Companies Act Section 189 — Register of contracts or arrangements in which directors are interested
CHAPTER XII MEETINGS OF BOARD AND ITS POWERS
Commercial / Corporate
Summary
Every company must keep one or more registers that record the details of all contracts or arrangements covered by sub-section (2) of section 184 or by section 188. The register must be kept in the manner and contain the particulars as prescribed by rules. After the particulars are entered, the register must be placed before the next meeting of the Board and signed by all directors present at that meeting.
Sub-section (2) requires every director or key managerial personnel to disclose to the company, within thirty days of their appointment or relinquishment of office, the particulars specified in sub-section (1) of section 184 about their concern or interest in other associations that need to be included in the register. They must also disclose any other information relating to themselves as may be prescribed.
Sub-section (3) states that the register must be kept at the company's registered office. It must be open for inspection during business hours, and any member of the company may take extracts from it. The company must furnish copies of the register to members to the extent, in the manner, and on payment of such fees as may be prescribed.
Sub-section (4) requires the register to be produced at the start of every annual general meeting of the company. It must remain open and accessible during the entire meeting to any person who has the right to attend the meeting.
Sub-section (5) provides that the requirement in sub-section (1) does not apply to two types of contracts or arrangements. Under clause (a), it does not apply to contracts for the sale, purchase, or supply of 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. Under clause (b), it does not apply to contracts by a banking company for the collection of bills in the ordinary course of its business.
Sub-section (6) states that every director who fails to comply with the provisions of this section and the rules made under it shall be liable to a penalty of twenty-five thousand rupees.
Official Text
(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.
(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.
(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.