Section 7A of The Securities and Exchange Board of India Act, 1992
Any member, who is a director of a company and who as such director has any direct or indirect pecuniary interest in any matter coming up for consideration at a meeting of the Board, shall, as soon as possible after relevant circumstances have come to his knowledge, disclose the nature of his interest at such meeting and such disclosure shall be recorded in the proceedings of the Board, and the member shall not take any part in any deliberation or decision of the Board with respect to that matter.]
Summary
- If a member is a director of a company and has a direct or indirect financial interest in a matter being discussed by the Board, they must disclose this interest.
- The member must disclose the nature of their interest as soon as possible after they realise the facts.
- This disclosure must be officially recorded in the proceedings of the Board.
- After disclosing the interest, the member is forbidden from taking part in any discussion or decision about that specific matter.
Practical examples
FAQ
1. What must a member do if their company is brought up in a meeting?
If they are a director and have a direct or indirect financial interest, they must disclose the nature of their interest as soon as possible.
2. Is the member allowed to sit in and argue their side after disclosing an interest?
No, the member cannot take any part in any deliberation or decision of the Board regarding that matter.
3. Does the rest of the Board keep a record of this?
Yes, the disclosure must be recorded in the proceedings of the Board.
Test yourself
Q1.Under Section 7A of The Securities and Exchange Board of India Act, 1992, what type of interest requires a member to make a disclosure?
Q2.Under Section 7A of The Securities and Exchange Board of India Act, 1992, what restriction is placed on a member after they disclose a financial interest?
Q3.Under Section 7A of The Securities and Exchange Board of India Act, 1992, when must a member disclose their interest in a matter?
Q4.Under Section 7A of The Securities and Exchange Board of India Act, 1992, what administrative action must follow a member's disclosure of interest?