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CS Executive · Company Law and Practice · Key Managerial Personnel and their Remuneration

Rohan Desai, a KMP of Orion Ltd, has a financial interest in an item of special business at a general meeting. Because the explanatory statement did not disclose it, he gained a benefit. What is the legal consequence under section 102?

He must hold the benefit in trust for the company and compensate the company to the extent of the benefit received, as section 102(4) provides, in addition to any other action under law. Key managerial personnel are expressly covered by the disclosure requirement.

  1. AHe holds the benefit in trust for the company and is liable to compensate the company to the extent of the benefitCorrect
  2. BHe keeps the benefit if it is below two per cent of paid-up capital
  3. CHe is only required to disclose it at the next meeting
  4. DNo consequence arises as KMP are outside section 102

Explanation

Section 102(1)(a) requires disclosure of the interest of every director, manager and other KMP. Under section 102(4), a benefit arising from non-disclosure is held in trust for the company and must be compensated, without prejudice to other action. The two per cent test concerns shareholding in another company, not this rule.

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