Priyanka (CS) (585 Points)
09 December 2013Please solve the following queries:
1) Do the New Companies Act draws the provision of interested director for private Companies?
2) If yes then , since most of the Private Companies cover the interested composition of Directors ort Shareholders....how it will be managed?
CS BHAVIN SHETH
(MANAGER-Company Secretary)
(131 Points)
Replied 09 December 2013
Dear Priyanka,
As per my understanding Section 184 of CA'13 which deals with Disclosure of interest by director and same applies to both Public as well as Private company but i think same has not been yet notified and not included in 98 sections which are notified.But still for your information please see the below mentioned Sections 184 of CA'13
184. (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 shall not be less than fifty thousand rupees but 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 where any of the directors of the one company 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
regards
BHAVIN
CAclubindia
