When must a director disclose interest under section 184?
How section 184 of the Companies Act, 2013 requires Form MBP-1, the first-meeting and first-meeting-of-the-year clocks, the 2 percent shareholding recusal test, the eight-year retention of notices, and the Rs 1 lakh penalty.
In this guide
Every director must disclose concern or interest, including shareholding, in Form MBP-1 at the first board meeting he attends as a director, at the first board meeting of every financial year, and at the first meeting after any change. Section 184 of the Companies Act, 2013 also bars an interested director from sitting in a contract discussion where the 2 percent shareholding test is met. Contravention costs that director a penalty of Rs 1 lakh.
What does section 184 require?
Section 184 of the Companies Act, 2013 has two duties. Section 184(1) is a standing disclosure of concern or interest, including shareholding, in any company, body corporate, firm or other association of individuals. Section 184(2) is a meeting-by-meeting disclosure, and recusal, when the Board discusses a contract or arrangement in which the director is concerned or interested.
Rule 9 of the Companies (Meetings of Board and its Powers) Rules, 2014 puts the standing disclosure in Form MBP-1. The form stays with the company. It is not an MCA e-form.
When is Form MBP-1 due?
Section 184(1) names three moments: the first meeting of the Board in which the person participates as a director; the first meeting of the Board in every financial year; and, whenever there is any change in the disclosures already made, the first Board meeting held after such change.
| Event | When Form MBP-1 is given |
|---|---|
| Director first participates as a director | At that first Board meeting |
| New financial year begins | At the first Board meeting of that year |
| Shareholding or other interest changes | At the first Board meeting after the change |
| Notice has been given | Kept 8 years from the end of that financial year (rule 9(3)) |
Rule 9(2) makes it the duty of the director who gave the notice to cause it to be disclosed at the meeting held immediately after the date of the notice. Minutes should record that reading.
Is MBP-1 filed with the Registrar?
No. Rule 9(3) keeps all notices at the registered office, preserved for eight years from the end of the financial year to which the notice relates, in the custody of the company secretary or any other person authorised by the Board. Related-party approval is a different filing. See the section 188 guide.
When must an interested director recuse?
Section 184(2) applies when the Board discusses a contract or arrangement, or a proposed one, with a body corporate in which the director, alone or with any other director, holds more than 2 percent shareholding, or is a promoter, manager or Chief Executive Officer of that body corporate, or with a firm or other entity in which the director is a partner, owner or member. The director discloses the nature of the interest at that meeting and shall not participate.
If the interest arises after the contract is entered, the director discloses forthwith when he becomes concerned or interested, or at the first Board meeting held after that.
Can a private-company director still sit in?
Yes, after disclosure. Notification G.S.R. 464(E) dated 5 June 2015 applies section 184(2) to private companies with the exception that the interested director may participate in such meeting after disclosure of his interest. Section 184(1) still runs. The standing MBP-1 is not dropped.
What is the 2 percent shareholding test?
Two places in section 184 use 2 percent, and they do different jobs. Section 184(2)(a) pulls a director into recusal where that director, or that director with any other director, holds more than 2 percent of the body corporate on the other side, or is its promoter, manager or CEO. Section 184(5)(b) then keeps the whole section off a contract between two companies, or between companies and bodies corporate, where the directors of one, or two or more of them together, hold not more than 2 percent of the paid-up share capital in the other.
A 1 percent holding, with no promoter, manager or CEO role, sits under the 184(5)(b) carve-out. A 2.5 percent holding does not.
What is the section 184 penalty?
Section 184(4), as substituted by the Companies (Amendment) Act, 2020, makes a director who contravenes sub-section (1) or (2) liable to a penalty of one lakh rupees. There is no imprisonment limb in the current text.
Section 184(3) is the civil consequence. A contract or arrangement entered without the section 184(2) disclosure, or with participation by a director who is concerned or interested, is voidable at the option of the company. The section 185 loan prohibition is a separate bar on advancing money to directors.
How do I confirm the MBP-1 rules?
- Read section 184 for the three disclosure moments, the recusal rule, the 2 percent tests, and the Rs 1 lakh penalty.
- Keep Form MBP-1 at the registered office for eight years under rule 9(3), and record in the minutes that the notice was disclosed.
- If the company is private, read G.S.R. 464(E) dated 5 June 2015 before treating recusal as mandatory.
Why do MBP-1 disclosures get missed?
- Collecting MBP-1 at appointment and skipping the first Board meeting of the next financial year.
- Treating a 3 percent holding in a vendor as too small to mention, then leaving the director in the room for that contract.
- Filing MBP-1 with the Registrar, or attaching it to DIR-12, and not keeping the notice at the registered office for eight years.
- Applying the private-company participation exemption to a public company, or dropping MBP-1 because the exemption exists.
Where are board-disclosure rules notified?
Form MBP-1, the Board-meeting rules and the private-company exemptions move through MCA. Complied AI keeps MCA updates in one feed so you can open the source behind a change. When the duty itself is the question, read section 184 next to that update.
Practical checks
Common questions
What is Form MBP-1 used for?
Form MBP-1 is the notice of interest by a director under section 184(1) of the Companies Act, 2013 and rule 9 of the Companies (Meetings of Board and its Powers) Rules, 2014. It lists the companies, bodies corporate, firms and associations in which the director is concerned or interested, including shareholding. It is given to the company, not filed with the Registrar.
When does a new director have to give MBP-1?
At the first meeting of the Board in which that person participates as a director. Section 184(1) of the Companies Act, 2013 uses that first-participation meeting, not the date of DIN allotment and not the date of DIR-12. If the director misses that meeting, the disclosure is already late.
Do I need a fresh MBP-1 every financial year?
Yes. Section 184(1) requires the disclosure again at the first meeting of the Board in every financial year, and also at the first Board meeting held after any change in the disclosures already made. A January appointment does not skip the April first-meeting-of-the-year disclosure.
I hold 1.5 percent in a supplier. Do I leave the room?
Not under the 2 percent test in section 184(2)(a), if that is the only interest and you are not a promoter, manager or CEO of that body corporate. Section 184(5)(b) also keeps the section off a contract between two companies where the directors of one, together, hold not more than 2 percent of the paid-up share capital in the other. Crossing 2 percent, or being promoter, manager or CEO, is what triggers recusal.
What is the penalty if a director skips MBP-1?
Section 184(4) of the Companies Act, 2013, as substituted by the Companies (Amendment) Act, 2020, makes that director liable to a penalty of Rs 1 lakh. The earlier imprisonment limb is gone. The contract itself is voidable at the option of the company under section 184(3) if it was entered without the section 184(2) disclosure or with the interested director participating.
How long must the company keep MBP-1 notices?
Eight years from the end of the financial year to which the notice relates, at the registered office, in the custody of the company secretary or another person authorised by the Board. That retention is rule 9(3) of the Companies (Meetings of Board and its Powers) Rules, 2014.
Can an interested director of a private company still vote?
Yes, after disclosure. Notification G.S.R. 464(E) dated 5 June 2015 applies section 184(2) to private companies with the exception that the interested director may participate in such meeting after disclosure of his interest. The MBP-1 duty in section 184(1) is not taken off.
Publication method
How this guide was prepared
This guide is published by the Complied AI research desk. Its source list and stated position were checked against the official records shown below on 9 September 2026.
Automation, including AI, may assist research, drafting and structure. It does not replace the official record or amount to an independent professional review. Read our editorial standards and corrections policy.
Verification path
Official sources used
Keep reading
Related guides
- Law · SectionsWho must appoint KMPs under section 203?Which companies must appoint whole-time key managerial personnel under section 203 of the Companies Act, 2013, the Rs 10 crore paid-up capital test in rule 8, the six-month vacancy clock, and the Rs 5 lakh company penalty.
- Law · SectionsHow many board meetings does section 173 require?How section 173 of the Companies Act, 2013 governs board meetings: the first meeting within 30 days, at least four meetings a year with no more than 120 days between two, the relaxed rule for OPCs, small and dormant companies, the seven-day notice, and video participation.
- Law · SectionsWho is a significant beneficial owner under section 90?Who is a significant beneficial owner under section 90 of the Companies Act, 2013 and the SBO Rules, 2018: the 10% indirect-holding test, the declaration duty, the company register, and how it links to Forms BEN-1 and BEN-2.