Last updated: 12 June 2026
On 28 March 2026, the Registrar of Companies, Bangalore fined all six directors of AVK Valves India Private Limited ₹1,00,000 each. Total: ₹6 lakh, payable from their personal income, not the company’s account. Their offence had nothing to do with fraud, funds or even a missed MCA filing. The company simply could not produce Form MBP-1 and DIR-8, the two disclosure of interest records every director must give under Section 184 at the first board meeting of each financial year. The secretarial auditor flagged the gap in MGT-8, an ROC inquiry followed, and the order (PO/ADJ/03-2026/BL/01827) landed three years later. First board meetings of FY 2026-27 are happening right now, between April and July. Fixing this costs nothing. Ignoring it just cost six people ₹1 lakh each.
Quick Summary
Deadline: First board meeting of FY 2026-27 (for most companies, between April and late July 2026 under the 120-day gap rule)
Who must comply: Every director of every company, private or public, on every board they sit on
Penalty for non-compliance: ₹1 lakh per director under Section 184(4), plus vacation of office risk under Section 167(1)(d) and voidable contracts under Section 184(3)
Key action: Collect signed MBP-1 and DIR-8 from every director, place them at the board meeting, record it in the minutes, and file the notices at the registered office for 8 years
Time to act: Before your first board meeting of the year. There is no MCA form, no late fee window, and CCFS-2026 cannot cure this lapse
Why MBP-1 Is the Compliance Everyone Skips
MBP-1 is the rare obligation under the Companies Act 2013 that involves no MCA portal, no SRN, no challan and no government fee. A director writes out his or her interests in other companies, firms and bodies corporate, signs the form, and hands it to the company. The company places it before the board, notes it in the minutes, and locks the paper away at the registered office for eight years under Rule 9(3) of the Companies (Meetings of Board and its Powers) Rules, 2014.
Because nothing gets uploaded, nothing reminds you. The MCA’s V3 portal will chase you for AOC-4 and MGT-7. Nobody chases you for MBP-1. The lapse stays invisible until one of three people asks for the file: a secretarial auditor signing MGT-8 on your annual return, an investor’s counsel running due diligence before a funding round, or an ROC officer conducting an inquiry under Section 206(4). At AVK Valves, the practising company secretary recorded in MGT-8 for FY 2021-22 that the company “has not made available Form MBP-1 and DIR-8”. The ROC inquiry took it from there.
The numbers in that order deserve attention. Six directors, including foreign nationals resident in Denmark, were each fined the full ₹1 lakh. The company argued in January 2026 that records were in fact available for five of the six directors. The Registrar rejected the explanation in one line: the company was duty bound to provide the documents to the secretarial auditor during the audit, failed to do so, and could not reconstruct compliance after the event. Late paper does not cure a missed disclosure.
What Section 184 Actually Requires
Section 184(1) sets three triggers. A director must disclose interests, in writing in Form MBP-1, at:
The disclosure covers every company, body corporate, firm or association where the director holds an interest, including shareholding. Section 184(2) adds the transactional layer: where a contract or arrangement is discussed with an entity in which the director holds more than 2% shareholding, or is a promoter, manager or CEO, or is a partner or owner, the director must disclose the nature of the interest at that meeting and stay out of the discussion. Private companies enjoy a narrow relaxation under notification G.S.R. 464(E) dated 5 June 2015: the interested director may participate, but only after disclosing, and the relaxation falls away if the company has defaulted on its Section 137 financial statement or Section 92 annual return filings.
Three consequences hang off a failure, and the penalty is the mildest of them.
| Consequence | Provision | What it means for the director |
|---|---|---|
| Civil penalty | Section 184(4) | Flat ₹1 lakh per defaulting director, paid personally. No imprisonment since the Companies (Amendment) Act 2020 took effect on 21 December 2020 |
| Voidable contract | Section 184(3) | A contract entered without the required disclosure, or with an interested director participating, is voidable at the company’s option |
| Vacation of office | Section 167(1)(d) | Failure to disclose interest in a contract or arrangement in contravention of Section 184 vacates the directorship by operation of law |
Read that last row again. The same lapse that costs ₹1 lakh can, where it touches an interested contract, end the directorship itself. For a founder this sits alongside the better-known Section 164(2) disqualification regime, which is exactly what the companion form DIR-8 addresses.
The Two Orders: AVK Valves (Bangalore) and Fluence BESS (Delhi)
Two recent adjudications show the two ways this goes wrong, and the two postures a company can take when it does.
AVK Valves India Private Limited, ROC Bangalore, 28 March 2026. An inquiry under Section 206(4) picked up the secretarial auditor’s MGT-8 qualification for FY 2021-22: MBP-1 and DIR-8 not made available. A show cause notice went out on 17 June 2025. The company replied in January 2026 claiming records existed for five of six directors, and its authorised representative, a practising company secretary, attended the e-hearing on 19 January 2026. The Registrar held that producing paper years later proves nothing about compliance at the time, found all six directors in default, and imposed ₹1,00,000 on each. The company did not meet the small-company definition in Section 2(85), so the halved penalty under Section 446B was unavailable. Payment was directed from personal sources within 90 days, with appeal to the Regional Director within 60 days.
Fluence BESS India Private Limited, ROC Delhi. The mirror-image case. Here the directors had signed their MBP-1 forms, but the company never placed them before the board: two directors’ disclosures were missed at the first board meeting of FY 2022-23 held on 1 April 2022, and three more at the first meeting of FY 2023-24 on 22 August 2023. The company applied suo-moto for adjudication in e-form GNL-1 under Section 454 and called the lapse inadvertent. The Registrar levied ₹1 lakh per director per defaulting year, ₹5 lakh in aggregate, and recorded that inadvertence is not a defence. A form signed but not placed at the meeting and minuted is a default all the same.
By The Numbers
Total penalty on AVK Valves’ six directors, paid from personal income
Flat Section 184(4) penalty per director, per default
How long MBP-1 notices must be preserved at the registered office
Cost of doing this correctly: one signed form per director, per year
What You Must Do Before Your First Board Meeting of FY 2026-27
The full cycle takes a competent company under an hour per year. Here is the sequence.
Step 1: Circulate blank MBP-1 and DIR-8 to every director now. Send both forms two weeks before the proposed first board meeting of the year. MBP-1 follows the format under Rule 9(1) of the Companies (Meetings of Board and its Powers) Rules, 2014. DIR-8 follows Rule 14(1) of the Companies (Appointment and Qualification of Directors) Rules, 2014.
Step 2: Have each director list every interest. Directorships in other companies (Indian and foreign), shareholding of any size in bodies corporate, partnerships in firms and LLPs, memberships of associations. Over-disclosure costs nothing. Under-disclosure costs ₹1 lakh and possibly the seat.
Step 3: Collect signed forms before the meeting, dated on or before the meeting date. A notice dated after the meeting is evidence of default, as Fluence BESS discovered.
Step 4: Place the forms at the meeting and minute it. The agenda item should read that the board took note of the disclosures of interest received in Form MBP-1 and declarations in Form DIR-8 from all directors. Rule 9(2) makes it the director’s duty to cause the disclosure at the meeting immediately after the date of the notice, so the minute is the proof both sides need.
Step 5: File the originals at the registered office. Custody belongs to the company secretary or a board-authorised person, preserved for eight years from the end of the financial year. Keep scanned copies in the statutory records folder your company secretary maintains for diligence.
Step 6: Repeat during the year on any change. A director who picks up a new directorship, crosses 2% shareholding in a counterparty, or joins a firm must give a fresh MBP-1, placed at the first board meeting after the change.
Step 7: If past years are broken, decide your posture deliberately. Quietly backdating forms is the one option that makes everything worse. The honest paths are: fix the current year properly, disclose the historical gap in the board’s report where material, and take advice on suo-moto adjudication under Section 454, which caps exposure at the statutory penalty and avoids the harsher optics of being caught in inquiry. Note carefully that CCFS-2026, the MCA amnesty running till 15 July 2026, waives additional fees on pending e-forms only. MBP-1 is not an e-form, so the scheme offers no shelter here.
The Deeper Implication: Diligence Files Are the New Enforcement Trigger
According to CS Sapna Malpani, the AVK Valves order confirms a pattern visible across recent ROC enforcement: the secretarial audit trail has become the Registrar’s discovery tool. “MGT-8 qualifications and inquiry reports now feed adjudication directly. A single adverse line from a practising company secretary in an annual return certification can mature into personal penalties on the entire board three years later. Boards should treat the statutory records file with the same seriousness as the filings themselves,” she notes. The forward view: as the MCA’s e-adjudication module scales and ROCs work through inquiry backlogs, expect record-keeping defaults under Sections 184, 189 (register of contracts) and 170 (register of directors) to produce a steady stream of orders through FY 2026-27, with foreign-director boards and PE-invested companies disproportionately represented because their secretarial audits are more searching.
MBP-1 vs DIR-8 vs Section 188: Which Obligation Is Which
Founders routinely confuse the three disclosure regimes that meet at the boardroom table. They stack, they do not substitute.
| MBP-1 (Section 184) | DIR-8 (Section 164(2)) | Section 188 (RPT) | |
|---|---|---|---|
| What it is | Disclosure of the director’s interests, incl. shareholding | Declaration that the director is not disqualified | Board/shareholder approval for related party transactions |
| When | First BM as director, first BM of every FY, on change | Before appointment/reappointment; in practice first BM of every FY | Before entering the specified transaction |
| Filed with MCA? | No. Internal record, 8-year preservation | No. Internal record | Disclosed in board’s report (AOC-2) |
| Default cost | ₹1 lakh per director + voidable contract + Section 167(1)(d) vacation risk | Acting while disqualified: ₹1 lakh to ₹5 lakh penalty under Section 159 territory + invalid acts risk | Penalties under Section 188(5); contract voidable |
A single transaction can engage all three at once, the same way one loan can trip Section 185, Section 186 and Section 188 simultaneously. The MBP-1 file is the foundation layer: without it, the company cannot even identify which counterparties are related parties, which is why diligence teams ask for it first.
Key Takeaways
- ✅ ROC Bangalore fined six AVK Valves directors ₹1 lakh each (₹6 lakh total) on 28 March 2026 for MBP-1 and DIR-8 records that were not available for FY 2021-22
- ✅ Section 184(4) is a flat ₹1 lakh personal penalty per director; the 2020 amendment removed imprisonment but made the penalty near-automatic through e-adjudication
- ✅ The bigger risks are structural: voidable contracts under Section 184(3) and vacation of office under Section 167(1)(d)
- ✅ MBP-1 is required at the first board meeting of every financial year; the FY 2026-27 window is open now and closes with your first meeting, at latest within the 120-day gap under Section 173(1)
- ✅ MBP-1 is never filed with MCA, so no portal reminder exists; preservation is 8 years at the registered office in CS custody
- ✅ Signed forms that were never placed at the meeting still count as default: Fluence BESS paid ₹5 lakh in Delhi after a suo-moto GNL-1 application, and “inadvertent” was rejected
- ✅ CCFS-2026 (open till 15 July 2026) cannot cure MBP-1 lapses because the scheme covers MCA e-forms only
- ✅ Small companies and recognised startups get the lower Section 446B penalty, but only if they meet the definition on the record; AVK Valves did not
Sources and References
- ROC Bangalore Adjudication Order PO/ADJ/03-2026/BL/01827 dated 28 March 2026, in re AVK Valves India Private Limited (CIN U29268KA2009PTC067581), full text via TaxGuru
- Section 184, Companies Act 2013, as amended by the Companies (Amendment) Act 2020: CAIRR integrated text and India Code
- Rule 9, Companies (Meetings of Board and its Powers) Rules, 2014 (Form MBP-1, custody and 8-year preservation)
- Rule 14(1), Companies (Appointment and Qualification of Directors) Rules, 2014 (Form DIR-8)
- Section 167(1)(d) and Section 173(1), Companies Act 2013, India Code
- Exemption notification G.S.R. 464(E) dated 5 June 2015, as conditioned by notification dated 13 June 2017 (private company relaxation under Section 184(2))
- ROC Delhi adjudication in re Fluence BESS India Private Limited (suo-moto GNL-1 under Section 454), analysis via VJM Global
- MCA General Circular No. 01/2026 dated 24 February 2026 (CCFS-2026 scheme scope)
Has Your Board Collected MBP-1 and DIR-8 for FY 2026-27?
Use the MCA Penalty Calculator to estimate your board’s exposure across Sections 184, 185, 186 and 188.
For a confidential statutory-records health check before your first board meeting of the year: Contact CS Sapna Malpani | WhatsApp
Frequently Asked Questions
What is Form MBP-1 under Section 184 of the Companies Act 2013?
Form MBP-1 is the written notice through which every director discloses his or her interest in other companies, bodies corporate, firms and associations, including shareholding. Section 184(1) read with Rule 9 of the Companies (Meetings of Board and its Powers) Rules, 2014 requires it at the first board meeting a person attends as director, at the first board meeting of every financial year, and at the first meeting after any change in the disclosures already made. The notice stays with the company at its registered office for eight years. It is not filed with the MCA.
What is the penalty for not giving MBP-1 disclosure of interest?
Section 184(4) imposes a flat penalty of ₹1 lakh on each defaulting director. The Companies (Amendment) Act 2020 replaced the earlier punishment of imprisonment up to one year or fine with this civil penalty, effective 21 December 2020. In March 2026, ROC Bangalore fined all six directors of AVK Valves India Private Limited ₹1 lakh each, a total of ₹6 lakh, payable from their personal income. Small companies and recognised startups attract the lower Section 446B penalty, but only where they meet the statutory definition; AVK Valves did not.
When is MBP-1 due in FY 2026-27?
MBP-1 has no MCA filing date. Each director must give a fresh MBP-1 so it is placed at the first board meeting of FY 2026-27. Section 173(1) caps the gap between two consecutive board meetings at 120 days, so a company whose last meeting fell in March 2026 must hold its first meeting of the new year, and complete the disclosure, by late July 2026. A further MBP-1 is needed whenever interests change during the year.
Is MBP-1 filed with the ROC or on the MCA portal?
No. MBP-1 is an internal statutory record. Rule 9(3) requires the notices to be kept at the registered office in the custody of the company secretary or a person authorised by the board, and preserved for eight years from the end of the relevant financial year. That absence of a portal trail is the reason the default is so common, and the reason it surfaces only in secretarial audit, investor due diligence or ROC inquiry.
What is the difference between MBP-1 and DIR-8?
MBP-1 is the Section 184(1) disclosure of interests. DIR-8 is the Section 164(2) declaration, under Rule 14(1) of the Companies (Appointment and Qualification of Directors) Rules, 2014, that the director is not disqualified. Boards collect both at the first meeting of every financial year, and the AVK Valves order penalised directors for the absence of both.
Can CCFS-2026 cure a missed MBP-1?
No. CCFS-2026, open till 15 July 2026, waives additional fees on pending MCA e-forms. MBP-1 is not an e-form, so the scheme has nothing to act on. The realistic remedies are proper current-year compliance, honest disclosure of historical gaps, and, where exposure warrants it, suo-moto adjudication under Section 454.
Does a director lose office for failing to disclose interest?
Where the failure relates to a contract or arrangement in which the director is interested, yes. Section 167(1)(d) vacates the office by operation of law. That makes the MBP-1 file a directorship-protection document, not a formality.