Amended and updated notes on section 192 of Companies Act 2013. Detail discussion on provisions and rules related to restriction on non-cash transactions involving directors.
Chapter XII (Sections 173–195) of the Companies Act, 2013 (CA 2013) deals with the provisions related to meetings of board and its powers. Section 192 of CA 2013 provides for restriction on non-cash transactions involving directors.
Recently, we have discussed in detail section 191 (Payment to director for loss of office, etc., in connection with transfer of undertaking, property or shares) of CA 2013. Today, we learn the provisions of section 192 of Companies Act 2013.
The provisions of section 192 are effective from 12-Sept-2013. You may refer Notification No. S.O. 2754(E) issued dated 12-09-2013. In this article, you will learn detail of the provisions of section 192 of the Companies Act 2013.
| Name of Act | The Companies Act 2013 |
|---|---|
| Enacted by | Parliament of India |
| Administered by | Ministry of Corporate Affairs (MCA) |
| Number of Chapters | 29 |
| Number of Sections | 484 (470-43+57) |
| Number of Schedules | 7 |
| You are reading: | |
| Chapter No. | XII |
| Chapter Name | Meetings of Board and its Powers |
| Section No. | 192 |
| Section Name | Restriction on non-cash transactions involving directors |
| Monthly Updated Edition | Company Law PDF |
Section 192 of Companies Act 2013: Restriction on non-cash transactions involving directors
Section 192 shall come into force on 12th September, 2013 vide Notification No. S.O. 2754(E) dated 12.09.2013.
(1) No company shall enter into an arrangement by which—
- (a) a director of the company or its holding, subsidiary or associate company or a person connected with him acquires or is to acquire assets for consideration other than cash, from the company; or
- (b) the company acquires or is to acquire assets for consideration other than cash, from such director or person so connected, unless prior approval for such arrangement is accorded by a resolution of the company in general meeting and if the director or connected person is a director of its holding company, approval under this sub-section shall also be required to be obtained by passing a resolution in general meeting of the holding company.
(2) The notice for approval of the resolution by the company or holding company in general meeting under sub-section (1) shall include the particulars of the arrangement along with the value of the assets involved in such arrangement duly calculated by a registered valuer.
(3) Any arrangement entered into by a company or its holding company in contravention of the provisions of this section shall be voidable at the instance of the company unless—
- (a) the restitution of any money or other consideration which is the subject matter of the arrangement is no longer possible and the company has been indemnified by any other person for any loss or damage caused to it; or
- (b) any rights are acquired bona fide for value and without notice of the contravention of the provisions of this section by any other person.