{"id":23736,"date":"2019-08-31T19:00:56","date_gmt":"2019-08-31T13:30:56","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=23736"},"modified":"2022-09-05T18:47:03","modified_gmt":"2022-09-05T13:17:03","slug":"disclosure-of-interest-by-director-section-184-of-the-companies-act","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/disclosure-of-interest-by-director-section-184-of-the-companies-act\/","title":{"rendered":"Disclosure of Interest by Director: Section 184 of the Companies Act"},"content":{"rendered":"<p class=\"has-drop-cap\">Section 184 of\nthe Companies Act, deals with the Disclosure of Interest by Directors. The main\npurpose of this section is to bring to the notice that the Director is having\ninterest in other entity. If the Company entering into any contract or arrangement\nand any of the directors is interested in such contract or arrangement then it is\nrequired to submit the disclosure from the director. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\">How many types of Disclosures are there?<\/h2>\n\n\n\n<ul><li><strong>General Disclosure<\/strong><\/li><\/ul>\n\n\n\n<p>As per Section\n184(1) of the Companies Act, 2013 every Director of the Company is required to\ndisclose his concern or interest having in any body Corporate, firms or\nassociation of individual which shall include the shareholding in the prescribed\nformat prescribed by the Act at the end of every Financial year.<\/p>\n\n\n\n<ul><li><strong>Specific Disclosure<\/strong><\/li><\/ul>\n\n\n\n<p>As per <strong>section 184(2) of the Companies Act, 2013<\/strong><sup><a href=\"https:\/\/www.mca.gov.in\/Ministry\/pdf\/CompaniesAct2013.pdf\"><strong>[1]<\/strong><\/a><\/sup> every director of a Company who is any way directly or indirectly concerned or interested in a contract or arrangement or in proposed contract or arrangement entered with any body corporate or with firm or with any other entity, then such director is required to give the disclosure. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\">General Disclosure<\/h2><br>\n\n\n\n<h3 class=\"wp-block-heading\">Is there any\nspecific format for submission of Disclosure of Interest by Director?<\/h3>\n\n\n\n<p>Yes, as per the\nCompanies Act, 2013 there is form MBP-1 which need to be submitted by the Director\nfor disclosing his interest.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Timeline for such disclosure needs to be\ngiven<\/h3>\n\n\n\n<ul><li>First Meeting of\nthe Board when he participates as a Director and<\/li><li>First meeting of\nthe Board in every Financial year or<\/li><li>First Meeting of\nthe Board held after there is any change made in any previous disclosure\nalready made by the Director.<\/li><\/ul>\n\n\n\n<p><strong>Notes:<\/strong><\/p>\n\n\n\n<ul><li>All such\nDisclosure is required to keep at the registered office of the Company.<\/li><li>It is required to\nbe preserved for 8 years from the end of the financial year to which it\nrelates.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Specific Disclosure<\/h2><br>\n\n\n\n<h3 class=\"wp-block-heading\">When the specific Disclosure is required\nto be submitted?<\/h3>\n\n\n\n<p>As per section\n184(2) of the Companies Act, 2013, a director of the Company who is any way\ndirectly or indirectly concerned or interested in a contract or arrangement\nentered into or to be entered into:<\/p>\n\n\n\n<ol><li>With the body\ncorporate in which such Director or such Director in association with any other\nDirector holds 2% shareholding of that body corporate or is a promoter,\nmanager, Chief Executive Officer of that Body corporate or<\/li><li>With a firm or\nother entity in which such Director is a partner, owner or member as the case\nmay be.<\/li><\/ol>\n\n\n\n<p>Then it shall be the duty of Director to disclose the notice of his interest.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Timeline for such disclosure to be given<\/h3>\n\n\n\n<p>Disclosure is\nrequired to be given by the Director under the following circumstances;<\/p>\n\n\n\n<ul><li>It is to be made\nby the Director at the meeting of the Board in which the contract or arrangement\nis discussed and entered or to enter into which the director has an interest.<\/li><li>In case the\nDirector becomes interested or concern after the contract or arrangement is\nentered into, such disclosure is required to be submitted at the first meeting of\nthe Board held after he becomes interested or concerned<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Is there any format where the details are\nrequired to be maintained?<\/h2>\n\n\n\n<p>Yes, as per\nSection 189 of the Companies Act, 2013 relates to &ldquo;Register of Contract or\narrangement in which Directors are Interested&rdquo;. Every Company is required to\nmaintain the register separately and mentioned the details accordingly as\nprescribed in the Act.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What are the particulars required to be\nmentioned in the Register of Contract?<\/h2>\n\n\n\n<p>The particulars are required to mention under <strong><a href=\"https:\/\/enterslice.com\/employment-contract\">Register of Contract<\/a><\/strong> in which the Director is concerned or interested are as under:<\/p>\n\n\n\n<ul><li>Date of\nContract\/arrangement<\/li><li>Name of the party\nwith which contract is entered into <\/li><li>Name of the\ninterested Director<\/li><li>Relation with\nDirector\/Company \/Nature of concern or interest.<\/li><li>Principal Terms\nand Conditions<\/li><li>Whether the\ntransaction is at arm&rsquo;s length <a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Basis&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;In finance, the &amp;quot;basis&amp;quot; is a term with several applications, including representing the difference between the spot price and the future contract price of an asset, which is vital in investment(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/basis\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>basis<\/a> <\/li><li>Date of approval\nof Board Meeting <\/li><li>Details of voting\non such resolution<\/li><li>Date of the next\nmeeting at which register was placed for the signature<\/li><li>Reference of the\nspecific item (a) to (g) u\/s 188<\/li><li>Amount of contract\nor arrangement<\/li><li>Signature\/\nRemarks if any<\/li><\/ul>\n\n\n\n<p><b>Also, Read<\/b> <mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/enterslice.com\/learning\/e-contracts-electronic-contracts\/\">All You Must Know About E Contracts<\/a><\/mark>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What if the Company has entered into the\nContract or arrangement without the Disclosure of Interest?<\/h2>\n\n\n\n<p>Contract or arrangement\nentered into by the Company without receiving the disclosure of interest by the\nDirector who is concerned or interested directly or indirectly in the contract\nor arrangement, then it shall be voidable at the option of the Company.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Format of MBP-1<\/h2>\n\n\n\n<p class=\"has-background has-text-align-center has-cyan-bluish-gray-background-color\"><strong>FORM MBP &ndash; 1<\/strong><\/p>\n\n\n\n<p class=\"has-background has-text-align-center has-very-light-gray-background-color\"><strong>Notice of interest by director<\/strong><\/p>\n\n\n\n<p class=\"has-text-align-center\"><strong><em>[Pursuant to section 184 (1) and rule 9(1)]<\/em><\/strong><\/p>\n\n\n\n<p>To<\/p>\n\n\n\n<p>The Board of Directors<\/p>\n\n\n\n<p><strong>XYZ PRIVATE\nLIMITED<\/strong><\/p>\n\n\n\n<p>Address:<\/p>\n\n\n\n<p>Dear Sir(s),<\/p>\n\n\n\n<p>I, <strong>__________________<\/strong>son\/daughter\/spouse\nof <strong>_________________<\/strong>, resident of <strong>______________________________________________<\/strong>,\nbeing a director in the company hereby give notice of my interest or concern in\nthe following company or companies, bodies corporate, firms or other\nassociation of individuals:-<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td>\n  <strong>Sr. No.<\/strong>\n  <\/td><td>\n  <strong>Names of the\n  \/bodies corporate\/ firms\/ association of individuals<\/strong>\n  <\/td><td>\n  <strong>Nature of\n  interest or concern \/ Change in interest or concern<\/strong>\n  <\/td><td>\n  <strong>Shareholding<\/strong>\n  <\/td><td>\n  <strong>Date on which\n  interest or concern arose \/ changed<\/strong>\n  <\/td><\/tr><tr><td>\n  &nbsp;\n  <\/td><td>\n  &nbsp;\n  <\/td><td>\n  &nbsp;\n  <\/td><td>\n  &nbsp;\n  <\/td><td>\n  &nbsp;\n  <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>Place:Signature:<\/p>\n\n\n\n<p>Date:<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Penalty <\/h2>\n\n\n\n<p>If a Director of the Company contravenes the provision,\nthen the Director shall be punishable with the following:<\/p>\n\n\n\n<ul><li>imprisonment\nfor a period which may extend to 1 year or <\/li><li>with fine&nbsp; which may extend to Rs. 1 Lakh or<\/li><li>with both<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Conclusion<\/h2>\n\n\n\n<p>It is the duty of every Director who is holding the Directorship at the end of the financial year in the Company required to submit in the Board Meeting of the Company the disclosure of interest having in any other entity. Further specific Disclosure will be required by the Director as and when applicable. If the Director contravenes the provision, then the penalty will be levied on the Director as prescribed in the Act.<\/p>\n\n\n\n<p><b>See More:<\/b> <mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/enterslice.com\/learning\/gujarat-hc-override-mca-notification-on-disqualification-of-directors\/\">Gujarat HC Override MCA Notification on Disqualification of Directors Online<\/a><\/mark>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Section 184 of the Companies Act, deals with the Disclosure of Interest by Directors. The main purpose of this section is to bring to the notice that the Director is having interest in other entity. If the Company entering into any contract or arrangement and any of the directors is interested in such contract or [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":23776,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1322],"tags":[2697],"acf":{"service_id":"220"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v14.6.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Section 184 of the Companies Act - Disclosure of Interest by Director<\/title>\n<meta name=\"description\" content=\"Section 184 of the Companies Act, deals with the Disclosure of Interest by Directors to the notice that the Director is having interest in other entity.\" \/>\n<meta name=\"robots\" content=\"index, follow\" \/>\n<meta name=\"googlebot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta name=\"bingbot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/enterslice.com\/learning\/disclosure-of-interest-by-director-section-184-of-the-companies-act\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Section 184 of the Companies Act - Disclosure of Interest by Director\" \/>\n<meta property=\"og:description\" content=\"Section 184 of the Companies Act, deals with the Disclosure of Interest by Directors to the notice that the Director is having interest in other entity.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/enterslice.com\/learning\/disclosure-of-interest-by-director-section-184-of-the-companies-act\/\" \/>\n<meta property=\"og:site_name\" content=\"Enterslice\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/enterslice\" \/>\n<meta property=\"article:author\" content=\"enterslice\" \/>\n<meta property=\"article:published_time\" content=\"2019-08-31T13:30:56+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-09-05T13:17:03+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/08\/Disclosure-of-Interest-by-Director.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"630\" \/>\n<meta name=\"twitter:card\" content=\"summary\" \/>\n<meta name=\"twitter:creator\" content=\"@enterslice\" \/>\n<meta name=\"twitter:site\" content=\"@enterslice\" \/>\n<!-- \/ Yoast SEO plugin. -->","authorName":"Narendra Kumar","authorImageUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/04\/nk-1.jpg","authorDescription":"Experienced Finance and Legal Professional with 12+ Years of Experience in Legal, Finance, Fintech, Blockchain, and Revenue Management.","postViews":846,"readingTime":4,"nextPost":{"id":23777,"slug":"a-complete-analysis-on-cottage-industries-in-india"},"prevPost":{"id":23735,"slug":"how-to-obtain-din-director-identification-number"},"featuredMediaUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/08\/Disclosure-of-Interest-by-Director.jpg","postTerms":"Company Registration","_links":{"self":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts\/23736"}],"collection":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/comments?post=23736"}],"version-history":[{"count":0,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts\/23736\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/media\/23776"}],"wp:attachment":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/media?parent=23736"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/categories?post=23736"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/tags?post=23736"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}