Mehr Fashions Ltd, is a public limited company, promoted by five founders. It manufactures textiles and is well known for its brand 'Flash' As part of its expansion plans and also to raise funds from PE firms, the founde

In terms of Section 184(2) of the Companies Act, 2013, every director of a company who is in any way, whether directly or indirectly, concerned or interested in a contract or arrangement or proposed contract or arrangement entered into or to be entered into with a body corporate in which such director or such director in association with any other director, holds more than two per cent. shareholding of that body corporate, or is a promoter, manager, Chief Executive Officer of that body corporate, shall disclose the nature of his concern or interest at the meeting of the Board in which the contract or arrangement is discussed and shall not participate in such meeting. Further, as per Section 166 of the Act, a director of a company shall not involve in a situation in which he may have a direct or indirect interest that conflicts, or possibly may conflict, with the interest of the company. Mahik is the founder of Mehr Fashions Ltd. and based on the facts of the case, it is assumed that Mahik is not a Director on the Board of the Company. Therefore, the provisions related to Disclosure of Interest by Director under Section 184 of the Act and Duties of Directors under Section 166 of the Act, as not applicable on Mahik. In view of this, he is not debarred from participating in the Board Meeting in which the agreement with Klothing Private Limited is proposed to be placed for approval and Mahik is also not mandatorily required to disclose his shareholding in Klothing Private Limited as he shall not be a part of decision-making process in the meeting, though the Board must still independently consider the transaction in compliance with the Act.