Law that bars persons charged with criminal offence from serving as Directors of companies unconstitutional- Supreme Court
The Supreme Court has declared as unconstitutional a provision in the new Company’s Act which bars a person charged with a criminal offence from becoming a Director of a proposed company about to be incorporated.
In a decision today, the apex court held that the first parts of Sections 13 (2) (h)(i) and (ii) of the Company Act , 2019 (Act 992) which dealt with a person being charged with a criminal offence were inconsistent with Article 19(2)(c) of the 1992 Constitution which protects the right of a person accused of a crime to be presumed innocent until proven guilty.
In view of the fact that the two provisions in Act 992 violated Article 19(2)(c), the Supreme Court declared it as null, void and of no legal effect and struck it out.
Section 13 (2) (h) (i) of Act 992 respectively stipulates that an application for incorporation of a company of shall include a statutory declaration by each proposed director of the proposed company indicating that within the preceding five years, that proposed director has not been charged with or convicted of a criminal offence involving fraud or dishonesty; and charged with or convicted of a criminal offence relating to the promotion, incorporation or management of a company.