Corporate and Economic Laws · Compromises, Arrangements and Amalgamations

Registers of Contracts and Directors' Interest under Section 189

Updated 11 October 2026 · Fact-checked

Section 189 requires every company to keep registers of contracts or arrangements covered by Section 184(2) or Section 188 in which directors are interested. The register goes to the next Board meeting for signature by directors present, is kept at the registered office, and is open to members. A director who fails to comply is liable to a ₹25,000 penalty.

Understand Registers of Contracts and Directors' Interest (Section 189)

Directors can be tempted to favour a company they own or run. The Act handles this in two layers. Section 184 deals with disclosure: the director declares the interest and stays out of the Board discussion. Section 189 deals with the record: the company must log the contract in a register so that members and the Board can see it.

Section 189(1) says every company must keep one or more registers giving separately the particulars of all contracts or arrangements to which Section 184(2) or Section 188 applies. The manner and particulars are as prescribed in the rules. After the entries are made, the register is placed before the next Board meeting and signed by all directors present at that meeting.

Two more duties sit in the section. Under 189(2), every director or key managerial personnel must, within 30 days of appointment or of relinquishing office, disclose to the company the particulars of his concern or interest in other associations, as specified in Section 184(1), or other prescribed information.

On access: the register is kept at the registered office and is open for inspection there during business hours. Members can take extracts and get copies, on payment of the prescribed fee. It must also be produced at the start of every annual general meeting and stay open and accessible during the meeting to any person entitled to attend.

There are two exemptions in 189(5). Section 189(1) does not apply to a contract for sale, purchase or supply of goods, materials or services if the value or cost does not exceed ₹5,00,000 in aggregate in any year. It also does not apply to a banking company's contract for collection of bills in the ordinary course of business.

Key rules to remember

What goes in the register: Contracts or arrangements under Section 184(2) or Section 188; Particulars are kept separately, in the manner and form prescribed by the rules.
Board placement and signing: Place before the next Board meeting; signed by all directors present; Section 189(1). Directors absent at that meeting do not sign.
Director or KMP disclosure: Within 30 days of appointment or relinquishment of office; Section 189(2). Particulars are those specified in Section 184(1), relating to his concern or interest in other associations.
Place and inspection: Registered office; open in business hours; produced at the start of every AGM; Section 189(3) and (4). Members may take extracts and get copies on payment of the prescribed fees.
Exemptions: Goods, materials or services not exceeding ₹5,00,000 in aggregate in a year; banking company bill collection in ordinary course; Section 189(5). The limit is aggregate per year, not per contract.
Penalty: ₹25,000 on every director who fails to comply; Section 189(6). Compare ₹1,00,000 for contravening Section 184(1) or (2) under Section 184(4).
Section 184 vs 189: 184 = disclosure and non-participation; 189 = register and access; Contract entered without Section 184 disclosure, or with an interested director participating, is voidable at the company's option (Section 184(3)).

How to solve Registers of Contracts and Directors' Interest (Section 189) questions

Most questions give a short scenario and ask whether the register duty applies, what must be done, or what the consequence is. Work through it in order.

1Identify whether the contract falls under Section 184(2) or Section 188. If not, the register duty under Section 189(1) is not triggered.
2Check the exemptions in Section 189(5): goods, materials or services up to ₹5,00,000 in aggregate in the year, or a bank's bill collection in ordinary course.
3If it applies, state that particulars are entered in the register, kept separately, in the prescribed manner.
4State the Board step: the register is placed before the next Board meeting and signed by all directors present.
5Cover custody and access: registered office, business-hours inspection, extracts and copies on prescribed fee, production at the start of the AGM.
6Cover director or KMP disclosure within 30 days of appointment or relinquishment, if the facts mention it.
7State the consequence: ₹25,000 penalty on each defaulting director under Section 189(6); add Section 184 consequences if disclosure was also missed.
8Close with a one-line conclusion answering the exact question asked.

Quickest way: Four-check shortcut for Section 189 questions

When to use it: Use for MCQs and short scenario questions where you have only a minute or two.

Is the contract under Section 184(2) or 188? If no, no register entry.
Is it a goods, materials or services contract within ₹5,00,000 in aggregate for the year? If yes, exempt.
Otherwise: enter, place before next Board meeting, signed by all directors present.
Penalty is ₹25,000 per defaulting director for Section 189; ₹1,00,000 if the issue is Section 184 disclosure.

Common mistakes in Registers of Contracts and Directors' Interest (Section 189)

Saying the register is signed by all directors.
The word 'all' sticks and the rest of the phrase is dropped.
Fix: Write 'all directors present at the meeting' at which the register is placed, which is the next Board meeting.
Mixing up the penalties of Section 184 and Section 189.
Both sections deal with director interest and the amounts look alike.
Fix: Section 189(6) is ₹25,000; Section 184(4) is ₹1,00,000. Link 189 to the register and 184 to disclosure.
Applying the ₹5,00,000 exemption to every contract.
Students remember the limit but not its scope.
Fix: It covers only sale, purchase or supply of goods, materials or services, and is an aggregate for the year.
Saying the register is kept at any place the company chooses.
Confusion with Section 94, which allows certain registers at another place by special resolution.
Fix: Section 189(3) requires the registered office. The Section 94 proviso applies to Section 88 registers, not this one.
Treating Section 189 as the section that makes contracts voidable.
Both sections are discussed together in one scenario.
Fix: Voidability comes from Section 184(3). Section 189 is about recording and access.
Forgetting the AGM duty.
Students focus on inspection at the office.
Fix: Add that the register must be produced at the commencement of every AGM and remain open during it.

Worked examples

Example 1

Sundaram Textiles Ltd enters into a contract to buy cotton worth ₹3,20,000 in the year from a firm in which director Mr. Ramesh Iyer is a partner. No other purchase from that firm occurs in the year. Must the company enter it in the Section 189 register?

Show the solution

The firm is one in which a director is a partner, so Section 184(2)(b) is the relevant provision and the contract is of the kind the register covers.
The contract is for purchase of goods (cotton). Check Section 189(5)(a): exempt if value does not exceed ₹5,00,000 in aggregate in the year.
Aggregate for the year is ₹3,20,000, which is below ₹5,00,000.
So Section 189(1) does not apply to this contract.

Answer: No register entry is required under Section 189, because the purchase of goods is within the ₹5,00,000 aggregate annual limit. Section 184 disclosure and non-participation by Mr. Iyer are separate duties and still apply.

Example 2

Kaveri Infra Ltd keeps a register of contracts in which directors are interested. It is not placed before the Board, and a member asks to inspect it at the registered office. Discuss the company's obligations and the consequences of default.

Show the solution

Section 189(1): after entries are made, the register must be placed before the next Board meeting and signed by all directors present. This was not done.
Section 189(3): the register is kept at the registered office and open for inspection during business hours. Extracts can be taken, and copies must be furnished to members on payment of the prescribed fees.
So the company must allow the member to inspect, and supply extracts or copies on payment of the prescribed fee.
Section 189(4): the register must also be produced at the commencement of every AGM and stay open during the meeting.
Consequence: under Section 189(6), every director who fails to comply with the section and its rules is liable to a penalty of ₹25,000.

Answer: The company must place the register before the next Board meeting for signature, and allow the member to inspect it and take extracts or copies on the prescribed fee. Each director in default is liable to a penalty of ₹25,000 under Section 189(6).

Exam tips

Learn the one-line split: Section 184 is disclosure and abstaining; Section 189 is the register and access. Questions often test this.
Memorise the numbers: 30 days, ₹5,00,000, ₹25,000, and ₹1,00,000 for Section 184.
In scenario MCQs, check the ₹5,00,000 exemption first; it is the most common trap.
In written answers, use the order: applicability, entry, Board signing, inspection, AGM, penalty.
Say 'prescribed' for manner, particulars and fees; do not invent rule details you are not sure of.

Practice questions from Compromises, Arrangements and Amalgamations

Registers of Contracts and Directors' Interest (Section 189) in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Registers of Contracts and Directors' Interest (Section 189): frequently asked questions

What is the penalty under Section 189 of the Companies Act, 2013?

Every director who fails to comply with the section and the rules made under it is liable to a penalty of ₹25,000. This is under Section 189(6).

What is the difference between Section 184 and Section 189?

Section 184 requires a director to disclose his interest and not participate in the Board discussion on the contract. Section 189 requires the company to record such contracts in a register, place it before the Board, and make it open to inspection. The penalty under 184(4) is ₹1,00,000, against ₹25,000 under 189(6).

Who can inspect the register of contracts under Section 189?

The register is open for inspection at the registered office during business hours, and members can take extracts and get copies on the prescribed fee. It must also be produced at every AGM and be accessible to any person entitled to attend.

Are small contracts exempt from the register?

Yes. Section 189(5)(a) exempts contracts for sale, purchase or supply of goods, materials or services if the value or cost does not exceed ₹5,00,000 in aggregate in any year. A banking company's bill collection in ordinary course is also exempt.