Directors get disqualified quietly

Section 164(2) is the harshest provision in Indian company law that most directors have never read.

A director of a company that has not filed financial statements or annual returns for three consecutive years is disqualified for five years — and not only from the defaulting company. From every company they are on the board of.

The usual route to this is a dormant company someone stopped filing for, on the reasonable-sounding assumption that a company doing nothing owes nothing. It does. Rs 100 per day per form, uncapped, and the disqualification at the end of it.

If you have a company you no longer use, strike it off properly. It costs less than a year of accrued penalty.