Chapter XII - Meetings of Board and Its Powers
Section 192
Section 192: restriction on non-cash transactions involving directors
Section 192 regulates arrangements under which a director (of the company or of its holding, subsidiary or associate company), or a person connected with him, acquires assets from the company, or the company acquires assets from such a person, for consideration other than cash.
On this page
Need advice on Section 192?
This article is for general information. Refer to the Companies Act, 2013 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) No company shall enter into an arrangement by which—(a) 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, unless prior approval for such arrangement is accorded by a resolution of the company in general meeting and if the director or connected person is a director of its holding company, approval under this sub-section shall also be required to be obtained by passing a resolution in general meeting of the holding company. (2) The notice for approval of the resolution by the company or holding company in general meeting under sub-section (1) shall include the particulars of the arrangement along with the value of the assets involved in such arrangement duly calculated by a registered valuer. (3) Any arrangement entered into by a company or its holding company in contravention of the provisions of this section shall be voidable at the instance of the company unless—(a) the restitution of any money or other consideration which is the subject-matter of the arrangement is no longer possible and the company has been indemnified by any other person for any loss or damage caused to it; or (b) any rights are acquired bona fide for value and without notice of the contravention of the provisions of this section by any other person.
Introduction
Prior approval by resolution in general meeting is required, and also in the holding company’s general meeting where the director or connected person is a director of the holding company. The notice must give the arrangement’s particulars and the value of the assets calculated by a registered valuer. An arrangement in contravention is voidable at the instance of the company, subject to two exceptions.
Section 192 commenced on 12 September 2013 under S.O. 2754(E). The India Code consolidated text shows no amendment, and the text matches the 2013 Gazette.
Key takeaways
Non-cash asset deals
Covers assets acquired from or by the company for consideration other than cash.
Wide group coverage
Includes directors of the holding, subsidiary or associate company and persons connected with them.
Prior approval with valuation
A general meeting resolution is needed in advance; the notice must carry a registered valuer’s valuation.
Voidable
A contravening arrangement is voidable at the company’s instance, with two exceptions.
Arrangements covered
Under sub-section (1), no company may enter into an arrangement by which (a) 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 connected person, unless prior approval is given by a resolution of the company in general meeting.
If the director or connected person is a director of its holding company, approval by resolution in general meeting of the holding company is also required.
Notice and valuation
Under sub-section (2), the notice for the resolution must include the particulars of the arrangement and the value of the assets involved, duly calculated by a registered valuer.
Consequences of contravention
Under sub-section (3), an arrangement in contravention is voidable at the instance of the company unless (a) restitution of the money or other consideration that is the subject-matter of the arrangement is no longer possible and the company has been indemnified by any other person for any loss or damage caused to it, or (b) rights have been acquired bona fide for value and without notice of the contravention by any other person.
Practical preparation
Screen any asset transfer involving a director or connected person of the company or its group companies for non-cash consideration; appoint a registered valuer; put the arrangement and valuation in the notice; pass the resolution before entering into the arrangement; check whether the holding company also needs to approve; consider related party rules under section 188 alongside.
Exemption notifications issued under section 462 can modify how some provisions apply to particular classes of companies (for example private, Government, Section 8 or Nidhi companies); check whether any applies to your company before relying on this guide.
Practical checklist
Do
- Obtain the registered valuer’s report before issuing the notice.
- Check group structure to see whether the holding company’s approval is also required.
Avoid
- Do not complete the transfer before the resolution is passed; approval must be prior.
Illustrative example
Hypothetical: director transfers land for shares
A director proposes to transfer a plot of land to the company in exchange for newly issued shares.
Identify
The company acquires an asset from a director for non-cash consideration, so section 192 applies.
Value
A registered valuer values the land; the value goes into the notice.
Approve
Members pass the resolution before the transfer is executed.
Outcome
- Without prior approval the company could later avoid the arrangement, unless one of the sub-section (3) exceptions applied.
Glossary
- Non-cash consideration
- Payment in a form other than cash, such as shares, other assets or the set-off of a claim.
- Registered valuer
- A valuer registered under section 247.
- Voidable
- Valid until the company elects to avoid it.
Frequently asked questions
Does section 192 apply to cash purchases from a director?
No. It covers acquisitions for consideration other than cash. Cash dealings with related parties may instead fall under section 188.
Is a contravening arrangement automatically void?
No. It is voidable at the instance of the company, and cannot be avoided where restitution is impossible and the company is indemnified, or where a third party has acquired rights bona fide for value without notice.
Need help applying this provision to your situation?
Contact BizeneedLast updated 11 October 2026