Section 184 (1) of the Companies Act 2013 requires that every director to make disclosure of his interest or concern in any company or firm or body corporate or any association of individuals at the first Board meeting or when there is any change in the interest of Directors.

The provisions are founded on the principle that a director is precluded from dealing on behalf of the company with himself and from entering into engagements in which he has a personal interest conflicting, or which possibly may conflict, with the interest of those to whom he is bound by fiduciary duty to protect. Section 184 of the New Act does not prohibit such engagements or contracts or arrangements, but it requires disclosure by the directors of their interests therein to their co-directors

Legal text of Section 184(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.

Rule 9 of Companies (meeting of Board and its Powers) Rules 2014

(1) Every director shall disclose his concern or interest in any company or companies or bodies corporate (including shareholding interest), firms or other association of individuals, by giving a notice in writing in Form MBP 1.

(2) It shall be the duty of the director giving notice of interest to cause it to be disclosed at the meeting held immediately after the date of the notice.

(3) All notices shall be kept at the registered office and such notices shall be preserved for a period of eight years from the end of the financial year to which it relates 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.

As per Section 184(1) of the New Act – Every director shall

i. At the first meeting of the Board in which he participates as a director and

ii. At the first meeting of the Board in every financial year; or

iii. Whenever there is any change in the disclosures already made, then at the first meeting held after such change, disclose his concern or interest (including shareholding) in

    • any Company or Companies;
    • Bodies Corporate;
    • Firms;
    • Other Association of Individuals in such manner as may be prescribed.

FAQS

1. What is the Applicability of MBP-1 ?

As per Section 184(1) of the Companies Act 2013 read with Rule 9(1) of The Companies (meeting of Board and its Powers) Rules 2014 , every director shall:

  • At the first meeting of the board in his capacity as a director and
  • At the first meeting of the board held during each financial year or
  • At the first meeting held after there is a change in the disclosures disclose his concern/ interest in any company/body corporate/firm/association of individuals, including details of the shareholding in Form MBP 1.

2. What is the Contents of the Notice?

  • Name of the company/body corporate/firms/association of individuals
  • Nature of interest/concern and changes, if any
  • Shareholding
  • The date on which interest/concern arose or changed
  • Place, date and signature of the Managing Director/Director/Secretary or Whole Time Director

3. What is the Penalty for Non-Compliance?

The director in default shall be punishable with imprisonment which may extend up to 1 year or with fine which may extend to a maximum of Rs 1 lakh or with both.

4. Preservation of Notice for how many year?

All notices shall be kept at the registered office, and it shall be preserved for a period of 8 years from the end of the financial year to which it relates. The custody of the notice shall be with the company secretary or any person authorized by the board.

5. Does form MBP-1 have to be filed anywhere, or attached with any form?

Form MBP-1 need not be filed anywhere or attached to any form. The details need to be simply entered into the register of contracts maintained in form MBP-1

6. Is it necessary for a director to give disclosure of his shareholdings in companies, irrespective of how much shareholding he has?

Yes, it is necessary for a director to give disclosure of any of his shareholdings in companies while giving the general disclosure of interest

7. At what point is the disclosure required?

Disclosure u/s 184 (2) is to be made by the Director at the meeting of the Board in which a contract or arrangement is discussed and entered into/proposed to be entered into with any entity in which such director has interest in the manner/ to the extent specified therein. In case the Director becomes concerned or interested after the contract or arrangement is entered into, such disclosure is required to be made forthwith at the first meeting of the Board held after he becomes concerned or interested.

Board Resolution for MBP-1 Disclosure of Interest by Directors

A director of a company is required to compulsorily disclose his concern or interest including shareholding interest in any other organisations by giving a notice in writing Form MBP-1 to each such company where he is a director.

Such notices in Form MBP-1, as received from the directors, are then presented to the Board of Directors of the company in its meeting and the Board takes a note of the same.

All such notices are required to be kept at the registered office and shall be preserved for 8years from the end of the financial year to which it relates 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.

Following are the format of board resolution for taking note of MBP-1 notices.

#. To record disclosure of interest received from Directors

The Board was informed that as required under the provisions of section 184 of the Companies Act, 2013, the company is in receipt of notices/declarations from all the Directors of the company, disclosing their interest in other entities in Form MBP-1. The copies of Form MBP 1 were presented before the meeting.

The Board took note of the notices in Form MBP-1 and authorised the Company Secretary to record the details as in Form MBP-1 in the register maintained under section 189 of the Companies Act, 2013, for the purpose.

The Board unanimously passed the following resolution to record the receipt of the above notices:

#. To take note of notices in Form MBP-1 received from Directors

“RESOLVED THAT pursuant to the provisions of Section 184(1) of the Companies Act, 2013 read with Rule 9(1) of the Companies (Meetings of Board and its Powers) Rules, 2014, the notices of disclosure of concern or interest in Form MBP 1 as received from the following directors of the company, and as laid down before the meeting, be and are hereby noted and taken on record by the Board:

1. Mr. …………………………., Managing Director

2. Ms. …………………………., Whole-time Director

3. Mrs. ……………………….., Independent Director

4. Dr. …………………………., Independent Director

FURTHER RESOLVED THAT Mr./Ms. ……………….., Company Secretary be and is hereby authorised to do all such acts, deeds and things as may be necessary in this regard.”

Form MBP-1

Notice of Interest by Director

[Pursuant to Section 184(1) and rule 9(1)]

To,

The Board of Directors

Company Name

Dear Sir(s)

I, ________ son/daughter/spouse of ______ resident of ______, being a director in the Company hereby give notice of my interest or concern in the following company or companies, body corporate, firms or other association of individuals.

Sr.No Name of Company/Body Corporate/Firms/ Other Association of Individuals Nature of Interest or Concern / Change in interest / concern Shareholding Date on which Interest or concern arose/changed

For, Company name and seal

___________ (Signature & Seal of Director)

___________ (Name of Director)

___________ (DIN No.)

Date:

Place:

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Qualification: CA in Practice
Company: JAIN K GUPTA & CO.
Location: CHANDIGARH, Chandigarh, IN
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One Comment

  1. Padmanabh says:

    Is a list of relatives, with the particulars of Companies in which they hold substantial interest, required to be attached to Form MBP – 1?
    First sentence of the preamble to the Resolution reads as under:
    ‘The Board was informed that as required under the provisions of section 184 of the Companies Act, 2013, the company is in receipt of notices/declarations from all the Directors of the company,’
    In compliance with Indirect speech in English Grammar, should the verb ‘is’ in the above sentence be changed to verb ‘was’?

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