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Disclosure of Directors’ interests:

Under the Companies Act 2013, directors of a company are required to disclose their interests in certain transactions or arrangements with the company. The purpose of this requirement is to ensure transparency and prevent conflicts of interest that could potentially harm the company’s interests. The provisions regarding the disclosure of directors’ interests are covered under Section 184 of the Act.

Here are the key aspects of disclosure of directors’ interests:

  1. Disclosure of Interest: A director who is directly or indirectly interested in a contract or arrangement with the company must disclose his/her interest in writing to the board of directors. This includes contracts or arrangements for the sale, purchase, or supply of any goods or services, leasing of property, appointment to an office or place of profit, etc.
  2. Timing of Disclosure: The director must disclose his/her interest at the first board meeting in which the contract or arrangement is discussed. If the director becomes interested after the contract or arrangement is entered into, the disclosure must be made at the first board meeting held after he/she becomes aware of the interest.
  3. Contents of Disclosure: The disclosure must include the nature of the director’s interest, whether it is a direct or indirect interest, the extent and nature of the interest, and any other relevant details. If the director is a related party, the nature of the relationship should also be disclosed.
  4. Participation in Board Discussions: The director with an interest in a contract or arrangement is generally not allowed to participate in the board discussions or vote on such matters, except in certain situations as provided by the Act. However, the director can be present in the meeting to provide any necessary information or clarification, if requested by the board.
  5. Register of Contracts or Arrangements: The company must maintain a register of contracts or arrangements in which directors are interested. The register should contain the details of the contracts or arrangements, the director’s interest, and the date of disclosure. The register should be kept at the registered office of the company and should be open for inspection by shareholders.
  6. Penalties: Non-compliance with the disclosure requirements may attract penalties for the director and the company.

It is important for directors to fulfill their disclosure obligations to ensure compliance with the law and to maintain transparency and integrity in the company’s operations. The specific requirements and procedures may vary depending on the company’s structure and the nature of the transactions. It is advisable to consult the Companies Act 2013 and seek legal advice for detailed guidance on the disclosure of directors’ interests in your specific context.

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