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July 13 To July 19, 2019 u Taxmann’s Corporate Professionals Today u Vol. 45 u 66Company Law
MCAproposestobringsimplewe b
basedKYCve rificationser vicefor
directorsGENERAL CIRCULAR NO. 7/2019 [F.NO.
01/22/2013-CL-V], DATED 27-6-2019
The Ministry of Corporate Affairs (MCA) is
now proposing to bring simple web based
KYC verification service for directors. Those
directors, who have filed DIR-3 KYC will only
be required to complete his/her KYC through
a simple web-based verification service, with
pre-filled data based on the records in the
registry, for ease of verification by the person
concerned. However, in case a person wishes
to update his mobile no. or e-mail address,
he would be required to file e-form DIR-3
KYC, as this facility of updation is not being
proposed in the web-based service. In case
of updation of any other personal detail,
e-form DIR-6 may be filed for updation of
the same before completion of KYC through
the web-based service. Disqualifyingdire ctorsfr omofficeon
failuretosubmitre turnsisnotultra
viresConstitution,rule sHighCour tYashodhara Shroff v. Union of India [2019]
106 taxmann.com 297 (Karnataka)
In the instant case, the petitioners challenged
the list published by the MCA in September,
2017 whereby nearly three lakh directors were
disqualified u/s 164(2)(a) and Section 167(1)(a)
for failing to file annual returns and statements
for a period of three consecutive years.The Petitioners argued that section 164(2) of
the Act is retrospective in effect inasmuch
as three continuous years of non-filing of
financial statements or annual returns could
extend to even prior to 01.04.2014 (on which
date the Act came into force) however, the
proviso of section 167(1)(a) came into force
with effect from May 05, 2018.
The petitioners argued that Section 164(2)
of the Act is ultra vires Article 14 and/or
Article 19(1)(g) of the Constitution of India
as being manifestly arbitrary.
The petitioner noted that the MCA had
gone beyond the law and worked arbitrary.
As, the due date of filing the returns and
financial statement was not over yet and
in the meantime, it published the list of
disqualified directors on Sep, 2017
The High Court ruled that the proviso of
section 167(1)(a) of the Companies Act, 2013
is prospective in nature, it should not looked
in retrospective. Therefore, any disqualification
of director arises prior to 07.05.2018 (date of
enforcement of provision of Section 167(1)
(a) would not compelled the director to
vacate the office in all companies in which
the disqualified director is a director. The
disqualified director would continue the
position of director in other company. On
the contrary, those who were disqualified
after 07.05.2018 would liable to vacate the
office in other companies as well.
With regard to the constitutional validity
of the proviso of section 167 (1) (a) of the
Companies Act, 2013, the Court ruled that,
the said provision does not violate Article
19(1)(g) of the Constitution as it is made in
the interest of general public and a reasonable
restriction on the exercise of the said right.Corporate Laws
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