Section 184 of the Companies Act, 2013
Section 184 of the Companies Act, 2013 deals with the Disclosure of Interest by Directors.
🔹 Section 184 – Disclosure of Interest by Director
🟡 Key Provisions:
General Disclosure (Section 184(1)):
Every director shall, at:
The first Board meeting in which they participate as a director, and
The first meeting of the Board in every financial year, and
Whenever there is any change in their interest,
Disclose their concern or interest in any company, body corporate, firm, or other association of individuals, including shareholding.
Disclosure of Interest in a Particular Transaction (Section 184(2)):
If a director is directly or indirectly interested in any contract or arrangement with:
A body corporate in which the director (alone or with others) holds more than 2% shareholding, or
A firm in which the director is a partner, owner, or member,
Then, he shall disclose such interest at the Board meeting where the contract is discussed.
Such director shall not participate in the meeting on that matter.
Penalty for Non-Disclosure (Section 184(4)):
If a director fails to disclose interest as required:
He shall be liable to a penalty of ₹1,00,000.
Exception (Section 184(5)):
This section does not apply to:
Private companies, where the director is the sole member and director.
Any contract between two companies where one is a wholly-owned subsidiary of the other, and the director is common.
✅ Objective:
To ensure transparency, prevent conflict of interest, and promote good governance by requiring directors to disclose their interests in other entities.
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