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CS Executive · Setting Up of Business, Industrial and Labour Laws · The Code on Social Security, 2020

Ms. Kavita Rao, a director of Rao Textiles Ltd., is also a member of a Social Security Organisation. A matter comes up in which Rao Textiles has a direct pecuniary interest. What must she do under the Code on Social Security, 2020?

She must disclose the nature of her interest as soon as possible, ensure it is recorded in the proceedings, and then stay out of all proceedings and decisions on that matter. She need not resign.

  1. ADisclose the nature of her interest as soon as possible, have it recorded in the proceedings, and not take part in any proceeding or decision on that matterCorrect
  2. BDisclose the interest but she may still vote if the matter is routine
  3. CResign immediately from the Organisation
  4. DTake part only in discussion but abstain from voting

Explanation

Under section 8(5), such a member must disclose the interest as soon as possible after it comes to her knowledge, with the disclosure recorded in the proceedings. She thereafter must not take part in any proceeding or decision on that matter. Resignation is not required, and abstaining while joining discussion is not allowed.

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