Section 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 arrange ment
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 contr avenes the provisions of sub-section (1) or sub-section (2), such
director shall be 1[liable to a penalty of one lakh rupees].
(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;
2[(b) shall apply to any contract or arrangement entered into or to be entered into between two
companies or between one or more companies and one or more bodies corporate where any of the directors
of the one company or body corporate 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 or the body corporate.]
3[185. Loans to directors, etc. —(1) No com pany shall, directly or indirectly, advance any loan,
including any loan represented by a book debt to, or give any guarantee or provide any security in
connection with any loan taken by,—
(a) any director of company, or of a company which is its holding company or any partner or relative
of any such director; or
(b) any firm in which any such director or relative is a partner.
(2) A company may advance any loan including any loan represented by a book debt, or give any
guarantee or provide any security i n connection with any loan taken by any person in whom any of the
director of the company is interested, subject to the condition that—
(a) a special resolution is passed by the company in general meeting:
Provided that the explanatory statement to the notice for the relevant general meeting shall disclose
the full particulars of the loans given, or guarantee given or security provided and the purpose for which

1. Subs. by Act 29 of 2020, s. 37, for certain words (w.e.f. 21-12-2020).
2. Subs. by Act 1 of 2018, s. 60, for clause (b) (w.e.f. 9-2-2018).
3. Subs. by s. 61, ibid., for section 185 (w.e.f. 7-5-2018).

the loan or guarantee or security is proposed to be utilised by the recipient of the loan or gua rantee or
security and any other relevant fact; and
(b) the loans are utilised by the borrowing company for its principal business activities.
Explanation.—For the purposes of this sub -section, the expression “any person in whom any of the
director of the company is interested” means—
(a) any private company of which any such director is a director or member;
(b) any body corporate at a general meeting of which 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; or
(c) any body corporate, the Board of directors, managing director or manager, whereof is accustomed
to act in accordance with the directions or instructions of the Board, or of any directo r or directors, of
the lending company.
(3) Nothing contained in sub-sections (1) and (2) shall apply to—
(a) the giving of any loan to a managing or whole-time director—
(i) as a part of the conditions of service extended by the company to all its employees; or
(ii) pursuant to any scheme approved by the members by a special resolution; or
(b) a company which in the ordinary course of its business provides loans or gives guarantees or
securities for the due repayment of any loan and in respect of such loans an interest is charged at a rate
not less than the rate of prevailing yield of one year, three years, five years or ten years Government
security closest to the tenor of the loan; or
(c) any loan made by a holding company to its wholly owned subsidiary company or any guarantee
given or security provided by a holding company in respect of any loan made to its wholly owned
subsidiary company; or
(d) any guarantee given or security provided by a holding company in respect of loan made by any
bank or financial institution to its subsidiary company:
Provided that the loans made under clauses (c) and (d) are utilised by the subsidiary company for its
principal business activities.
(4) If any loan is advanced or a guarantee or security is given or provided o r utilised in contravention
of the provisions of this section,—
(i) the company shall be punishable with fine which shall not be less than five lakh rupees but which
may extend to twenty-five lakh rupees;
(ii) every officer of the company who is in default shall be punishable with imprisonment for a term
which may extend to six months or with fine which shall not be less than five lakh rupees but which
may extend to twenty-five lakh rupees; and
(iii) the director or the other person to whom any loan is advanced or guarantee or security is given