The provisions also state that all the directors who have been directors in the relevant year, from the due date to the expiry of one year after the due date, will be disqualified.

This rule would apply to reappointment of directors as well.

Exemption has been provided for cases wherein dividend has not been parked in a separate bank account as postulated by Section 205A or paid into the Investors Education and Protection Fund as stipulated by Section 205C of the Companies Act.

Statutory auditors have been instructed to report whether any director is disqualified from being appointed as director. Just to make sure, they are to also issue a certificate.

Another task that has been cast upon the statutory auditors of a company in which the disqualification has occurred is to report whether any director on the company has been disqualified during the year from being reappointed in that company or in any other company.

The rules made by the Government look incomplete without forms and, hence, Form "DD-B" has been developed for public limited companies that have defaulted to report.

A very strange requirement states that no unusual abbreviations or short forms shall be used. We now need to find a definition for unusual abbreviations.

Non-filing of Form DD-B shall promptly make the list of officers under Section 5 — officers in default.

Once these formalities are completed, the Central Government takes over and has been mandated by the Rules to place on the Web site of the Department of Company Affairs, the names and addresses and such other details in respect of the disqualified directors.

A clause that could worry disqualified directors states that the Central Government may publicise the names of the disqualified directors in such manner as it may consider appropriate.

A small mercy has been provided in that the names of the disqualified directors shall be removed from the Web site once they complete their exile period of five years.

To complete the alphabetical sequence, every director in a public company needs to file Form DD-A.

If the provisions of the Rules go unheeded, Rs 5,000 is the fine one has to pay. However, if one contravenes continuously, fines can go up to Rs 500 for every day of default.

For the sake of clarity, the Rules could have stated what happens in case there is a total compliance by a company within a few days of the default.

Assuming a company is in default as of March 31, and complies with the Rules within April 15, it would seem harsh to prevent directors from entering into the company for five years.

The Rules are also silent as to what would happen in cases of partial compliance.

It would also be prudent to explain the role of additional directors, special directors and independent directors vis-à-vis the rules to pre-empt litigation.

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