Section 179: Power of
BOD
·
The BOD of a company shall be eligible to
exercise all such powers, and to do all such acts and things, as the company is
authorized to exercise and do as per provisions of Act, memorandum and article
of company.
·
Shareholders may restrict the powers of the
Board by amendment in article.
·
Shareholders have no power to interfere into routine business for which BODs are
authorized to act. However, the GM of shareholders is competent to intervene
and act in following matter delegated to the BODs:
-> Where the directors
acting mala fide.
-> Director’s personal interests are in conflict with interest of company or their duty.
-> Where the directors themselves the wrong doers and have acted mala fide.->
When the Board
has become incompetent to act.
-> When there is a deadlock in the management so that director cannot exercise some of
their powers.
·
Individual director does not have any general powers.
·
Section 179 of Companies Act, 2013 specifies
certain powers which can be exercised by the Board only by passing a resolution at a BM. However, some of
these powers may be delegated by the Board in the manner prescribed.
·
According to section 179, the Board shall
exercise the following powers only by means of a resolution passed at a meeting of the Board:
a.
To make
calls on shares.
b.
To authorize buy-back upto 10% of paid up capital and free reserve in year.
c.
To issue
securities including debentures, whether in or outside India.
d.
To borrow
money.
e.
To invest
funds of the company.
f.
Grant
loans or give guarantee or provide security in respect of loans.
g.
Approve financial
statement and the Board’s report.
h.
Diversify the business of the company.
i.
Approve amalgamation,
merger or reconstruction.
j.
Take over
a company or acquire a controlling or substantial stake in another company.
Delegation of powers
·
The power to
invest, borrow and grant loan or guarantee or security can be delegated.
·
Power of board can be delegated to committee of
board or MD, manager or other principal officer of company or by branch officer
in case of branch by resolution passed
by board.
·
Resolution delegating powers is passed at a Board meeting.
·
Power to make inter-corporate loans and investments cannot be delegated by
company.
·
Company in GM may impose any restrictions and conditions on the exercise by the Board
of any of the powers specified above.
·
Beside the powers specified in section 179,
there are certain other powers also
which can be exercised only at the meeting of the Board:
-> The power
of filling casual vacancies in the Board.
-> The power
to make political contributions.
·
Approval of every directors entitle to vote and
present is required at Board’s meeting for the following matters:
-> The power
to appoint a person as MD or manager who is holding either office in
another company.
-> The power
to give loan to, or invest in any shares of, any other body corporate.
Section 192:
Restriction on non-cash transaction involving directors
· Section 192 regulates arrangements in respect of acquisition of assets for consideration
other than cash between a company and a director of company or holding
company or its subsidiary company or its associate or person connected with
such director. A company can’t enter into an agreement by which:
-> A director of the company or its holding,
subsidiary or associate company or a person connected with him acquires assets
for consideration other than cash, from the company; or
-> Company acquires assets for consideration other
than cash, from such director or person so connected.
·
Such arrangements shall require prior approval by a resolution in GM.
·
If a director or connected person is a director
of its holding company, approval is also required to be obtained by passing a resolution in GM of holding
company.
·
The value of SR shall include the particulars of
the arrangement along with the value of the assets involved in such arrangement
duly calculated by a registered valuer.
·
If arrangement is entered into by company or its
holding company in contravention of provisions is voidable at the option of company.
·
The arrangement will be valid if:
-> Restitution
of any money is not possible and the company has been indemnified by any
other person; or
-> Any rights are acquired bona fide for value and without notice of the contravention of the
provisions of this section by any other person.
Meaning of associate company
Associate
company means a company in which other company has control of 20% of total
share capital or business decisions under agreement, but which is not
subsidiary of company and includes a joint venture company
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