Section 164 of Companies Act vs. Section 165 of Companies Act

Attribute	Section 164 of Companies Act	Section 165 of Companies Act
Maximum number of directorships	20	Unlimited
Disqualification for defaulting directors	Yes	Yes
Resignation of director	Allowed	Allowed
Appointment of director	By shareholders	By board of directors

Introduction

Section 164 and Section 165 of the Companies Act are two important provisions that deal with the disqualification of directors in a company. While both sections aim to ensure the integrity and accountability of directors, they have distinct attributes that set them apart. In this article, we will compare and contrast the key features of Section 164 and Section 165 to understand their implications on corporate governance.

Section 164 of Companies Act

Section 164 of the Companies Act pertains to the disqualification of directors. It outlines the circumstances under which a person shall not be eligible for appointment as a director in a company. One of the main provisions of this section is that a person who has been convicted of an offense involving moral turpitude and sentenced to imprisonment for a period of six months or more shall be disqualified from being appointed as a director.

Furthermore, Section 164 also states that a person who has not paid any calls in respect of any shares of the company held by him for a period of six months from the due date shall also be disqualified from being a director. This provision aims to ensure that directors fulfill their financial obligations towards the company and its shareholders.

In addition, Section 164 provides for the disqualification of a person who has been declared as a proclaimed offender by a court. This provision is crucial in preventing individuals with a history of evading the law from holding positions of authority in a company.

Overall, Section 164 of the Companies Act focuses on the character and financial integrity of directors to safeguard the interests of the company and its stakeholders.

Section 165 of Companies Act

Section 165 of the Companies Act deals with the removal of disqualification of directors. This section provides a mechanism for directors who have been disqualified under Section 164 to seek relief from such disqualification. One of the key features of this section is that it allows a disqualified director to apply to the National Company Law Tribunal (NCLT) for the removal of disqualification.

Section 165 also specifies the grounds on which the NCLT may grant relief to a disqualified director. These grounds include the payment of all overdue calls and other amounts in respect of shares, obtaining a court order setting aside the conviction, or any other sufficient cause that the NCLT deems fit.

Moreover, Section 165 empowers the NCLT to pass orders for the removal of disqualification and make such directions as it deems fit. This provision ensures that directors who have rectified their past mistakes or have valid reasons for their disqualification are given an opportunity to continue serving on the board of a company.

Overall, Section 165 of the Companies Act provides a mechanism for directors to seek redressal and regain their eligibility to hold office in a company, thereby promoting fairness and justice in corporate governance.

Comparison

While Section 164 and Section 165 of the Companies Act both deal with the disqualification of directors, they have distinct attributes that differentiate them. Section 164 focuses on the grounds for disqualification and sets out specific criteria that render a person ineligible for appointment as a director. In contrast, Section 165 provides a process for the removal of disqualification and allows disqualified directors to seek relief from the NCLT.

Another key difference between the two sections is that Section 164 lays down the conditions under which a person shall be disqualified from being a director, while Section 165 outlines the grounds on which relief from disqualification may be granted. This distinction highlights the complementary nature of the two provisions in ensuring the integrity and accountability of directors in a company.

Furthermore, Section 164 focuses on preventing individuals with a tainted past or financial irregularities from holding positions of authority in a company, whereas Section 165 provides a mechanism for directors to rectify their mistakes and seek redressal. This difference underscores the dual objectives of maintaining high standards of corporate governance while also allowing for the rehabilitation of directors who have demonstrated their commitment to compliance and ethical conduct.

In conclusion, Section 164 and Section 165 of the Companies Act play a crucial role in regulating the appointment and disqualification of directors in a company. While Section 164 sets out the grounds for disqualification, Section 165 provides a mechanism for the removal of disqualification, thereby ensuring fairness and justice in corporate governance.