184. Disclosure of interest by director.— (1) Every director shall at the first meeting of the Board in
which he participates as a director and thereafter at the first meeting of the Board in every financial year
or whenever there is any change in the disclosures already made, then at the first Board meeting held after
such change, disclose his concern or interest in any company or companies or bodies corporate, firms, or
other association of individuals which shall include the shareholding, in such manner as may be
prescribed.
(2) Every director of a company who is in any way, whether directly or indirectly, concerned or
interested in a contract or arrangement or proposed contract or arrangement entered into or to be entered
into—
(a) with a body corporate in which such director or such director in association with any other
director, holds more than two per cent. shareholding of that body corporate, or is a promoter,
manager, Chief Executive Officer of that body corporate; or
(b) with a firm or other entity in which, such director is a partner, owner or member, as the case
may be,
shall disclose the nature of his concern or interest at the meeting of the Board in which the contract or
arrangement is discussed and shall not participate in such meeting:
Provided that where any director who is not so concerned or interested at the time of entering into
such contract or arrangement, he shall, if he becomes concerned or interested after the contract or
arrangement is entered into, disclose his concern or interest forthwith when he becomes concerned or
interested or at the first meeting of the Board held after he becomes so concerned or interested.
(3) A contract or arrangement entered into by the company without disclosure under sub-section (2)
or with participation by a director who is concerned or interested in any way, directly or indirectly, in the
contract or arrangement, shall be voidable at the option of the company.
(4) If a director of the company contravenes the provisions of sub-section (1) or subsection (2), such
director shall be punishable with imprisonment for a term which may extend to one year or with fine
which shall not be less than fifty thousand rupees but which may extend to one lakh rupees, or with both.
(5) Nothing in this section—
(a) shall be taken to prejudice the operation of any rule of law restricting a director of a company
from having any concern or interest in any contract or arrangement with the company;
(b) shall apply to any contract or arrangement entered into or to be entered into between two
companies where any of the directors of the one company or two or more of them together holds or
hold not more than two per cent. of the paid-up share capital in the other company.
