Section 243 Consequence of termination or modification of certain agreements – Companies Act 2013

Amended and updated notes on section 243 of the Companies Act 2013. Detail discussion on provisions and rules related to powers of Tribunal.

Amended and updated notes on section 243 of the Companies Act 2013. Detail discussion on provisions and rules related to consequence of termination or modification of certain agreements.

Chapter XVI (Sections 241246) of the Companies Act, 2013 (CA 2013) deals with the provisions related to prevention of oppression and mismanagement. Section 243 of CA 2013 provides for consequence of termination or modification of certain agreements.

Recently, we have discussed in detail section 242 (Powers of Tribunal) of CA 2013. Today, we learn the provisions of section 243 of the CA 2013.

The provisions of section 243 are effective from 1st June, 2016. You may refer Notification No. S.O. 1934(E) issued dated 01.06.2016. In this article, you will learn detail of the provisions of section 243 of the Companies Act 2013.

Name of ActThe Companies Act 2013
Enacted byParliament of India
Administered byMinistry of Corporate Affairs (MCA)
Number of Chapters29
Number of Sections484 (470-43+57)
Number of Schedules7
You are reading:
Chapter No.XVI
Chapter NamePrevention of Oppression and Mismanagement
Section No.243
Section NameConsequence of termination or modification of certain agreements
Monthly Updated EditionCompany Law PDF

Section 243 of Companies Act 2013: Consequence of termination or modification of certain agreements

Section 243 shall come into force on 1st June, 2016 vide Notification No. S.O. 1934(E) issued dated 01.06.2016.

(1) Where an order made under section 242 terminates, sets aside or modifies an agreement such as is referred to in sub-section (2) of that section, —

  • (a) such order shall not give rise to any claims whatever against the company by any person for damages or for compensation for loss of office or in any other respect either in pursuance of the agreement or otherwise;
  • (b) no managing director or other director or manager whose agreement is so terminated or set aside shall, for a period of five years from the date of the order terminating or setting aside the agreement, without the leave of the Tribunal, be appointed, or act, as the managing director or other director or manager of the company:

Provided that the Tribunal shall not grant leave under this clause unless notice of the intention to apply for leave has been served on the Central Government and that Government has been given a reasonable opportunity of being heard in the matter.

(1A) The person who is not a fit and proper person pursuant to sub-section (4A) of section 242 shall not hold the office of a director or any other office connected with the conduct and management of the affairs of any company for a period of five years from the date of the said decision:

Provided that the Central Government may, with the leave of the Tribunal, permit such person to hold any such office before the expiry of the said period of five years.

(1B) Notwithstanding anything contained in any other provision of this Act, or any other law for the time being in force, or any contract, memorandum or articles, on the removal of a person from the office of a director or any other office connected with the conduct and management of the affairs of the company, that person shall not be entitled to, or be paid, any compensation for the loss or termination of office.

(2) Any person who knowingly acts as a managing director or other director or manager of a company in contravention of clause (b) of sub-section (1) or sub-section (1A), and every other director of the company who is knowingly a party to such contravention, shall be punishable with imprisonment for a term which may extend to six months or with fine which may extend to five lakh rupees, or with both.


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