What must the company record?
Section 189 requires registers for covered contracts under section 184(2) or section 188. Rule 16 prescribes Form MBP-4 and also addresses particulars of directors’ interests. Entries must be made promptly in chronological order and authenticated. The register must then follow the Board, registered-office and member-access requirements; a related-party spreadsheet used only for financial-statement notes is not automatically an adequate statutory register.
Read the Act and the rule together
The ICSI official text of section 189 and Rule 16 of the Companies (Meetings of Board and its Powers) Rules, 2014 provide the framework checked on 26 October 2026. This article’s numerical threshold examples assume an ordinary company without a special exemption, not a section 8 company or a banking-company bill-collection arrangement. The section 189 text identifies a section 8 modification; those companies require a separate applicability review.
Do not merge the two percentage and value screens
Rule 16(1)(a) addresses director-interest particulars under section 184(1). Its proviso excludes particulars of companies or bodies corporate where the director, together with any other director, holds 2% or less of paid-up share capital. The wording requires an aggregation check. It is not a 2% exemption from every contract entry, every conflict disclosure or section 188 approval.
Section 189(5)(a) excludes from subsection (1) contracts for sale, purchase or supply of goods, materials or services where the relevant value or service cost does not exceed ₹5 lakh in aggregate in any year. Exactly ₹5 lakh is within that wording. Track the annual aggregate for the covered arrangement and do not screen each invoice independently. Do not automatically extend this exclusion to unrelated categories such as a property arrangement without checking whether its terms fall within the specified exclusion.
A register exclusion does not itself remove a transaction from sections 184 or 188 or authorise it. Maintain separate conclusions for the substantive interest/approval requirements and for whether a particular statutory entry is required. If facts or classification are uncertain, preserve the underlying evidence and resolve the issue before relying on an exemption.
Entry, Board presentation and custody
Rule 16(2) requires entries at once when the cause arises, chronologically, authenticated by the company secretary or another Board-authorised person. Section 189(1) requires the register to be placed before the next Board meeting and signed by all directors present. These are separate controls: administrative authentication does not replace the directors’ signatures, and a future Board date does not justify delaying the entry.
Section 189(2) separately addresses disclosure by directors or KMP within 30 days of appointment or relinquishment, for the specified information. Preserve this disclosure trail, the section 184 information and the contract-entry record distinctly. Rule 16(3) requires permanent preservation and custody at the registered office by the company secretary or another Board-authorised person.
Member access and copies
Section 189(3) provides registered-office inspection during business hours; subsection (4) requires production at the commencement of every AGM and accessibility throughout it to those entitled to attend. Under Rule 16(4), a member’s requested extracts must be provided within seven days upon payment of the fee specified in the articles, capped at ₹10 per page. The ceiling is not a compulsory charge: verify the articles and the actual request.
A practical control file contains the request date, page count, applicable fee, payment and dispatch or delivery evidence. Do not substitute an invoice raised on the seventh day for proof that the requested extract was provided. Keep the permanent register while making controlled copies for access.
Six worked illustrations
All facts and amounts below are fictional. Assumptions describe the model, not additional statutory rules.
Illustrative example 1: Annual aggregate exceeds the exclusion
An otherwise covered service arrangement costs ₹4,80,000 initially and another ₹30,000 in the same year. Aggregate cost is ₹5,10,000, exceeding ₹5,00,000 by ₹10,000. The section 189(5)(a) value exclusion cannot be claimed on the modelled aggregate merely because each invoice is lower.
Illustrative example 2: Exactly ₹5 lakh
An otherwise covered goods arrangement totals ₹5,00,000 for the year. It does not exceed ₹5 lakh and falls within subsection (5)(a)’s value wording for the stipulated ordinary-company facts. This is a register-subsection exclusion, not a transaction-approval conclusion.
Illustrative example 3: Combined director holdings above 2%
Director A holds 1.2% and Director B 0.9% of the same company’s paid-up capital. Their combined holding is 2.1%, above the Rule 16(1)(a) proviso’s 2% ceiling by 0.1 percentage point. The low-holding exclusion does not apply on these facts.
Illustrative example 4: Combined holding exactly 2%
A director holds 1.1% and another director 0.9%. Combined holding is 2.0%. The proviso covers 2% or less for the relevant company-interest particulars. This does not exempt a separately covered contract entry under another limb.
Illustrative example 5: Extract fee within the articles and ceiling
The articles specify ₹8 per page and a member requests 12 pages. Fee is 12 × ₹8 = ₹96. The statutory maximum for that page count would be ₹120, but the lower articles-based charge governs the model.
Illustrative example 6: Seven-day extract diary
A member requests an extract on 10 April 2026 and pays the applicable fee that day. Using start-date exclusion, the seven-day interval ends on 17 April 2026. A delivery on 19 April is 2 days beyond that modelled date; preserve evidence of actual provision.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Confirm entity scope | Ordinary-company or special-exemption analysis. |
| 2 | Collect interest disclosures | Director/KMP records and section 184 information. |
| 3 | Test the 2% particulars proviso | Combined relevant director holdings. |
| 4 | Identify covered contracts | Sections 184(2)/188 legal classification. |
| 5 | Apply relevant value exclusions | Annual aggregate and contract-category evidence. |
| 6 | Enter and authenticate promptly | Chronological MBP-4 and authorised authentication. |
| 7 | Present at next Board meeting | Register presentation and signatures of all directors present. |
| 8 | Maintain permanent custody | Registered-office location and authorised custodian. |
| 9 | Provide AGM and member access | Inspection arrangements, extract request, fee and delivery proof. |
| 10 | Reconcile independently | Contract ledger, disclosures and financial-reporting schedules without conflating approvals. |
Sixteen practitioner FAQs
1. Is MBP-4 merely a related-party financial-note list?
No. It serves a statutory register function with prescribed interest, contract, authentication and access requirements.
2. Which contracts does section 189(1) identify?
Those to which section 184(2) or section 188 applies, subject to applicable exclusions and modifications.
3. Does Rule 16 also cover interest particulars?
Yes. Rule 16(1)(a) addresses the specified section 184(1) interests separately from the contract limbs.
4. Is the 2% proviso per director in isolation?
The wording considers a director together with any other director; document the relevant combined holding.
5. Does exactly 2% qualify for that proviso?
Yes, the wording is 2% or less, within its specific particulars scope.
6. Does that proviso excuse all related-party contracts?
No. Assess the other limbs and substantive approval/conflict rules separately.
7. Is the ₹5 lakh test per invoice?
Do not screen invoices in isolation where the statutory annual aggregate applies to the covered arrangement.
8. Is exactly ₹5 lakh above the value ceiling?
No. Section 189(5)(a) uses “does not exceed”.
9. Does the value exclusion cover every type of arrangement?
No. Its specified goods/materials/services wording must fit the actual contract.
10. Does a register exemption confer approval?
No. The underlying transaction and interest requirements require their own analysis.
11. When should entries be made?
At once when a cause for entry arises, chronologically, under Rule 16(2).
12. Who authenticates entries?
The company secretary or another person authorised by the Board under the rule.
13. Does authentication replace Board signatures?
No. Section 189(1) separately requires next-meeting presentation and signatures of all directors present.
14. How long is the register preserved?
Permanently under Rule 16(3), at the registered office with the prescribed authorised custodian.
15. Is ₹10 per page always chargeable?
No. Check the articles-based fee; ₹10 is the per-page cap.
16. Do section 8 companies use these ordinary examples unchanged?
No. The official section text records a special modification; establish its applicability and conditions separately.
Conclusion
MBP-4 combines interest particulars and covered contracts, with distinct entry and disclosure rules. Apply section 189 and Rule 16 without confusing register exemptions with permission to enter related-party transactions.