Director Disqualification Under Section 164(2): Complete 2026 Guide — How 3 Lakh Directors Lost Their DIN

By CS Sapna Malpani | Practising Company Secretary, Bangalore | 20 April 2026 | Last Updated: 20 April 2026

In September 2017, the Ministry of Corporate Affairs published three lists in a single week. Totalling 3,09,614 names. Each list was a director whose DIN had been deactivated under Section 164(2) of the Companies Act, 2013 — automatically, without warning, without a court order. Overnight, directors who had been managing perfectly healthy companies found themselves legally ineligible to sign a board resolution, file a return, or hold any directorship anywhere in India — for five years.

That wave happened because 2.4 lakh companies had not filed their annual returns or financial statements for three consecutive years. The directors of those companies paid the price — even if they sat on five other active, compliant companies. Section 164(2) does not distinguish. It deactivates your DIN across every company on your profile.

In 2026, the companies that missed FY 2022-23, 2023-24, and 2024-25 filings are now entering the three-year danger zone. If your company falls in this category, you need to act before the ROC acts first.

What Is Section 164(2) — The Exact Legal Text

Section 164(1) covers personal disqualification grounds — insolvency, conviction for moral turpitude, court order. These are individual-level failures. Section 164(2) is different and more dangerous: it operates at the company level but punishes the individual director. The exact provision states that no person who is or has been a director of a company which has not filed financial statements or annual returns for any continuous period of three financial years shall be eligible to be re-appointed as a director of that company or appointed in other company for a period of five years from the date on which the said company fails to do so.

The word “eligible” is key. Once this provision is triggered, the person is simply ineligible. There is no grace period, no notice, no hearing. The ROC updates the MCA database and the director’s DIN is flagged as disqualified.

What Happens to a Director When Section 164(2) Is Triggered

1. DIN Deactivation on MCA V3 Portal

The MCA marks the director’s DIN as disqualified. A deactivated DIN means the director cannot file any electronic form, sign any digital document on behalf of any company, or be named as director in any statutory filing. This applies across the MCA’s entire database — not company-specific.

2. Office Becomes Vacant Under Section 167

Section 167(1)(a) states that the office of a director shall become vacant if the director incurs any of the disqualifications specified in Section 164. Crucially, the vacancy applies in all companies where the director holds a directorship — not just the company that defaulted. If you are a director of a family business, a startup, and a subsidiary, and the family business stops filing for three years, you automatically vacate your office in all three.

3. Criminal Exposure Under Section 167(2)

If the director continues to act as director after the vacancy is triggered — signing resolutions, representing the company, filing forms — this is a criminal offence. Section 167(2) prescribes imprisonment up to one year, or fine between ₹1 lakh and ₹5 lakhs, or both. This is not an MCA adjudication — it is a prosecution before a criminal court.

4. Five-Year Bar from All Directorships

From the date the defaulting company first incurred the failure, the director is barred from appointment or reappointment in any company for five years. No exceptions within the five-year window other than judicial relief.

Penalty and Consequence Matrix

How the 3-Year Non-Filing Clock Works

The three financial years must be continuous. If a company misses AOC-4 and MGT-7 for FY 2022-23, FY 2023-24, and FY 2024-25, Section 164(2) is triggered. If even one year’s filing is completed (even late), the clock resets. This is why CCFS-2026 is such a valuable tool — clearing even one year of pending filings breaks the chain.

The Innocent Director Problem

Section 164(2) applies to all directors of the defaulting company, regardless of personal participation. A nominee director who never attended a board meeting and had no idea filings were being missed can still find their DIN deactivated across all their other companies. The Kerala High Court held in several cases that automatic DIN deactivation may not be sustainable if the director had no real involvement, but the position is not uniform across High Courts. Prevention through timely compliance remains the only reliable solution.

How to Check If Your DIN Is Disqualified

Method 1: Visit mca.gov.in → Find Director Details → Enter your DIN. Status showing “Deactivated” or “Disqualified” means Section 164(2) has been triggered.

Method 2: Check the MCA’s published list of disqualified directors, updated periodically by each ROC office.

Step-by-Step Remedy: How to Remove Director Disqualification

Path A: NCLT Company Revival (Recommended)

Path B: High Court Writ Petition (Article 226)

Where the NCLT window has passed or there is genuine dispute about involvement, file a writ petition in the High Court. Grounds: violation of natural justice (no notice before deactivation), right to livelihood under Article 19(1)(g), retrospective application, no role in the default. Landmark cases include Mukut Pathak v. Union of India. Delhi, Bombay, and Madras High Courts have directed ROC offices to de-flag DINs in appropriate circumstances.

Path C: Automatic De-Flagging After 5 Years

File Form DIR-10 with Form CG-1 to the Central Government after the five-year period elapses. The simplest but most passive option — five years of being unable to hold a directorship anywhere.

Prevention: How to Avoid Section 164(2) Disqualification

According to CS Sapna Malpani, practising Company Secretary based in Bangalore, “Section 164(2) is entirely preventable with basic calendar discipline. The tragedy in 2017 was not that companies had bad finances — it was that their directors did not know the filing obligation had lapsed for three years. In the post-CCFS-2026 environment, there is simply no excuse for a company to remain non-compliant when the MCA is offering 90% fee relief until July 15.”

• Annual calendar: Treat AOC-4 and MGT-7 as non-negotiable year-end deliverables. AOC-4 is due within 30 days of the AGM; MGT-7 within 60 days.
• Director alert system: If you hold directorships in multiple companies, maintain a compliance calendar for each. Non-compliance in one can affect you across all.
• CCFS-2026 window: Runs until 15 July 2026. Clear pending filings at just 10% of normal additional fees. Use it now.
• Annual compliance audit: Engage a Practising Company Secretary to review all director obligations and filings across every company where you hold a seat.

Section 164(2) vs. Section 164(1): Key Differences

The 2026 Context: Why This Matters Now

The CCFS-2026 scheme (MCA General Circular No. 01/2026 dated 24 February 2026) runs from 15 April to 15 July 2026. It was introduced because a large number of companies are still carrying backlogs from COVID disruption years and the MCA V3 transition in 2022-23. Companies that missed filings during those three years and have continued to miss them are now sitting at exactly the three-year threshold that triggers Section 164(2).

CS Sapna Malpani observes: “Every time I review a client’s compliance profile, I find at least one related company — usually a holding vehicle, a family investment company, or an old subsidiary — that has silently stopped filing. The director of that sleepy vehicle is often also the MD of the main operating company. Section 164(2) does not care about intent. If the filing clock has run three years, the disqualification is automatic.”

Sources and References

1. Gold: Section 164 & 167, Companies Act 2013 — India Code
2. Gold: MCA — Published List of Disqualified Directors
3. Gold: MCA General Circular No. 01/2026 — CCFS-2026
4. Silver: TaxGuru — Director Disqualification Section 164(2)
5. Silver: iPleaders — Section 164(2) Remedies Analysis
6. Silver: RNA CS — Disqualification Remedy Process
7. Silver: Fintrac Advisors — DIN Deactivation 2026 Perspective
8. Bronze: MUDS — Operation Clean 2017: 3.09 Lakh Directors Disqualified

Frequently Asked Questions

What is director disqualification under Section 164(2) of the Companies Act?

Section 164(2)(a) disqualifies a director for five years if the company failed to file AOC-4 or MGT-7 for any continuous three financial years. The disqualification is automatic — no court order required. Once triggered, the director cannot be appointed anywhere, and their DIN is deactivated by the MCA.

How many directors were disqualified under Section 164(2) in India?

In September 2017, the MCA published lists containing 3,09,614 directors associated with companies that had not filed for three continuous years. Simultaneously, 2.4 lakh companies were struck off — India’s largest corporate governance enforcement action. The risk of a similar wave exists today for companies that missed FY 2022-23, 2023-24, and 2024-25 filings.

Can a disqualified director continue to manage their other companies?

No. Section 167 makes the vacancy effective in every company where the director holds a seat. Continuing to act is a criminal offence: imprisonment up to one year or fine ₹1–5 lakhs under Section 167(2).

How can a disqualified director remove their Section 164(2) disqualification?

Three pathways: (1) NCLT Restoration under Section 252 — revive the struck-off company within three years, clear filings, apply via Form DIR-10. (2) High Court Writ under Article 226 — courts have helped where disqualification was applied without notice or director had no involvement. (3) Automatic de-flagging after 5 years — file Form DIR-10 with Form CG-1 to the Central Government.

Does CCFS-2026 help avoid director disqualification under Section 164(2)?

Yes — indirectly. CCFS-2026 runs from April 15 to July 15, 2026, allowing companies to file all pending returns at just 10% of normal additional fees. Clearing even one year of backlog breaks the three-year consecutive chain and prevents disqualification from triggering. If disqualification has already occurred, CCFS-2026 does not reverse it.