Board of directors of Divine Ltd. decides to enter into a contract whereby Manish, a director of the company shall acquire certain assets from the company for consideration other than cash, without seeking approval of th

Section 192 of the Companies Act, 2013 restricts companies from transacting any non-cash transaction involving directors. It provides that no company can enter into an arrangement by which - a. director of the company or its holding, subsidiary or associate company or a person connected with him acquires or is to acquire assets for consideration other than cash, from the company; or b. the company acquires or is to acquire assets for consideration other than cash, from such director or person so connected. However it is further provided that a company can enter into an arrangement only if the prior approval for such arrangement is accorded by a resolution of the company in general meeting. Considering the above provisions, in the present case, the decision of the Board of Divine Ltd. is not valid. Hence the contention of shareholders is tenable.