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Disclosure of interest by director.— (1) Every director of a company who is in any way, whether directly or indirectly, concerned or interested in any contract or arrangement entered into, or to be entered into, by or on behalf of the company shall disclose the nature of his concern or interest at a meeting of the board: Provided that a director shall be deemed also to be interested or concerned if any of his relatives, is so interested or concerned. Explanation. For the purpose of this section "director's relatives", are: (a) the director's spouse; (b) the director's children, including the step children; (c) the director's parents; (2) The disclosure required to be made by a director under sub-section (1) shall be made- (a) in the case of a contract or arrangement to be entered into, at the meeting of the board at which the question of entering into the contract or arrangement is first taken into consideration or, if the director was not, on the date of that meeting, concerned or interested in the contract or arrangement, at the first meeting of the board held after he becomes so concerned or interested; and (b) in the case of any other contract or arrangement, at the first meeting of the board held after the director becomes concerned or interested in the contract or arrangement. (3) For the purposes of sub-sections (1) and (2), a general notice given to the board to the effect that a director is a director or a member of a specified body corporate or a partner of a specified firm and is to be regarded as concerned or interested in any contract or arrangement which may, after the date of the notice, be entered into with that body corporate or firm, shall bedeemed to be a sufficient disclosure of concern or interest in relation to any contract or arrangement so made. (4) Any such general notice shall expire at the end of the financial year in which it is given, but may be renewed for further period of one financial year at a time, by a fresh notice given in the last month of the financial year in which it would otherwise expire. (5) No such general notice, and no renewal thereof, shall be of effect unless either it is given at a meeting of the board, or the director concerned takes reasonable steps to ensure that it is brought up and read at the first meeting of the board after it is given. (6) Any contravention or default in complying with requirements of subsections (1) or (2), shall be an offence liable to a penalty of level 1 on the standard scale. 206. Interest of officers. (1) Save as provided in section 205 in respect of directors, no other officer of a company who is in any way, directly or indirectly, concerned or interested in any proposed contract or arrangement with the company shall, unless he discloses the nature and extent of his interest in the transaction and obtains the prior approval of the board, enter into any such contract or arrangement. (2) Any contravention or default in complying with requirement under this section shall be an offence liable to a penalty of level 1 on the standard scale. 207. Interested director not to participate or vote in proceedings of board. (1) No director of a company shall, as a director, take any part in the discussion of, or vote on, any contract or arrangement entered into, or to be entered into, by or on behalf of the company, if he is in any way, whether directly or indirectly, concerned or interested in the contract or arrangement, nor shall his presence count for the purpose of forming a quorum at the time of any such discussion or vote; and if he does vote, his vote shall be void: Provided that a director of a listed company who has a material personal interest in a matter that is being considered at a board meeting shall not be present while that matter is being considered.2) If majority of the directors are interested in, any contract or arrangement entered into, or to be entered into, by or on behalf of the company, the matter shall be laid before the general meeting for approval. (3) Sub-section (1) shall not apply to: (a) a private company which is neither a subsidiary nor a holding company of a public company; (b) any contract of indemnity or insurance coverage executed by the company in favor of interested director against any loss which he may suffer or incur by reason of becoming or being a surety for the company or while undertaking any transaction on behalf of the company: Provided that for the purpose of clause (b), a company shall only insure the liability of interested director where such liability arises out of a transaction validly approved by the board or the members of the company as the case may be: (4) Any contravention or default in complying with requirements under this section shall be an offence liable to a penalty of level 1 on the standard scale.
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