Question

Consider the following statements regarding conflict of interest and related party transactions under Sections 184-188 of the Companies Act, 2013: Statement 1: A director must disclose their interest in any contract with the company as soon as possible after becoming aware of it. Statement 2: A director can participate in discussions and voting on matters where they have a material interest. Statement 3: A company can enter into a contract with a director only if it is for the benefit of the company and has been approved by the Board. Statement 4: Related party transactions require prior Audit Committee approval or Shareholder approval depending on the transaction value. Which statements are correct?

Q: Answer-Consider the following statements regarding conflict of interest and related party transactions unde...

Sections 184-188 regulate conflicts of interest. Statement 1 is correctSection 184 mandates disclosure of director interest. Statement 3 is correctsuch contracts must be in companys interest and board-approved. Statement 4 is correctSection 188 requires approval from Audit Committee or shareholders depending on transaction size. Statement 2 is incorrect because interested directors must not participate in discussions or voting on related matters they must recuse themselves as per Section 1842 and common law fiduciary duty. Statements 1, 3, and 4 are correct.