Chapter XII of Companies Act – Meeting of Board of Directors and its Powers

184 to 185

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 Companies Act 2013 -> Section 184 – Disclosure of Interest by Director

Disclosure of Interest by Director

Ram

Director

Ram is a shareholder in company B or has Company A

such relation that he can benefit from
company B

Ram would be interested in company B

Company B
 Companies Act 2013 -> Section 184 (1) – Disclosure of Interest by Director

Disclosure of Interest by Director

Director should disclose his interest in any company or association at the following times by giving a notice in
FORM MBP1

1. In the first meeting of Board of directors after his appointment as director

2. In first meeting of board of directors each financial year
3. Whenever there is a change in disclosure already made like increase in shareholding from 3 %to 5%

All Such notices given by directors disclosing his interest shall kept for a period of eight years from the
end of the financial year

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 Companies Act 2013 -> Section 184 (2) – Disclosure of Interest by Director

Disclosure of Interest by Director

Ram
Director

Ram alone or together with

other director holds > 2%
shareholding in Company B
or Company A
is partner, owner, promoter
or CEO in Firm B Company or Firm B

In a meeting in which such contract is being discussed by directors of company A, such a director or directors shall disclose
their interest and should not participate in that meeting (except in case of private company where director can participate in
a meeting after disclosing his interest )

If a director is not interested in company at the time when contract was entered into but became interested later, then he
should disclose his interest in the immediate next meeting of Board of Directors

Exception: In case of section 8 company this subsection is only valid if transaction size exceeds 1 lakh rupees
 Companies Act 2013 -> Section 184 (3) – Disclosure of Interest by Director

Disclosure of Interest by Director – Cancellation of Contract

If a contract is entered by violating these conditions

like interested director not disclosing his interest or
participating in a meeting in which the contract was
discussed, then

1. Contract can become void if company wants to

cancel the contract

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 Companies Act 2013 -> Section 184 (4) – Disclosure of Interest by Director

Penalty for Non-Disclosure of Interest by Director

If director violates either of the conditions discussed in subsection 184(1) and 184 (2), director shall be punishable with fine
of rupees one lakh rupees

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 Concept check

The notice given by director disclosing his interest in certain company shall be preserved by company for how many years
1. 3
2. 5
3. 8
4. 10
Ans Option 3

What is fine if the director does not disclose his interest in any other company or participates in a meeting in which a
transaction with that company in which a director has interest is being discussed?
1 lakh

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 Companies Act 2013 -> Section 185 (1) – Loans to Directors

Loans to Directors

Any Director of the company or holding

company

Shall not advance any loan or Any relative or partner of director

give guarantee or security for
Company any loan taken by
Any other firm or company in which director or
relative of director is partner

As per this clause can a company A give a loan to other company B in which director of Company A is a director?

Yes because as per this clause only the company in which director of company A is partner is prohibited from
being given a loan

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 Companies Act 2013 -> Section 185 (2) – Loans to Directors

Loans to Interested Parties with Directors

Any Party with whom the director is interested in

Can advance loan or give Subject to Following Conditions

guarantee or security for any
loan taken by A special resolution is passed by the company in
general meeting
Company
The loans are utilized by the borrowing company for its
Meaning of Any party with whom director is interested in principal business activities (Principal Activity means
the main activity the company is operating in)

1. Any private company of which any such director is a director or member or

2. Any company where not less than twenty-five per cent. of the total voting power may be exercised or controlled by any
such director, or by two or more such directors, together

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 Companies Act 2013 -> Section 185 (3) – Loans to Directors

Three Exceptions in case Loans to Directors

Loan can be given to a managing or whole-time director (whole-time director” includes a director in the whole-time
employment of the company) when
1. That is being given as part of scheme introduced for the employees of the company
2. As part of any scheme passed by special resolution

A company which usually is in the business of giving loans or security towards any loans can give loans without any
restrictions mentioned in this section provided they charge rate not less than the rate of prevailing rate of government
securities of the same duration.

Example: if loan is being provided for 5 years and rate of 5 years of Government bonds is 5% then rate of interest on loan
shall not be less than 5%

Loan given by Holding company to its subsidiary company or security or guarantee given by holding company for loan
taken by subsidiary company shall be exempted from all such restrictions provided these loans are used by subsidiary
company for principal activities

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 Quick questions

If Ram is director in Company A and Sham who is relative of Ram is a partner in company B then can company A provide loan
to company B? No

Company B is subsidiary of Company A. If Ram is director in Company A and Sham who is relative of Ram is a partner in
company B then can company A provide loan to company B? yes

Can loan be provided to whole time directors because of his position even if there is no policy to give such loans to the
employees of the company? No

Can loan be provided to independent directors provide there is a policy to give such loans to the employees of the company
who are associated with the company? No

The loan can be given to company in which a director is interested by passing a ordinary resolution? No
 Companies Act 2013 -> Section 185 (4) – Loans to Directors

Punishment in case violation of 185

To the Company:
Fine which shall not be less than five lakh rupees, but which may extend to twenty-five lakh rupees

To the Officer of the company who is in default

I. Imprisonment for a term which may extend to six months or
II. with fine which shall not be less than five lakh rupees, but which may extend to twenty-five lakh rupees

To the Director the director or the other person to whom any loan is advanced or guarantee or security is given
I. Imprisonment which may extend to six months or
II. with fine which shall not be less than five lakh rupees, but which may extend to twenty-five lakh rupees, or
III. with both

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 Concept check

The company can give loan to which of the following?

1. Any director of the company
2. Relative or partner of the director of the company
3. Any firm in which director or his relative is partner
4. Any firm in which relative of director is director
Ans Option 4
The loan given by company to interested party needs to be passed in
1. Special Resolution in general meeting of the company
2. Ordinary resolution in general meeting of company
3. Special resolution in meeting of board of directors
4. Ordinary resolution in meeting of board of directors
Ans Option 1

The penalty to the officer or the company who is default : Fine up to maximum of
1. 5 lakh
2. 10 lakh
3. 15 lakh
4. 25 lakh
Ans Option 4

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Chapter XII of Companies Act – Meeting of Board of Directors and its Powers
Section 186 and 187

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 Companies Act 2013 -> Section 186 (1) – Loans and Investment by Companies

Loans and Investment by Companies

Layers of Companies: It means subsidiaries of Companies

Meaning of Subsidiary

Company A Controls the composition of the Board of Directors of company

B i.e. Company A can remove or appoint directors in Company

Company B would be
OR
Subsidiary of
Company A Company A Exercises or controls more than one-half of the total voting power
of company B either at its own or together with one or more of its subsidiary
companies:

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 Companies Act 2013 -> Section 186 (1) – Loans and Investment by Companies

Loans and Investment by Companies

Meaning of Investment Company

Investment company” means a company whose principal business is the acquisition of shares, debentures or other securities

Definition of Principal Business

Assets in the form of investment in income derived from investment

shares, debentures or other business constitutes not less than fifty
OR
securities constitute not less than fifty per cent. as a proportion of its gross
per cent. of its total assets income

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 Companies Act 2013 -> Section 186 (1) – Loans and Investment by Companies

Loans and Investment by Companies

A company shall not make investment through more than two layers of investment companies

So if any investment is done through subsidiary which is 3rd

layer investment company then that shall not be valid

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 Companies Act 2013 -> Section 186 (2 and 3) – Loans and Investment by Companies
Loans and Investment by Companies

1. Give any loan to any person except employees or other body corporate
Company shall not 2. or provide security in connection with a loan to any other Give any
guarantee body corporate or person and
3. Acquire or purchase the securities of any other body corporate

exceeding sixty per cent. of its paid-up share capital, free reserves and
securities premium account or

one hundred per cent. of its free reserves and securities premium account,
whichever is more.

If the paid-up share capital is 20, free reserves is 50 and security premium account is 30 then
60% of 100 = 60
100% of 80 = 80
So max limit shall be 80 for giving a loan to these parties as per this example

If company wants to exceed this limit then special resolution needs to be passed
Companies Act 2013 -> Section 186 (2 and 3) – Loans and Investment by Companies
Loans and Investment by Companies

Exception: If a loan or guarantee or is given or where a

security has been provided by a company to its wholly
owned subsidiary company or a joint venture company
then the requirements of this section does not apply

Company shall give such details in the financial

statement of the company
 Quick Questions

Company B would be Subsidiary of Company A if company A controls more than ______ of voting power of Company B
1/2

Investment company would have acquisition of shares, debentures or other securities has its principle business if Assets in the
form of investment in shares, debentures or other securities constitute not less than ____ of its total assets or income derived
from investment business constitutes not less than ____as a proportion of its gross income
50%, 50%

Company shall not give any loan or provide security in connection with a loan or Acquire or purchase the securities exceeding
_______of its paid-up share capital, free reserves and securities premium account or one hundred per cent. of its free
reserves and securities premium account, whichever is higher
60%
 Companies Act 2013 -> Section 186 (4 to 6) – Investments of Company to be Held in its Own Name
Loans and Investment by Companies

The company shall disclose in the financial statement the full particulars of the loans given, investment made, or guarantee
given, or security provided and the purpose for which the loan or guarantee or security is proposed to be utilized by the
recipient of the loan or guarantee or security.

No investment shall be made or loan or guarantee or security given by the company unless the resolution sanctioning it is
passed at a meeting of the Board with the consent of all the directors present at the meeting

No company, which is registered under section 12 of the SEBI Act, 1992 and covered shall take inter-corporate loans
exceeding the limits mentioned in the regulations by SEBI

The companies registered under section 12 can be stock-broker, sub- broker, share transfer agent, banker to an issue,
trustee of trust deed, registrar to an issue, merchant banker, underwriter, portfolio manager, investment adviser and such
other intermediary dealing in securities
 Companies Act 2013 -> Section 186 (7) – Loans and Investment by Companies
Rate at which Loans or Investments are transacted

No loan shall be given under this section at a rate of interest lower than the prevailing yield of that number of years as the
duration of the loan

Example: if loan is being provided for 5 years and yield of 5 years of Government bonds is 5% then rate of interest on loan
shall not be less than 5%
 Companies Act 2013 -> Section 186 (9 and 10) – Loans and Investment by Companies

Maintaining Register for Loans and Investment by Companies

Every company giving loan or giving a guarantee or providing security or making an investment under this section shall keep
a register

The company shall maintain a register using FORM MBP2 and enter in that the details of particulars of loans and guarantees
given, securities provided, and acquisitions made

The entries in the register shall be made chronologically and within seven days of doing such transactions

The register can be maintained manually or electronically and shall be authenticated by the company secretary of the
company

The extracts of the register shall be available to any member of the company on making such a request

The register shall be kept at the registered office of the company

 Companies Act 2013 -> Section 186 (11) – Loans and Investment by Companies

Certain Exceptions for Loans and Investment by Companies

Loan or guarantee or security provided, or investment

made by following entities shall be exempted
Except what we discussed in subsection 1, no other
section shall be applicable in these cases 1) Housing Finance Companies
2) Banking Company
3) Insurance Company
4) Any other company with these activities as its
principal activities

Any investment done by following entities shall be

exempted

1) Investment made by investment company

2) Investment made by investing rights issues of shares
made by some other company
3) Investment done by NBFC whose principal business
is acquisition of securities
 Quick Questions

Is the company required to pass a resolution at the meeting of board of directors while giving loans, guarantee, security or
making any investments
Yes

Every company giving loan or giving a guarantee or providing security or making an investment under this section shall keep
a register and the entries in the register shall be made chronologically and within ____ days of doing such transactions

Can housing company make loan exceeding sixty per cent. of its paid-up share capital, free reserves and securities premium
account or one hundred per cent. of its free reserves and securities premium account, whichever is more. Yes
 Companies Act 2013 -> Section 186 (12) – Loans and Investment by Companies

Punishment for Section 186

To the Company
Fine which shall not be less than twenty-five thousand rupees, but which may extend to five lakh rupees

To the officer who is in default

I. Imprisonment for a term which may extend to two years and
II. with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees.
 Concept check

A company shall not make investment through more than ___layers of investment companies
1. 1
2. 2
3. 3
4. 4
Ans Option 2
Investment made in other company is exempted under section 186 for which of the following type of shares
1. Redeemable Debentures
2. Irredeemable Debentures
3. Sweat Equity Shares
4. Shares issued under rights issue
Ans Option 4

A banking company will be exempted from all of following activities under section 186 except
1. Maintaining of Register for details of loans and guarantees given
2. Passing a resolution in meeting of BOD when giving loans
3. Making investment through 3rd layer of investment company
4. Disclose the full particulars of the loans given in the financial Statement
Ans Option 3

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 Companies Act 2013 -> Section 187– Investments of Company to be Held in its Own Name
Investments of Company to be Held in its Own Name

All investments made or held by a company in any property, security or other asset shall be made and held by it in its own
name:

For some Operational reason company can have investments not in its name

Depositing any shares or securities for the Banker of the

Company company
collection of any dividend or interest with

Depositing or transferring shares or securities, in Banker of the

Company company
order to facilitate the transfer with

depositing or transferring to any person any Person

Company shares or securities as a security for the
repayment of any loan advanced

Holding shares with depository as registered Depository

Company owner and Company as beneficial owner
 Companies Act 2013 -> Section 187– Investments of Company to be Held in its Own Name
Investments of Company to be Held in its Own Name

In the last point where shares are held with

company as beneficial owner, company needs to
maintain a register using FORM MBP 3 with detail
of all such shares

The register shall be authenticated by the company

secretary of the company or by any other person
authorized by the Board for the purpose
 Companies Act 2013 -> Section 187– Investments of Company to be Held in its Own Name
Punishment

To Company

the company shall be liable to a penalty of five lakh rupees

To Officer of Company

every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees.
 Concept check

The details of investment of company in shares in which company is beneficiary owner needs to be maintained in register
using FORM
1. MBP 1
2. MBP 2
3. MBP 3
4. MBP 4
Ans Option 3

The fine to officer of the company for violation of section 187 which is related to investments of company in its own name
can be
1. 1 lakh
2. 5 lakh
3. 10 thousand
4. 50 thousand
Ans Option 4

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Chapter XII of Companies Act – Meeting of Board of Directors and its Powers
188 to 195

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 Companies Act 2013 -> Section 188 – Related Party Transactions
Related Party Transactions

What is Related Party

a director or his relative

a key managerial personnel or his relative

A firm in which director, manager or his relative is a partner

Company
A holding, subsidiary or an associate company of
such company; or a private company in which a director or manager or his
a subsidiary of a holding company to which it is relative is a member or director
also a subsidiary; or
an investing company or the venture of the
company; a public company in which a director or manager is a director
and along with his relatives holds more than two per cent of
any person on whose advice, directions or its paid-up share capital.
instructions a director or manager is accustomed
to act:
 Companies Act 2013 -> Section 188 – Related Party Transactions
Related Party Transactions

Who is relative

1. They are members of a Hindu Undivided Family

2. They are husband and wife;

3. Father including step father

4. Mother including step Mother

5. Son including step son and Son’s wife

6. Daughter and daughter’s husband

7. Brother including step brother

8. Sister including step sister

 Companies Act 2013 -> Section 188 – Related Party Transactions
Related Party Transactions

What is Arms Length Transaction?

A transaction between two related parties that is conducted as if they were unrelated, so that there is no conflict of
interest.

So in general all the transactions between related parties shall occur arms length transaction
 Companies Act 2013 -> Section 188 – Related Party Transactions
Related Party Transactions

Difference between Related Party Contracts and Interested Contracts

Company Company

Does a transaction with wife of Director Does a transaction with a friend of

director or does a transaction with a
known person of director

Is it a related party ? Yes Is it a related party ? No

But here director is interested as he may

gain benefit from this transaction
 Companies Act 2013 -> Section 188(1) – Related Party Transactions

Limits for Related Party Transactions Requiring Boards Approval or Shareholder Approval

Area of Transaction Approval of board by passing a Approval of Shareholder by

resolution in meeting of BOD Passing a resolution in GM
sale, purchase or supply of any goods or materials amounting to < 10% of the turnover amounting to >= 10% of the
directly or through agent of the company turnover of the company

selling or otherwise disposing of, or buying, amounting to < 10% of the net worth amounting to >= 10% of the
property of any kind directly or through agent of the company net worth of the company
leasing of property of any kind amounting to` amounting to < 10% of the turnover amounting to >= 10% of the
of the company turnover of the company
availing or rendering of any services directly or amounting to < 10% of the turnover amounting to >= 10% of the
through agent amounting to of the company turnover of the company
such related party's appointment to any office or monthly remuneration <= 2.5 lakh monthly remuneration > 2.5
place of profit in the company, its subsidiary lakh
company or associate company
underwriting the subscription of any securities or remuneration for underwriting <= 1% remuneration for
derivatives thereof, of the company of the net worth of the company underwriting > 1% of the net
worth of the company
 Companies Act 2013 -> Section 188(1) – Related Party Transactions
Related Party Transactions Requiring Boards Approval

Where Boards consent is required Boards

Consent must be obtained by passing a
resolution in meeting of board of directors

In the meeting following details shall be

presented
1. name of the related party and nature of
relationship

2. nature, duration of the contract and

particulars of the contract or arrangement

3. Terms of the contract or arrangement

including the value, if any;

4. the manner of determining the pricing and

other commercial terms
 Companies Act 2013 -> Section 188 (1) – Related Party Transactions
Related Party Transactions Requiring Shareholders Approval

Where shareholder approval is required , Resolution needs to be passed by members of company in general meeting of
company

While passing a resolution for a particular contract then the member which is a related party with respect to that contract
shall not participate in that voting with an exception that if 90% or more of members are relatives of promoters or are related
parties then even related members can participate in meeting or in case of private company related parties can vote
 Companies Act 2013 -> Section 188 (1)– Related Party Transactions
Exceptions for Related Party Transactions

Exceptions

No Resolution shall be required to be passed

by the company if the transaction are
between holding and wholly owned
subsidiary of that company irrespective of
their value. Resolution by BOD shall suffice

Transactions between government

companies shall not require resolution to be
passed by shareholders
 Companies Act 2013 -> Section 188 (2) – Related Party Transactions
Related Party Transactions to be included in Board’s Report

Every contract or arrangement entered into under sub-section (1) shall be referred to in the Board’s report to the
shareholders along with the justification for entering into such contract or arrangement.
 Companies Act 2013 -> Section 188(3 and 4) – Related Party Transactions
Related Party Transactions by Directors if not done through Proper channel

If any related party contract is entered into by a director or any employee without obtaining the consent of the Board or
approval by a resolution in the general meeting as per requirement under sub-section (1) then it can be ratified by the
board or as the case may be, by the shareholders at a meeting within three months from the date on which such contract
or arrangement was entered

if it is not ratified by the Board or, as the case may be, by the shareholders at a meeting within three months the board or
the shareholders has the option to cancel

In case of any loss to the company due to contract being cancelled the director concerned shall indemnify the company
against any loss incurred by it.
 Companies Act 2013 -> Section 188(5) – Related Party Transactions
Punishment for Violation of Related party Transactions

A director or employee who had entered or authorised the contract or arrangement in violation of the provisions of
this section

in case of listed company, be liable to a penalty of twenty-five lakh rupees

In case of any other company, be liable to a penalty of five lakh rupees

 Concept check

A public company in which a director or manager of company A is a director and along with his relatives holds more than
___ percent of its paid-up share capital shall be called related party of Company A
1. 1
2. 2
3. 3
4. 4
Ans Option 2

The transactions such as sale, purchase or supply of any goods or materials directly or through agent amounting to 18% of
the turnover of the company shall be approved
1. Resolution in meeting of BOD
2. Resolution in general meeting of the company
3. Special resolution in meeting of BOD
4. Special resolution in general meeting of company
Ans Option 2

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 Concept check

No Resolution shall be required to be passed by the company if the transaction is between holding and wholly owned
subsidiary of that company irrespective of their value Yes

Every contract or arrangement entered into under definition of related party transaction shall be referred to in the
financial statement of the company NO

In case of listed company the director who is in violation related to related party transactions shall be fined with a value
of
1. 500000
2. 1000000
3. 2500000
4. 5000000
Ans: Option 3

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 Companies Act 2013 ->Section 189 – Register of Contracts or Arrangements in Which Directors are Interested

Register of Contracts or Arrangements in Which Directors are Interested

Company shall maintain Done under 184 (where director is interested party)
register(s) using MBP 4 for
details of transactions Done under section 188 where it is a related party
exceeding 5 lakh in a year transaction

After entering the register it shall be placed before the next meeting of the Board and signed by all the directors
present at the meeting

Every director or key managerial personnel shall, within a period of thirty days of his appointment, or relinquishment of
his office must disclose to the company relating to his concern or interest in the other associations which are required to
be included in the register

Penalty
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
Companies Act 2013 ->Section 189 – Register of Contracts or Arrangements in Which Directors are Interested

Procedure for Maintaining Register of Contracts or Arrangements in Which Directors are Interested

The register shall be kept at the registered office of the

company and the register shall be preserved
permanently and shall be kept in the custody of the
company secretary of the company or any other person
authorized by the Board for the purpose

The company shall provide extracts from such register

to a member of the company on his request, within
seven days from the date on which such request

Register shall be open for inspection at registered

office during business hours

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
 Concept check

Company shall maintain register(s) using MBP 4 for details of transactions exceeding ___ lakh in a year done under section
184 and 188 5

Every director or key managerial personnel shall, within a period of ___ days of his appointment, or relinquishment of his
office must disclose to the company relating to his concern or interest in the other associations which are required to be
included in the register for maintaining transactions under section 184 and 188 30

Director who fails to comply with the provisions of this section and the rules made thereunder shall be liable to a penalty
of ______rupees
1. 5000
2. 10000
3. 25000
4. 50000
Ans: Option 3

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 Companies Act 2013 ->Section 190 – Contract of Employment with Managing or Whole-Time Directors
Contract of Employment with Managing or Whole-Time Directors

Should have a written contract with the MD and other

Company except Private
whole-time director
Company
OR

A written memorandum setting out terms of

employment

The copies of the contract or the memorandum shall be open to inspection by any member of the company without
payment of fee

Penalty

To Company: penalty of twenty-five thousand rupees for each default

To Officer in default: penalty of five thousand rupees for each default
 Companies Act 2013 ->Section 191 – Payment to Director for Loss of Office, etc., in Connection with Transfer of
Undertaking, Property or Shares
Payment to Director for Loss of Office, etc., in Connection with Transfer of Undertaking, Property or Shares

Director in Company A

Director might have to leave Company A is selling an undertaking

Director will suffer some
his office when stake in of company or selling stake in
monetary Loss in this case
company is sold company

Section 191 says that any payment made to director for loss of office shall be made only if following are disclosed to the
members of the company and they pass a resolution at a general meeting approving the payment of such amount
(a) name of the director; (b) amount proposed to be paid; (c) event due to which compensation become payable; (d) date of
Board meeting recommending such payment; (e) basis for the amount determined; (f) reason or justification for the payment;
(g) manner of payment - whether payable in cash or otherwise and how;(h) sources of payment

Note: The payment made to the director shall not exceed the remuneration which he would have earned if he had been in
office for the remainder of his term or for three years, whichever is shorter
 Companies Act 2013 ->Section 191 – Payment to Director for Loss of Office, etc., in Connection with Transfer of
Undertaking, Property or Shares
Payment to Director for Loss of Office, etc., in Connection with Transfer of Undertaking, Property or Shares

Penalty

If a director of the company makes any default in

complying with the provisions of this section, such
director shall be punishable with fine which shall
not be less than twenty-five thousand rupees, but
which may extend to one lakh rupees.
 Companies Act 2013 ->Section 192 – Restriction on Non-cash Transactions Involving Directors.

Restriction on Non-cash Transactions Involving Directors.

Director of Company A or Director of holding,
subsidiary or associate company of Company A or any
person connected with director
Company A acquires or is to acquire assets for
consideration other than cash
Acquire assets for consideration other than cash, from
the company A
OR
Director of Company A or Director of holding,
subsidiary or associate company of Company A or any
person connected with director

In such a case the resolution needs to be passed by the company A in general meeting and if the director is a director of
its holding company then the resolution needs to be passed by holding company also

Example: Suppose director takes a big car from company for the promise that he will work hard in coming years. Now this
car is not bonus for good results given to director instead it is being given as arrangement that director will work hard in
coming time. Here hard work is being exchanged for car and hence it is an example of non-cash transaction

This has been implemented because many a times promoters who are directors engage in such non-cash transaction
which have no basis but to evade tax liabilities
 Companies Act 2013 ->Section 193 – Contract by One Person Company

Contract by One Person Company

enters into a contract with the sole

One Person Company member of the company who is also the
director of the company

Such contracts shall discussed in

immediate next board meeting and
approved there

The company shall inform the Registrar within a

period of fifteen days of the date of approval by
the Board of Directors
Companies Act 2013 ->Section 194 – Prohibition on Forward Dealings in Securities of Company by Director

Prohibition on Forward Dealings in Securities of Company by Director

Scrapped now
 Companies Act 2013 ->Section 195 – Prohibition on Insider Trading of Securities

Prohibition on Insider Trading of Securities

Scrapped now
 Concept check

Which company is exempted from having a written contract with the MD and other whole-time director Private

The payment made to the director in lieu of loss of office shall not exceed the remuneration which he would have earned
if he had been in office for the remainder of his term or for three years, whichever is____ lower

The payment made to the director in lieu of loss of office shall be passed by resolution in meeting of BOD NO

The penalty to a director for violation section 191 related to payment to a director for loss of office is 1 lakh

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