Disclosure of interest by directors and filing of form mgt.1


Student of ICAI

Dear All

 

Sub.: Disclosure Of Interest By Directors And Filing Of Form MGT.14 With Roc

As you are aware the New Companies Act, 2013, have been brought in statute books replacing old Companies Act, 1956 (hereinafter referred as CA1956). The Companies Act, 2013 includes comprehensive provisions governing all listed and unlisted companies in the country. The Companies Act, 2013 was partially made effective w.e.f. 12th September, 2013, implementing 98 Sections and repealing the corresponding sections under the Companies Act, 1956. The amended companies Act 2013 has introduced Section 184 in place of Old section 299, under which both Private and Public companies have  to make certain compliances in the above matter ,as explained below.

Section 184(Old Section 299 of the Companies Act, 1956) of the Companies Act 2013 read with Rule 9 of the Companies (Meetings of Board and its Powers) Rules, 2014 prescribes as under:

i)  184.    (1) Every director shall at the first meeting of the Board in which he participates as a director and thereafter 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, disclose his concern or interest in any company or companies or bodies corporate, firms, or other association of individuals which shall include the shareholding, in such manner as may be prescribed.

ii)         Section 179(3) read with Rule 8 of the Companies (Meetings of Board and its Powers) Rules, 2014 state that the Board of Director of the Company have to take note of the Disclosure of Director’s Interest & shareholding.

iii)        Section 117(3)(g) of  the Companies Act, 2013, resolution passed in pursuance of sub-section (3) of Section 179  has to be filed with ROC in Form MGT.14 within 30 days of passing

iv)   Rule 9.    Disclosures by a director of his interest.- 

(1)        Every director shall disclose his concern or interest in any company or companies or bodies corporate (including shareholding interest), firms or other association of individuals, by giving a notice in writing in Form MBP 1.

(2)        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.

(3)        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.

 

PENALTY

1)         For non Compliance of Section 184 : If a director of the company contravenes the provisions of sub-section (1) or subsection (2), such director shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than fifty thousand rupees but which may extend to one lakh rupees, or with both.

2)         For non Compliance of Section 117 : If a company fails to file the resolution or the agreement under sub-section (1) before the expiry of the period specified under section 403 with additional fee, the company shall be punishable with fine which shall not be less than five lakh rupees but which may extend to twenty-five lakh rupees and every officer of the company who is in default, including liquidator of the company, if any, shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.

The Compliance under Section 184 is explained below:

Accordingly, if you are a director of reporting company and if you are Director or shareholder of other Company (i.e. if Mr. X is Director of AB Private Limited, BC Private Limited & CD Private Limited than Mr. X Has to Disclose his interest to AB Private Limited in Form MBP.1 of his Directorship or Shareholding in BC & CD Private Limited and in Case of BC Private Limited his Directorship or Shareholding of AC & CD Private Limited)  you have to Disclose your interest to the reporting Company in Form MBP.1 as on last dated of Financial Year (i.e. 31.03.2014) and the company shall file the Board Resolution along with Form MBP.1 to the ROC in Form MGT.14  

May we request you to kindly obtain Form MBP.1 from all the Directors to whom the above provision is applicable and you may call on us for facilitating ONLINE submission of the same to ROC.

Further we are enclosing herewith following for your perusal:

1)         Draft of Form MBP.1

2)         Draft of Board Resolution taking note on Form MBP.1

 

Further various rules, notifications; circulars are also available on the Ministry of Corporate Affairs web site. You can directly go to this link  http://www.mca.gov.in/Ministry/ .


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article assisstant

thank you sir, it was of great help


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If Director does not give disclosure of interest in first board meeting and disclose it in second board meeting what will be the consequences?

 
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