Company Law

Disclosure of Interest by Director [S. 184]

1.

Disclosure of interest by a Director [S. 184(1)]
  • Every Director shall disclose his concern or interest in any Co or bodies corporate, firms, or other association of individuals including the shareholding in Form MBP 1:
    • At 1st BM in which he participates as a Director;
    • At 1st BM in every FY
    • In case of any change in the disclosures already made ➔ at the 1st BM held after such change

2.

Interest in a contract/arrangement [S. 184(2)]
  • Every director of a Co who is in any way, whether directly or indirectly, concerned or interested in a contract/arrangement or proposed contract or arrangement entered into or to be entered into–

with a body corporate in which ↓

with a firm or other entity in which ↓
  • such director in association with any other director, holds > 2% shareholding of that body corporate, or
  • is a promoter, manager, CEO of that body corporate

such director is a partner, owner or member, as the case may be
  • shall disclose the nature of his concern or interest at the BM in which the contract or arrangement is discussed, and
  • shall not participate in such meeting

If a director is not concerned or interested in a contract/arrangement at the time of entering, but becomes concerned or interested subsequently, he shall

  • disclose his concern or interest forthwith when he becomes concerned or interested, or
  • at the 1st BM held after he becomes so concerned or interested

3.

Contract in contravention of S. 184(2) [S. 184(3)]
  • If any contract/arrangement in entered into without disclosure of interest u/s. 184(2) or with participation by an Interested Director➔ Such contract/arrangement voidable at the option of the Co.

4.

Non-applicability of S. 184[S. 184(5)]
  • S. 184 not applicable to any contract/arrangement entered into or to be entered into between 2 Cos/between one or more Cos and one or more bodies corporate ➔ if all of the directors of a Co or body corporate together hold not > 2% of the paid-up share capitalin the other Co or the body corporate