Section 164(2) disqualification: how 3 years of missed filings bars directors for 5 years

Last updated 24 Oct 2026 · India

Short answer. Under section 164(2)(a) of the Companies Act 2013, a person who is or has been a director of a company that has not filed financial statements or annual returns for any continuous period of three financial years cannot be reappointed as director of that company or appointed in any other company for five years from the date of the default. Section 164(2)(b) applies the same bar for failing to repay deposits, debentures or declared dividend for a year or more. A director newly appointed to the defaulting company is not disqualified for six months from appointment, which gives time to fix the filings.

How to stay clear

AOC-4 within 30 days of the AGM, every year
MGT-7 or MGT-7A within 60 days of the AGM, every year
Check every company you sit on the board of, including dormant ones
Close dead companies properly (STK-2) instead of leaving them unfiled

What follows a disqualification

Under section 167(1)(a) the director vacates office in other companies, but not in the defaulting company itself.
The DIN can be flagged on MCA as disqualified, which blocks new appointments.

Common mistakes

Thinking a "sleeping" company is safe. Annual filings are still due unless the company has dormant status or is struck off.
Counting financial years wrongly. The test is three continuous financial years of non-filing.
Joining a defaulting board and not fixing filings within six months.

Frequently asked questions

What triggers disqualification under section 164(2)?

Not filing financial statements or annual returns for any continuous period of three financial years, or failing to repay deposits, debentures or declared dividend for a year or more.

How long does the disqualification last?

Five years from the date the company fails to file or repay.

Is a new director of the defaulting company disqualified at once?

No. The first proviso to section 164(2) gives a newly appointed director six months from appointment.

Official sources

Not tax or legal advice. This is a free explainer of public rules; deadlines and rules can change by notification, so confirm on the official portal or with your CA before you file. Last checked 24 Oct 2026.

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