Powers of Board and Restriction on Powers of Board Under Section 179 and 180 of Companies Act, 2013
POWER OF BOARD OF DIRECTORS
POWERS OF BOARD as per section-179(1)- Board of Directors of a company shall be entitled to exercise all such powers, and to do all such acts and things, as the company is authorised to exercise and do
Provided that while exercising such powers or doing such act or thing, the Board shall be subject to the provisions contained in that behalf in
2. Article of Association
3. Memorandum of Association
4. Any regulations not inconsistent therewith and duly made thereunder
5. Regulations made by the company in general meeting
Provided further that the Board shall not exercise any power or do any act or thing which is directed or required, whether under
1. Companies Act, 2013
2. Article of Association
3. Memorandum of Association
Which is required to be exercised or done by the company in general meeting.
As per Section 179(2)- Company shall not make any regulation in general meeting which shall invalidate any prior act of the Board which would have been valid if such regulation had not been made.
As per section 179(3)- Board of Directors of the company shall exercise followings powers by passing Board Resolution in the Board Meeting:-
(a) To make calls on shareholders in respect of money unpaid on their shares;
(b) To authorise buy-back of securities under section 68;
(c) To issue securities, including debentures, whether in or outside India;
(d) To borrow monies;
(e) To invest the funds of the company;
(f) To grant loans or give guarantee or provide security in respect of loans
(g) To approve financial statement and the Board’s report;
(h) To diversify the business of the company;
(i) To approve amalgamation, merger or reconstruction;
(j) To take over a company or acquire a controlling or substantial stake in another company;
(k) Any other matter which may be prescribed:
As per Rule 8 of Companies (Meeting of Board and its Powers) Rules, 2014 Board shall also exercise these power only by passing of Board Resolution
i. To make political contributions;
ii. To appoint or remove key managerial personnel (KMP);
iii. To appoint internal Auditor and Secretarial auditor.
Board shall also delegate its power to committee of Director by passing Board Resolution to
1. Any director of Committee
2. Managing Director of company
3. Manager of company
4. Principal officer of company
5. Principal officer of any branch office of company
RESTRICTIONS ON POWERS OF BOARD as per section-180- Board of Director shall exercise such powers with the approval of shareholder in General Meeting by means of Special Resolution-
1. To sell, lease or otherwise dispose of the whole or substantially the whole of the undertaking of the company or where the company owns more than one undertaking, of the whole or substantially the whole of any of such undertakings.
2. To invest in trust securities the amount of compensation received by it as a result of any merger or amalgamation;
3. Borrowing money will exceed 100% of its paid-up share capital + free reserves+ securities premium apart from temporary loans obtained from the company’s bankers in the ordinary course of business
4. To remit, or give time for the repayment of, any debt due from a director.
Note- “undertaking” shall mean an undertaking in which the investment of the company exceeds twenty per cent. of its net worth as per the audited balance sheet of the preceding financial year or an undertaking which generates twenty per cent. of the total income of the company during the previous financial year;
(ii) the expression “substantially the whole of the undertaking” in any financial year shall mean twenty per cent. or more of the value of the undertaking as per the audited balance sheet of the preceding financial year.
Note- Temporary loans” means loans repayable on demand or within six months from the date of the loan such as short-term, cash credit arrangements, the discounting of bills and the issue of other short-term loans of a seasonal character.
As per section 180(2) and 180(4)- Special Resolution shall contain the full particulars of money borrowed, total amount of Loan etc. also stipulated condition of investment, disposal, sell, buy of undertaking.
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