Section 8 of The Small Industries Development Bank of India Act, 1989
1[8. Disqualifications of directors.-- A person shall not be eligible for being elected as a director under clause (f) of sub-section (1) of section 6, if he--
- (a)has been found to be of unsound mind by a court of competent jurisdiction and the finding is in force;
- (b)is an undischarged insolvent;
- (c)has applied to be adjudicated as an insolvent and his application is pending;
- (d)has been convicted by a court of competent jurisdiction, of any offence involving moral turpitude and sentenced in respect thereof to imprisonment for not less than six months and a period of five years has not elapsed from the date of expiry of the sentence; or
- (e)has not paid any call in respect of shares of the Small Industries Bank held by him, whether alone or jointly with others, and six months have elapsed from the last day fixed for the payment of the call.]
Summary
- This section lists the reasons a person would be blocked from being elected as a director under Section 6 of the Act.
- A person is disqualified if a competent court has declared them to be of unsound mind and that order is still active.
- Anyone who is an undischarged bankrupt or has a pending application to be declared bankrupt is not eligible.
- A person convicted of a crime involving moral turpitude with a prison sentence of at least six months is disqualified until five years have passed since their sentence ended.
- A shareholder who owes money on a call for their bank shares and is six months late on that payment cannot be elected.
Practical examples
FAQ
1. Does this disqualification apply to all directors on the Board?
No, it specifically applies to directors elected by the ordinary shareholders under Section 6, not the ones nominated by the government or major institutions.
2. What happens if someone was convicted of a crime but only served three months in prison?
They would not be disqualified under this specific rule, because the ban only triggers if the prison sentence is for not less than six months.
3. Can a person run for director if they just submitted paperwork to declare bankruptcy?
No, having a pending application to be adjudicated as an insolvent is enough to disqualify a person.
Test yourself
Q1.Under Section 8 of The Small Industries Development Bank of India Act, 1989, the listed disqualifications apply to directors elected under Section 6. Based on the cross-reference to Section 6, which type of director is directly bound by these specific Section 8 rules?
Q2.Under Section 8 of The Small Industries Development Bank of India Act, 1989, how long must a person wait after serving a 10-month prison sentence for a crime involving moral turpitude before they can be eligible for election?
Q3.Under Section 8 of The Small Industries Development Bank of India Act, 1989, what is the exact financial delay regarding bank shares that will disqualify a candidate?
Q4.Under Section 8 of The Small Industries Development Bank of India Act, 1989, which bankruptcy status will disqualify a person from being elected as a director?