General
Circular No. 11
/2001
Government of
India
Ministry of
Law, Justice & Company Affairs
Department of
Company Affairs
5th Floor, Shastri Bhavan,
New
Delhi-110001
Dated
: 25th May, 2001
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)