Section 184 Disclosure of interest by director – Companies Act 2013

Amended and updated notes on section 184 of Companies Act 2013. Detail discussion on provisions and rules related to disclosure of interest by director.

Amended and updated notes on section 184 of Companies Act 2013. Detail discussion on provisions and rules related to disclosure of interest by director.

Chapter XII (Sections 173195) of the Companies Act, 2013 (CA 2013) deals with the provisions related to meetings of board and its powers. Section 184 of CA 2013 provides for disclosure of interest by director.

Recently, we have discussed in detail section 183 (Power of Board and other persons to make contributions to national defence fund, etc.) of CA 2013. Today, we learn the provisions of section 184 of Companies Act 2013.

The provisions of section 184 are effective from 1-April-2014. You may refer Notification No. S.O. 902(E) issued dated 27-03-2014. In this article, you will learn detail of the provisions of section 184 of the Companies Act 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014.

Name of ActThe Companies Act 2013
Enacted byParliament of India
Administered byMinistry of Corporate Affairs (MCA)
Number of Chapters29
Number of Sections484 (470-43+57)
Number of Schedules7
You are reading:
Chapter No.XII
Chapter NameMeetings of Board and its Powers
Section No.184
Section NameDisclosure of interest by director
Monthly Updated EditionCompany Law PDF

Section 184 of Companies Act 2013: Disclosure of interest by director

Section 184 shall come into force on 1st April, 2014 vide Notification No. S.O. 902(E) issued dated 27.03.2014.

(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.

(2) 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—

  • (a) with a body corporate in which such director or such director in association with any other director, holds more than two per cent. shareholding of that body corporate, or is a promoter, manager, Chief Executive Officer of that body corporate; or
  • (b) with a firm or other entity in which, such director is a partner, owner or member, as the case may be,
  • 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:

Provided that where 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.

(3) A contract or arrangement entered into by the company without disclosure under sub-section (2) or with participation by a director who is concerned or interested in any way, directly or indirectly, in the contract or arrangement, shall be voidable at the option of the company.

(4) 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 may extend to one lakh rupees, or with both.

(5) Nothing in this section—

  • (a) shall be taken to prejudice the operation of any rule of law restricting a director of a company from having any concern or interest in any contract or arrangement with the company;
  • (b) shall apply to any contract or arrangement entered into or to be entered into between two companies or between one or more companies and one or more bodies corporate where any of the directors of the one company or body corporate or two or more of them together holds or hold not more than two per cent. of the paid-up share capital in the other company or the body corporate.

Exception/ Modification/ Adaptation:

1) In case of Private company, sub-section (2) of section 184 shall apply with the exception that the interested director may participate in such meeting after disclosure of his interest. – Notification No. G.S.R. 464(E) dated 5th June, 2015.

2) In case of Section 8 (Non-profit) Companies, Sub-section (2) of section 184 shall apply only if the transaction with reference to section 188 on the basis of terms and conditions of the contract or arrangement exceeds one lakh rupees. – Notification No. G.S.R. 466(E) dated 5th June, 2015.

3) In case of a Specified IFSC public company, sub-section (2) of section 184 shall apply with the exception that interested director may participate in such meeting provided the disclosure of his interest is made by the concerned director either prior or at the meeting. –Notification No. G.S.R. 08(E) dated 4th January, 2017


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