The Companies Act, 2013, in India, necessitates the directors of a company to disclose any personal or professional interest they may have in any transactions that the company is a part of. This requirement is laid down under Section 184 (1) of the Companies Act, 2013, and Rule 9 of the Companies (Meetings of Board and its Powers) Rules, 2014.
In the context of this requirement, it is necessary to understand the format and implications of a board resolution that is passed to take note of these disclosures from the directors. Such resolutions are usually passed during a meeting of the Board of Directors and are a part of the official records of the company.
The resolution begins with a formal declaration, citing the location, date, and time of the Board meeting during which it was passed. This is followed by a reference to the relevant provisions of the Companies Act, 2013, and the Companies (Meetings of Board and its Powers) Rules, 2014, which legally bind the directors to disclose their interests in the company’s transactions.
Subsequently, the resolution specifies that the disclosures of interest received from the directors, in Form MBP-1, are noted and recorded. Form MBP-1 is the prescribed form in which a director discloses his or her interests in the company’s transactions. These could include any professional or personal interests that may lead to potential conflicts of interest with the company’s operations.
In the resolution, the Board also authorizes a specific person, usually the Company Secretary or any of the directors, to file an e-form, typically Form DIR-2, with the Registrar of Companies (RoC). This e-form informs the RoC about the appointment or resignation of directors in a company. Additionally, the resolution empowers the authorized person to make the necessary entries about the directors’ disclosures of interest in the company’s Register of Directors and to undertake all other actions necessary in this regard.
In summary, the resolution for the disclosure of interest by directors is a key aspect of corporate governance and transparency, helping ensure that potential conflicts of interest are duly noted and managed within the company’s operations. The format and content of such a resolution need to adhere to the stipulations laid down by the Companies Act, 2013, to be considered legally valid and binding.
Format of Board Resolution for Disclosure of Interest Received From Directors
ON THE LETTERHEAD OF THE COMPANY
CERTIFIED TRUE COPY OF THE RESOLUTION PASSED AT THE MEETING OF THE BOARD OF DIRECTORS OF [Company Name] HELD ON [Day], [Date] AT [Time] AT THE REGISTERED OFFICE OF THE COMPANY [Address]
SUBJECT: TAKING NOTE OF DISCLOSURE OF INTEREST RECEIVED FROM DIRECTORS
“RESOLVED THAT pursuant to the provision of Section 184 (1) of the Companies Act, 2013, read in conjunction with Rule 9 of the Companies (Meetings of Board and its Powers) Rules, 2014, the Board has taken into account the disclosure of interest in Form MBP-1 received from the Directors of the company and it is noted and recorded.
“FURTHER RESOLVED THAT [Name], the Company Secretary/any of the directors, is hereby authorized to file the necessary e-form with the Registrar of Companies, [Location] and to make entries in the Register of Directors of the Company as required, and to undertake all other necessary actions in this regard.”
CERTIFIED TRUE COPY
For [Name of Company],
[Name of Director]
DIN [DIN Number]