Director Disqualification Under Section 164 of the Companies Act (2026)

How-to · Company Law · Process

Updated for 2026 · Claw Editorial

Director disqualification under Section 164 of the Companies Act, 2013 bars a person from being a director, either because of a personal ground such as a conviction, or because a company he was on failed to file its returns. The most common trigger is non-filing: if a company does not file financial statements or annual returns for three continuous financial years, its directors are disqualified for five years. This guide explains the grounds, the effect on other directorships, and how to address it. Last verified October 2026.

01Why directors get disqualified

Thousands of directors have found themselves disqualified without a court case, simply because a company they were on stopped filing its returns. The Registrar publishes a list of disqualified directors, their Director Identification Number (DIN) is flagged, and they cannot sign filings for any company.

This hits hard because the disqualification can reach beyond the defaulting company. A person who sits on several boards can lose those seats because of the default of one. Understanding which ground applies, and what it affects, is the first step to fixing it.

02The personal grounds: Section 164(1)

Section 164(1) lists grounds personal to the individual. A person cannot be a director if he:

• is of unsound mind, as declared by a court;
• is an undischarged insolvent, or has an application pending to be adjudged insolvent;
• has been convicted of an offence and sentenced to imprisonment for the stated period, and a time has not passed since release;
• is disqualified by a court or tribunal order that is in force;
• has not paid calls on shares; or
• has been convicted of an offence dealing with related party transactions under Section 188 in the last five years.

These grounds are personal, so they apply wherever the person is or seeks to be a director.

03The non-filing ground: Section 164(2)

Section 164(2) is the ground most directors meet in practice. A person who is or has been a director of a company is disqualified if that company:

• (a) has not filed financial statements or annual returns for any continuous period of three financial years; or
• (b) has failed to repay deposits, pay declared dividends, or redeem debentures on time, and the default continues for one year or more.

The disqualification lasts five years. For the (a) ground, a director of the defaulting company is not eligible to be reappointed in that company, or appointed in any other company, for five years.

Three years of non-filing by one company can disqualify its directors for five years, and the bar reaches their seats on other boards too.

04The effect: vacation of office under Section 167

Disqualification does not just stop future appointments. Section 167 says the office of a director becomes vacant if he incurs any disqualification under Section 164. So the person loses the directorships he already holds.

There is an important proviso for the Section 164(2) non-filing ground. Where a director is disqualified under Section 164(2), his office is vacated in all companies other than the company that is in default. This lets him stay on the board of the defaulting company (to help fix the default) while losing his seats elsewhere.

Continuing to act as a director after the office has become vacant is itself an offence under Section 167, with its own penalty.

05DIN deactivation and DIR-3 KYC

People often confuse disqualification with DIN deactivation. They are different.

• Disqualification under Section 164 is a bar on being a director, flagged against the DIN.
• DIN deactivation for KYC happens when a director does not file the annual DIR-3 KYC under Rule 12A of the Companies (Appointment and Qualification of Directors) Rules. This is a compliance lapse, cured by filing the KYC with a fee, and it is separate from a Section 164 disqualification.

Filing DIR-3 KYC reactivates a DIN deactivated for KYC default, but it does not by itself remove a Section 164 disqualification.

06How to address a disqualification

Who acts: the affected director, usually with the company.

Where: the Registrar of Companies maintains the record, and challenges have gone to the High Courts under writ jurisdiction and, in some matters, the National Company Law Tribunal (NCLT).

Practical routes include:

• Challenge in the High Court: many directors have filed writ petitions challenging the disqualification and the DIN flagging, especially on the timing of the default and on being heard first.
• Revive the defaulting company: if the company was struck off, restoring it before the NCLT can be part of the remedy. See striking off a company and reviving it.
• Wait out the period: where the disqualification is valid, it ends after five years.

The right route depends on the ground and the facts, so take advice early.

07Where Claw fits

Claw is an all-in-one legaltech platform for Indian advocates, law firms, and corporate legal teams, combining AI-based case search, an AI legal assistant (Legal GPT), case management, and compliance automation across all Indian courts and tribunals.

Disqualification challenges have thrown up a large and uneven body of High Court decisions, on the timing of the default, the right to be heard, and how far Section 167 reaches, so the way your own High Court has leaned is the best signal of whether a writ will succeed. Claw puts that within reach. It searches more than 30 crore judgments and returns them in under five seconds, with High Court rulings covered from 1990 and the Supreme Court from 1950, and it tracks a live writ petition, its orders and its hearings across 9,102 courts, benches and forums, by party or advocate name. Claw does not use your case documents to train its AI models.

Open a free Claw account to see how your High Court has treated a Section 164(2) disqualification and to follow a pending petition, and to search the wider body of law see case search across Indian courts.

08Sources and further reading

• Ministry of Corporate Affairs (Companies Act, 2013 and rules): mca.gov.in
• India Code (Companies Act, 2013, Sections 164 and 167): indiacode.nic.in
• Claw: clawlaw.in

This guide is general information, not legal advice. Company law and MCA rules change through amendments and circulars, so check the current text and take advice from counsel before you act.

09Frequently asked questions