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  • Writer's pictureAesha Gandhi

Section 189 Of Companies Act 2013: Register Of Contracts In Which Directors Are Interested

Updated: Oct 7, 2022

Provisions under Section 189:

  1. It states that a company needs to maintain one or more registers that have details of all particulars of a contract or arrangement. Once the particulars are entered, they should be placed in the next bird meeting and should be signed by all directors present in the meeting.

  2. Every director within 30 days of his appointment or relinquishment should disclose necessary information relating to the contracts or arrangements or provide any necessary supplementary information.

  3. Such registers shall be kept at the registered office and can be open for inspection only during office hours. A copy of such registers can be provided to members on the payment of specified fees.

  4. Such registers are to be produced at every Annual General Meeting and should be accessible during the meeting to any individual who has the right to attend the meeting.

  5. This section doesn’t apply to contract or agreement to sale, purchase, cost of services, etc. that doesn’t exceed 5 lakh rupees in aggregate in a year; and bills by a banking company in the regular course of business.

  6. Any director who does comply with these provisions shall be liable to pay a fine of Rs. 25,000.

  7. These provisions apply to Section 8 (Non-profit) Companies, only if the transaction is by section 188 based on terms and conditions and if the contract or arrangement exceeds 1 lakh rupees.

Section 189 of the Companies Act, 2013

[Register of contracts or arrangements in which Directors are interested]

(1) Every company shall keep one or more registers giving separately the particulars of all contracts or arrangements to which subsection (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.

2) Every director or key managerial personnel shall, within 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.

(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.

(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.

(5) Nothing contained in sub-section (1) shall apply to any contract or arrangement—

(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

(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.

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