{"id":4341,"date":"2020-03-02T06:23:31","date_gmt":"2020-03-02T06:23:31","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=4341"},"modified":"2024-07-10T15:02:01","modified_gmt":"2024-07-10T09:32:01","slug":"disclosure-of-directors-interest","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/disclosure-of-directors-interest\/","title":{"rendered":"Disclosure of Director\u2019s Interest: Section 184 Companies Act, 2013"},"content":{"rendered":"\n<p class=\"has-drop-cap\">The Directors never compromise on the fiduciary position, which they occupy concerning a Company. Hence, the Directors exclude themselves from making a decision in such contracts and arrangements where personal interest is involved. <strong><em>Section 184 of the Companies Act, 2013, the main objective is to bring to the notice of the Directors the conflict of interest and duty of any of their employees on the Board<\/em><\/strong>. The main purpose of <strong><em>Section 184 of the <\/em><\/strong><em><strong>Companies Act, 2013<\/strong><\/em><sup><a href=\"https:\/\/www.mca.gov.in\/content\/mca\/global\/en\/acts-rules\/ebooks.html\"><strong>[1]<\/strong><\/a><\/sup><strong> <em>,<\/em><\/strong> is that Director should make disclosure of any interest which he\/she has in any other body corporate, company or firm. This article is a compilation and breakdown of the relevant provisions relating to the Disclosure of Directors Interest. <\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/disclosure-of-directors-interest\/#What_are_the_Different_Types_of_Disclosure_of_Directors_Interest\" >What\nare the Different Types of Disclosure of Directors Interest?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/disclosure-of-directors-interest\/#What_is_the_Time_Limit_Prescribed_for_the_Disclosure_of_Directors_Interest\" >What\nis the Time Limit Prescribed for the Disclosure of Directors Interest?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/disclosure-of-directors-interest\/#What_is_the_Manner_Prescribed_for_the_Disclosure_of_Directors_Interest\" >What\nis the Manner Prescribed for the Disclosure of Directors Interest?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/disclosure-of-directors-interest\/#What_is_the_format_in_which_the_details_of_the_Disclosure_of_Directors_Interest_should_be_maintained\" >What\nis the format in which the details of the Disclosure of Directors Interest\nshould be maintained?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/disclosure-of-directors-interest\/#What_is_the_penalty_if_Disclosure_of_Directors_Interest_is_not_done\" >What\nis the penalty if Disclosure of Directors Interest is not done?<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_Different_Types_of_Disclosure_of_Directors_Interest\"><\/span>What\nare the Different Types of Disclosure of Directors Interest?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>The different types of Disclosure of Directors Interest are as follows:<\/em><\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" width=\"580\" height=\"352\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/03\/image.png\" alt=\"Types of Disclosure of Directors Interest\" class=\"wp-image-4342\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/03\/image.png 580w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/03\/image-300x182.png 300w\" sizes=\"(max-width: 580px) 100vw, 580px\" \/><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\">General\nDisclosure by Directors<\/h3>\n\n\n\n<p><strong><em>Every\nDirector of Company should disclose all of his concerns and interest in any\ncompany or companies or firms and all other associations which include\nshareholding<\/em><\/strong>. The\ndisclosures which are made by the Director should be kept at the registered\noffice of the Company. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Special\nDisclosure by Directors <\/h3>\n\n\n\n<p><strong><em>This\ndisclosure is specified under Section 184(2) of the Companies Act, 2013. This type\nof disclosures is transaction-specific Disclosures. A Director who is\ninterested or concerned in a contract or arrangement, to be entered into:<\/em><\/strong><\/p>\n\n\n\n<ul>\n<li>With a body\ncorporate in which the Director holds more than 2% of the shareholding of the\nCompany, or is a promoter, manager or Chief Executive Officer (CEO) of that body\ncorporate.<\/li>\n\n\n\n<li>With a firm or\nany other entity in which the Director is the partner, owner or a member. &nbsp;&nbsp;<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_Time_Limit_Prescribed_for_the_Disclosure_of_Directors_Interest\"><\/span>What\nis the Time Limit Prescribed for the Disclosure of Directors Interest?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><em>The time limit in which the Disclosure of Directors Interest should be done:<\/em><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">In\nthe case of General Disclosure<\/h3>\n\n\n\n<p><strong><em>The\nGeneral Disclosure of Directors Interest should be made:<\/em><\/strong><\/p>\n\n\n\n<ul>\n<li>At the first meeting\nof Board when the Director participates as a Director.<\/li>\n\n\n\n<li>At every\nfinancial year, in the first Board meeting which is held.<\/li>\n\n\n\n<li>At the first\nBoard Meeting after any alteration in any previous disclosure made by the\nDirector.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">In\nthe case of Special Disclosure<\/h3>\n\n\n\n<p><strong><em>The\nSpecial Disclosure of Directors Interest should be made:<\/em><\/strong><\/p>\n\n\n\n<ul>\n<li>At the Board Meeting, where the contract or arrangement in which the Director is interested, will be discussed.<\/li>\n\n\n\n<li>In case if the Director is interested after the contract or arrangement is entered, then the Director has to submit the disclosure at the first Board meeting, which will be held after the Director becomes interested.<\/li>\n<\/ul>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/disqualification-of-directors\/\">An Insight into Section 164, Companies Act: Disqualification of Directors<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_Manner_Prescribed_for_the_Disclosure_of_Directors_Interest\"><\/span>What\nis the Manner Prescribed for the Disclosure of Directors Interest?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p> The manner of the Disclosure of Directors Interest has been specified under <strong><em>Rule 9(1) of companies (Meetings of Board and its Power) Rules, 2014<\/em><\/strong>. <strong><em>The manner of the disclosure of Directors Interest is prescribed is the Form MBP-1<\/em><\/strong>, in which the Disclosures will be written in the way as asked. The Sample of MBP-1 Form is as follows: <\/p>\n\n\n<a href=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/03\/FORM_MBP-1.pdf\" class=\"pdfemb-viewer\" style=\"\" data-width=\"max\" data-height=\"max\"  data-toolbar=\"bottom\" data-toolbar-fixed=\"off\">FORM_MBP-1<br\/><\/a>\n<p class=\"wp-block-pdfemb-pdf-embedder-viewer\"><\/p>\n\n\n\n<p>The\nlink for the above Form: <a href=\"https:\/\/www.webtel.in\/Image\/FORM_MBP-1.pdf\">https:\/\/www.webtel.in\/Image\/FORM_MBP-1.pdf<\/a><\/p>\n\n\n\n<p>The\nDisclosures filed in the Form should be kept at the registered Office of the\nCompany and should be preserved for at least 8 years from the end of the\nfinancial year. The disclosures are to be kept in custody of Company Secretary\nof Company or any other person authorized by Board for this purpose.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_format_in_which_the_details_of_the_Disclosure_of_Directors_Interest_should_be_maintained\"><\/span>What\nis the format in which the details of the Disclosure of Directors Interest\nshould be maintained?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>Section\n189 of the Companies Act, 2013 is related to &#8220;Register of contracts or\narrangements in which the Directors are Interested<\/em><\/strong>\u201d. In this Register, the Company is required to\nmaintain the Register and mentioned the details as prescribed. <strong><em>The\nparticulars which are necessary to be mentioned in the Register are as follows:<\/em><\/strong><\/p>\n\n\n\n<ul>\n<li>Date of the contract<\/li>\n\n\n\n<li>Name of the party with which agreement is entered<\/li>\n\n\n\n<li>Name of interested Director<\/li>\n\n\n\n<li>Relation with Director\/ Company <\/li>\n\n\n\n<li>&nbsp;Nature of\nInterest<\/li>\n\n\n\n<li>Important terms and Condition<\/li>\n\n\n\n<li>Date of Approval at the meeting of Board<\/li>\n\n\n\n<li>Amount of Contract<\/li>\n\n\n\n<li>Signatures and Remarks<\/li>\n\n\n\n<li>The date on which the interest arose<\/li>\n\n\n\n<li>Name of Company<\/li>\n\n\n\n<li>Details of voting on such Resolution<\/li>\n\n\n\n<li>Date of next meeting where the Register will be\nplaced for signature<\/li>\n\n\n\n<li>The date on which the shareholders approved<\/li>\n<\/ul>\n\n\n\n<p>The\nRegister also requires mentioning every detail written in the MBP-1 Form which\nwas filed with the Registrar for Disclosure of Directors Interest.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_penalty_if_Disclosure_of_Directors_Interest_is_not_done\"><\/span>What\nis the penalty if Disclosure of Directors Interest is not done?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Director\nif contravenes the procedure prescribed for the disclosure then the Director\nshall be liable to: <\/p>\n\n\n\n<ul>\n<li>Imprisonment which can be extended to 1 year, or;<\/li>\n\n\n\n<li>A fine which can be extended up to 1 lakh rupees, or\nwith both.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Conclusion<\/h3>\n\n\n\n<p>Director of Company is precluded from entering into engagements in which personal interest is conflicting with the interest of those with whom he is in a fiduciary duty to protect. Section 184 does not prohibit these types of engagements, but it requires the Director to make Disclosure of such Interest. If the Disclosure of Directors Interest is not done then, a penalty will be imposed on the Director who does this. Looking at the pitfalls, consult a firm which will help you with the process. We at <a href=\"https:\/\/corpbiz.io\/\">Corpbiz<\/a>, have experts who will guide you with the filing process of the Disclosure of Directors Interest Forms. Our experts will work ideally to ensure successful completion of the process. &nbsp;  <\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/procedure-for-appointment-and-resignation-of-the-directors\/\">Companies Act 2013 Provides a Procedure for Appointment and Resignation of the Directors <\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Directors never compromise on the fiduciary position, which they occupy concerning a Company. Hence, the Directors exclude themselves from making a decision in such contracts and arrangements where personal interest is involved. Section 184 of the Companies Act, 2013, the main objective is to bring to the notice of the Directors the conflict of [&hellip;]<\/p>\n","protected":false},"author":16,"featured_media":4350,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[369],"tags":[370],"acf":{"service_id":"215"},"authorName":"Sakshi Sharda","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/02\/sakshi-sharda.jpg","authorDescription":"Sakshi Sharda has done BBALLB(HONS) and holds a strong knowledge on the matters pertaining to finance and law. From the past one year she is working as a legal advisor and in her leisure time she works on improvising her knowledge. Sakshi is spreading her knowledge by writing for Corpbiz.","postViews":11154,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/4341"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/16"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=4341"}],"version-history":[{"count":26,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/4341\/revisions"}],"predecessor-version":[{"id":65296,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/4341\/revisions\/65296"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/4350"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=4341"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=4341"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=4341"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}