Section 189: Register of contracts or arrangements in which directors are interested
This section requires companies to maintain a register of contracts or arrangements in which directors have an interest, and sets out the rules for keeping and inspecting this register.
Penalty
(6) Every director who fails to comply with the provisions of this section and the rules made thereunder shall be liable to a penalty of twenty-five thousand rupees.
The section, clause by clause
What the section says
In plain terms
(1)Every company shall keep one or more registers giving separately the particulars of all contracts or arrangements to which sub-section (2) of section 184 or section 188 applies, in such manner and containing such particulars as may be prescribed and after entering the particulars, such register or registers shall be placed before the next meeting of the Board and signed by all the directors present at the meeting.
Every company must keep a register of contracts or arrangements that directors are interested in, which must be signed by all directors present at the next board meeting after the particulars are entered.
(2)Every director or key managerial personnel shall, within a period of thirty days of his appointment, or relinquishment of his office, as the case may be, disclose to the company the particulars specified in sub- section (1) of section 184 relating to his concern or interest in the other associations which are required to be included in the register under that sub-section or such other information relating to himself as may be prescribed.
Directors and key managerial personnel must disclose their interests in other associations to the company within 30 days of their appointment or relinquishment of office.
(3)The register referred to in sub-section (1) shall be kept at the registered office of the company and it shall be open for inspection at such office during business hours and extracts may be taken therefrom, and copies thereof as may be required by any member of the company shall be furnished by the company to such extent, in such manner, and on payment of such fees as may be prescribed.
The register must be kept at the company's registered office and be available for inspection during business hours, with members able to take extracts and copies on payment of a prescribed fee.
(4)The register to be kept under this section shall also be produced at the commencement of every annual general meeting of the company and shall remain open and accessible during the continuance of the meeting to any person having the right to attend the meeting.
The register must also be produced at the start of every annual general meeting and remain accessible to attendees throughout the meeting.
(5)Nothing contained in sub-section (1) shall apply to any contract or arrangement—
The register does not need to include contracts for goods or services worth less than 5 lakh rupees in a year, or bills collected by a banking company in the ordinary course of business.
(5)(a)for the sale, purchase or supply of any goods, materials or services if the value of such goods and materials or the cost of such services does not exceed five lakh rupees in the aggregate in any year; or
(5)(b)by a banking company for the collection of bills in the ordinary course of its business.
(6)Every director who fails to comply with the provisions of this section and the rules made thereunder shall be liable to a penalty of twenty-five thousand rupees.
Directors who fail to comply with this section are liable to a penalty of 25,000 rupees.
The right-hand column is written from the section text, not quoted from it, and it has no legal force. Where the two differ, the left-hand column is the law.
Amendment notes
- 1. The proviso ins. by Act 21 of 2015, s. 16 (w.e.f. 29-5-2015).
- 2. Subs. by Act 1 of 2018, s. 63, for “shall be voidable at the option of the Board” (w.e.f. 9-2-2018).
- 3. Subs. by Act 29 of 2020, s. 39, for certain words (w.e.f. 21-12-2020).
- 4. Subs. by s. 39, ibid., for certain words (w.e.f. 21-12-2020).
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Reproduced from the official India Code print for reference. Check the current text on India Code before you rely on it, and read the section alongside its Rules. Nothing here is legal advice.