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SECTION 189 OF THE COMPANIES ACT 2013

SECTION 189 OF THE COMPANIES ACT 2013

READ WITH SECTION 184, SECTION 188 OF THE COMPANIES ACT 2013 AND RULE 16 OF THE COMPANIES RULES 2014

REGISTER OF CONTRACTS OR ARRANGEMENTS IN WHICH DIRECTORS ARE INTERESTED

APPLICABILITY: 

This section applies to every company including banking & insurance company.

EXPLANATION:

Every company is required to maintain register named MBP-4 under this section. This register is in respect to transactions entered into with the persons and as manner specified under section 184 & 189 of the companies act 2013. The following things are required to be recorded in this register:

  1. Particulars of every company or companies or body corporate, firms or association of individuals in which any director has any concern or interest. This interest or concern in other companies are disclosed by directors himself in form MBP-1 as required under section 184 of the companies act 2013. This interest of directors may be in the form of Shareholders interest in other companies. However if the shareholding of all the directors in another company does not exceed 2% of the paid up share capital of the company, then this interest is not required to be mentioned in form MBP-4.
  2. Contract or arrangement with a body corporate in which the director in association with other directors of the company holds more than 2% of the shareholding of that company or with a body corporate in which director of the company is promoter, manager, CEO or firm or any other entity in which the director of the company is partner, owner or member as the case may be.
  3. Contracts or arrangements with the related parties with respect to which section 188 applies.

However the following contracts or arrangements are not required to be mentioned in form MBP-4 as provided in sub section (5) of section 189 of the act:

  1. The contracts or arrangement for the supply of goods, materials or services if its value does not exceed rs.5 Lacs in aggregate in any year.
  2. Contracts or arrangements by a banking company for the collection of bills in the ordinary course of its business.

Every director within 30 days of appointment or relinquishment as the case shall disclose his concern or interest in other associations to the company which are required to be mentioned in Form MBP-4. In case of failure to comply with this section & rules made there under, then director shall be liable for penalty of Rs.25000.

This register is required to be maintained by every company and after entering above particulars in this register, it shall be placed in the next board meeting and shall be signed by all the directors present at the meeting. Every entry in this register shall be made in chronological order and shall be authenticated by Company Secretary or such other person as authorized by the board. This register is maintained in the registered office of the company & in the custody of company secretary and is available for inspection during business hours & extracts can be taken therefrom.

SECTION 189 OF THE COMPANIES ACT 2013

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