Section 192 of the Companies Act, 2013
Section 192 of the Companies Act, 2013 deals with the restriction on non-cash transactions involving directors.
🔹 Section 192 – Restriction on Non-Cash Transactions Involving Directors
This section is intended to prevent misuse of company assets through barter or exchange-based transactions involving directors or their connected parties.
✅ Key Provisions:
📌 1. Scope and Applicability:
This section applies when:
A company enters into a non-cash transaction with:
Director of the company
Director of its holding, subsidiary, or associate company
A person connected with any of the above
📌 2. Approval Requirement:
Such transactions are voidable unless:
Prior approval is obtained from the company in a general meeting through a resolution.
If the director belongs to a holding company, the approval must also be taken by passing a resolution in the general meeting of the holding company.
📌 3. Definition – "Non-Cash Transaction":
A transaction where assets are acquired or disposed of without cash consideration, such as:
Exchange of property
Barter arrangements
Asset swaps with directors or related persons
⚠️ 4. Penalty for Contravention:
If the transaction is carried out without approval:
It becomes voidable at the instance of the company, unless:
Restitution is no longer possible, or
The company has been indemnified by the director or connected person involved
🧾 Example:
If a company gives a company-owned vehicle to a director in exchange for personal property (like a plot of land) without shareholders' approval, it violates Section 192 and the transaction is voidable.
📌 Objective:
To ensure transparency and prevent directors from abusing their position by entering into favorable barter-style arrangements using company assets.
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