Section 189: Register of Contracts or Arrangements Involving Director’s Interest

Every company is obligated to maintain one or more registers in Form MBP 4, providing detailed information about all contracts or arrangements. The register should include the following particulars:

1. Companies, bodies corporate, firms, or other associations of individuals in which any director has an interest, as per section 184(1). However, details of companies or bodies corporate where a director, along with another director, holds two percent or less of the paid-up share capital need not be entered.
2. Contracts or arrangements with a body corporate, firm, or other entity, as mentioned in section 184(2), where any director is directly or indirectly concerned or interested.
3. Contracts or arrangements with a related party, pertaining to transactions covered by section 188.

Entries in the register must be made promptly and chronologically whenever there is a cause to do so. The entries should be authenticated by the company secretary or any person authorized by the Board (Rule 16(2)).

The register is to be kept at the registered office of the company, preserved permanently, and held in the custody of the company secretary or another person authorized by the Board (Rule 16(3)). The register(s) must be presented at the next Board meeting and signed by all directors present.

Within thirty days of appointment or relinquishment, every director is required to disclose their concern or interest in other associations for inclusion in the register.

The register is open for inspection during business hours at the registered office. Extracts from the register should be provided to a member upon request, within seven days, upon payment of a fee specified in the articles, not exceeding ten rupees per page (Rule 16(4)).

During the annual general meeting, the register is to be produced, open for inspection, and accessible to any person with the right to attend the meeting (Section 189(4)).

Exceptions:

1. The provisions of Section 189 do not apply to contracts or arrangements for the sale, purchase, or supply of goods, materials, or services if the value does not exceed five lakh rupees in the aggregate in any year.
2. Contracts or arrangements by a banking company for the collection of bills in the ordinary course of its business.