1st things 1st – Disclosure of Director’s Interest

11 April 2014 • CS Samrish Bhanja

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11 April 2014 • CS Samrish Bhanja

We updated earlier about the correction in the letter head of the Company in order to comply with the requirement of the Companies Act, 2013. Another thing the company has to be careful about is Disclosure of Director’s interest.

Disclosure of Director’s Interest….

  • Every director shall disclose his concern or interest in any company or companies or bodies corporate (including shareholding interest), firms or other association of individuals, by giving a notice in writing in the form prescribed. (Sec 184).
  • When to disclose: Such disclosure shall be made at the 1st board meeting in which the director participates and thereafter at the 1st meeting of every financial year or whenever there is a change. All notices shall be kept at the registered office and shall be preserved for a period of eight years.
  • No option but to comply: Earlier, most of the Companies used to ignore the provisions relating to Disclosure of Director’s Interest. Now, the Companies will have no option but to comply with this provision, reason being…..

Reason 1: Contravention by a Director may lead to imprisonment extending to 1 year or a fine not less than Rs. 50,000 and extending to Rs. 1,00,000. (This contravention can be compounded only with the approval of the Special Court.).

Reason 2:  The Company shall file copy of this Resolution (Disclosure of Interest) with the RoC within 30 days of passing it..

Reason 3: If there is delay in filing the Resolution beyond 270 days, then the Company shall be punishable with fine of minimum of Rs. 5 lacs but which may extend to Rs. 25 lacs and every Officer in Default shall also be penalised with fine of min Rs. 1 lac to Rs. 5 lacs. (The only reprieve is this is a compoundable offence).

Reason 4: The office of a director shall become vacant in case  he acts in contravention of the provisions of Section 184 relating to entering into contracts or arrangements in which he is directly or indirectly interested (Sec 167)

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5 comments

  1. Dear all,
    Rule 9 of “meeting of board & its power” states that every director shall disclose his concern or intrest in any company by giving notice…my query is director may have personal holdings and interest by way of shares held in their Demat and such interest changes very frequently…how to keep tarck..
    so is the interpretation is that director shall disclose his shareholding interest of only those companies in which he is director..
    Please clarify

    1. Pursuent to Section 184(1)and Rule 9(1)[Disclosures by a Director of his Interest]- Every director shall disclose his concern or interest in any company or companies or bodies corporate (including shareholding interest), firms or other association of individuals, by giving a notice in writing in Form MBP 1. A change in shareholding interest needs to be disclosed if it is more than 2% of the Paid up capital.

  2. Dear Sir

    Can u provide me the draft board resolution for approval of financial statments and Board report under new companies act 2013.
    I shall be very thankful to u.

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