Directors Disclosure

ROC Directors Disclosure

What is Director Disclosure?

Section 184 of the Companies Act, 2013 (the Act) relates to “Disclosure of interest by directors”. The object of Section 184 of the Act is to bring to the notice of the directors the conflict of interest and duty of any of their colleagues on the Board. The provisions are founded on the principle that a director is precluded from dealing on behalf of the company with himself and from entering into engagements in which he has a personal interest conflicting, or which possibly may conflict, with the interest of those to whom he is bound by fiduciary duty to protect. Section 184 of the Act does not prohibit such engagements or contracts or arrangements, but it requires disclosure by the directors of their interests therein to their co-directors.

Who & when needs to Disclose?

The Companies (Meetings of Board and its Powers) Rules, 2014. 1. Rule 9 provides that 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

As per Section 184(1) of the New Act – Every director shall

• At the first meetingof the Board in which he participates as a director and
• at the first meetingof the Board in every financial year ; or
• whenever there is any changein the disclosures already made, then at the first meeting held after such change,

Disclose his concern or interest (including shareholding) in

• any Company or Companies;
• Bodies Corporate;
• Firms;
• other Association of Individuals

Types of Disclosure

According to the above provisions of Section 184(1) and 184(2) of the New Act, there are two types of discourse by Director –

• General Disclosure;
• Specific Disclosure.

General Disclosure by Directors u/s 184(1) of the New Act: Disclosure u/s 184(1) is a general notice of disclosure given by every director about his concern or interest in any company (ies), bodies corporate, firms or other association of individuals, along with shareholding. This is required to be given on 3 occasions mentioned above.

Specific Disclosure by Directors u/s 184(2) of the New Act: Disclosure u/s 184(2) is a specific disclosure given by the director at the meeting of the Board in which a contract or arrangement is discussed and entered into/proposed to be entered into with any entity in which such director has an interest in the manner/ to the extent specified therein.