Disclosure of Interest by Directors u/s 184 of Cos Act,2013

Section 184 of the Companies Act,2013 read with Rule 9 of the Companies (Meetings of Board and its Powers) Rules,2014 deals with Disclosure of Interest by Directors.

Disclosure of Interest of by director in any firm or body Corporate:

Every director shall disclose his concern or interest in any company or companies or bodies corporate, firms, or other association of individuals which shall include the shareholding, by giving notice  in Form MBP -1 in such manner as prescribed. under Rule 9 of Companies (MBP)Rules,2014-

- at the first meeting of the Board in which he participates as a director and

- at the first meeting of the Board in every financial year or whenever there is any change in   the disclosures already made, then at the first Board meeting held after such change.

Disclosure of Interest of by director in any Contract or Arrangement:

Every director of a company who is in any way, whether directly or indirectly, concerned or interested in a contract or arrangement or proposed contract or arrangement entered into or to be entered into, shall disclose the nature of his concern or interest at the meeting of the Board in which the contract or arrangement is discussed and shall not participate in such meeting.

If any director who is not so concerned or interested at the time of entering into such contract or arrangement, he shall, if he becomes concerned or interested after the contract or arrangement is entered into, disclose his concern or interest forthwith when he becomes concerned or interested or at the first meeting of the Board held after he becomes so concerned or interested.

It shall be the duty of the director giving notice of interest to cause it to be disclosed at the meeting held immediately after the date of the notice.

All notices shall be kept at the registered office and such notices shall be preserved for a period of eight years from the end of the financial year to which it relates and shall be kept in the custody of the company secretary of the company or any other person authorized by the Board for the purpose

Voidable Contract or Arrangement:

A contract or arrangement shall be voidable at the option of the company.-if

- Entered without disclosure of interest by director or

- with participation by a director who is concerned or interested in any way, directly or indirectly, in the contract or arrangement,

Exemptions:

This provision shall not –

- Prohibit  a director of a company from having any concern or interest in any contract or arrangement with the company;

- Apply to any contract or arrangement entered into or to be entered into between two companies where any of the directors of the one company or two or more of them together holds or hold not more than 2%of the paid-up share capital in the other company

Penalty:

CS M.Kurthalanathan

Practising Company Secretary

csmknathan.blogspot.in

mknathanacs@gmail.com