
The defaulting company itself	Office is not vacated. You remain a director, and can therefore sign and file the overdue returns. You cannot be re-appointed for five years.
Every other company where you are a director	Office is vacated automatically on the date the disqualification is incurred — including compliant, profitable, entirely unrelated companies.
Any new company	You cannot be appointed for five years.

The practical sting is in the second row. One dormant company nobody bothered to close can remove a person from the board of a live business with employees and lenders, on a date nobody noticed at the time.

The six-month grace for a newly appointed director

There is a proviso to Section 164(2) worth knowing if you are being asked to join a board. Where a person is appointed as a director of a company which is already in default under clause (a) or clause (b), he does not incur the disqualification for six months from the date of his appointment.

It is a window to fix the position, not an exemption. If you join a defaulting company and the filings are still not made six months later, the disqualification attaches to you as well — for a default that was in place before you arrived.

DIR-8, DIR-9 and DIR-10

Rule 14 of the Companies (Appointment and Qualification of Directors) Rules, 2014 sets out the paperwork, and it runs in both directions.

• Form DIR-8 — the director’s declaration to the company that he is not disqualified, given before appointment or re-appointment. This is the document that turns an unnoticed disqualification into a false declaration, which is why it is worth checking the status before signing rather than after.
• Form DIR-9 — the company’s filing with the Registrar. Where the company defaults under Section 164(2), it must file DIR-9 immediately, giving the names and addresses of all its directors. Where it receives a DIR-8 disclosing a disqualification, it files DIR-9 within thirty days of receipt. If the company does not file DIR-9 within thirty days, the officers specified in Section 2(60) are themselves officers in default.
• Form DIR-10 — the application for removal of disqualification.

Companies almost never file DIR-9 voluntarily. That does not keep the disqualification from operating; it just adds a second default on top of the first, and one that can be adjudicated. Our note on replying to an ROC adjudication notice under Section 454 covers what that looks like when it arrives.

How to check whether you are disqualified

Do not wait to be told. Three checks, in this order:

1. Your own DIN status on the MCA portal. The DIN master data shows the current status against your DIN.
2. The Registrar’s published lists. ROCs publish lists of directors disqualified under Section 164(2)(a), state by state, with DIN, name and the company that caused it.
3. The filing history of every company you are on. This is the only check that catches a disqualification before it happens. Pull the master data and the index of charges and filings for each one, and look for the gap. A company you forgot you were a director of is the usual culprit.

Keeping DIR-3 KYC current is a separate obligation and does not protect against this — a fully KYC-compliant DIN can still be disqualified.

What the disqualification actually stops you doing

• You cannot be appointed or re-appointed as a director of any company for five years.
• You vacate office in every company other than the defaulting one, which means resolutions passed afterwards with you counted in the quorum are exposed.
• Incorporating a new company with yourself as a subscriber-director is blocked.
• Continuing to act as a director after the office has been vacated carries its own consequence under Section 167, and this is the part people walk into by simply carrying on.

The routes out, honestly assessed

There is no form that reverses a disqualification already incurred. Be wary of anyone who says otherwise. The realistic options are:

1. File before the third year completes. Not a remedy — a prevention. If the company is mid-default, this is the answer and it is cheap.
2. A government scheme, when one is open. Past schemes such as the Condonation of Delay Scheme, 2018 and the Companies Fresh Start Scheme, 2020 gave defaulting companies a window to file and, in the first case, dealt expressly with disqualified directors. These come and go. As at September 2026 there is no such general window open — see our note on what late ROC filing costs now that CCFS has closed. Do not plan around a scheme that has not been announced.
3. A writ petition before the High Court. This is how most disqualifications have actually been lifted. The grounds that have succeeded are procedural and factual: defaults counted from years before the section came into force, no opportunity of being heard, the person not being a director during the default period, or the company having been struck off so that filing was impossible.
4. Restoration under Section 252, where the company was struck off. If the company’s name was removed from the register, an appeal to the NCLT to restore it is usually a necessary first step, because the filings cannot be made against a company that does not exist on the register. Our note on strike-off under STK-2 explains how companies end up there.

Which route fits depends on dates that are all on the public record: when the defaults ran, when you were appointed and resigned, and whether the company was struck off. Get those four facts straight before spending money on anything.

What the courts have said

Two points from the litigation are worth carrying into any assessment.

Retrospectivity. In its November 2019 decision the Delhi High Court held that disqualification could not rest on defaults committed before Section 164 came into force. Defaults for the financial years 2011-12 and 2012-13 could not be counted; the default for 2013-14 could, because it fell after the provision was in effect. Where a disqualification list counts years that pre-date the section, that is a ground.

DIN and DSC deactivation. The same court held that deactivating a disqualified director’s DIN and DSC was unsustainable, finding no statutory basis for it, and directed reactivation. Disqualification and cancellation of the DIN are not the same thing, and a director who needs a working DSC to file the very returns that would end the default should not be locked out of doing so.

If you are being asked to join a board

Run the check before you sign the DIR-2 consent, not after. Pull the target company’s filing history and confirm annual returns and financial statements are current for the last three years. If they are not, the six-month proviso gives you a window — but you are now on a clock, and the only way off it is for someone to complete the filings. Nominee and investor-appointed directors get caught by this more often than founders do.

Mistakes that make it worse

1. Resigning from the defaulting company. Section 164(2) applies to a person who is or has been a director. Resigning does not remove a disqualification already incurred, and it may remove the only person able to sign the pending returns.
2. Continuing to act on other boards. Those offices vacated by operation of law on the date of disqualification. Signing as a director afterwards is a separate problem, and it is visible on the filings.
3. Signing a DIR-8 without checking. A declaration of non-disqualification that turns out to be wrong is a worse document than no document.
4. Waiting for a scheme. CODS and CFSS were one-off windows. Planning on the next one is planning on an announcement nobody has made.
5. Treating the ROC list date as the start date. The five years runs from the default. Mis-reading this has people waiting longer than they need to, and occasionally acting sooner than they may.

Frequently asked questions

Does filing the pending returns automatically lift the disqualification?

No. Completing the filings removes the ongoing default, and it is necessary before any relief, but the five-year disqualification once incurred does not fall away by itself. Relief has generally come through a scheme, where one was open, or a court.

Can I stay a director of the defaulting company?

Your office in that company is not vacated, because of the proviso to Section 167(1)(a). But you cannot be re-appointed there for five years, so the position ends at the next re-appointment.

I resigned two years before the third year of default. Am I disqualified?

It depends on whether the three continuous years of default ran while you were a director. The dates on the filings and on your DIR-11 and DIR-12 decide it. This is one of the most commonly successful grounds in a writ petition, and one of the easiest to establish from the record.

Does this apply to LLP designated partners?

Section 164 sits in the Companies Act and applies to directors of companies. An LLP has its own filing obligations and its own consequences for missing them.

Is a private company exempt?

No. Section 164(2) applies to companies generally. Small, dormant and closely held companies are in fact the most common source, because they are the ones whose filings quietly lapse.

If a DIN has already been flagged

The first hour of work is establishing four dates: the financial years of default, the dates you were appointed and resigned in each company, whether the company was struck off, and whether any year counted pre-dates the section coming into force. Those decide whether this is a filing problem, a restoration problem or a writ.

TAXAJ handles director disqualification assessments, restoration petitions and the underlying MCA and ROC compliance for companies in Delhi, Bengaluru, Goa and Bihar. If a DIN has been flagged or a company is heading into its third year of non-filing, schedule a call or send the details on WhatsApp.

This note sets out the general position under Sections 164 and 167 of the Companies Act, 2013 and Rule 14 of the Companies (Appointment and Qualification of Directors) Rules, 2014 as at September 2026. Whether a particular disqualification stands, and what relief is available, turns on the specific dates and filings in that case.