board-of-directors

Section 179 Powers of Board read with Rule 8 of the Companies (Meeting of Board and its Powers) Rules, 2014 and Companies (Meeting of Board and its Powers) Amendment Rules, 2015

As per Section 179 (1) of Companies Act, 2013 board of directors are entitled to exercise such powers, and to do such acts, as the company is authorised to exercise and do.

Provided that, the acts done by the board of directors on behalf of company are not inconsistent with the provisions of the Companies Act, Memorandum of Association, Articles of Association or any regulation of the Company (Proviso to Section 179(1) of the Companies Act, 2013).

The Board shall not exercise any power which is required to be exercised by the company in general meeting.

As per Section 179 (2) of Companies Act, 2013, any regulation made in general meeting shall be void, which invalidates the acts done by Board of Directors in their meeting held prior to the General meeting, which would otherwise be considered valid if the regulation was not made.

Sub-section (3) of Section 179 vests following powers to the Board of Directors which can be exercised by them by passing a resolution in the Board Meeting:

  • To make calls on shareholders in respect of money unpaid on their shares.
  • To authorise buy-back of securities under section 68.
  • To issue securities whether inside or outside India.
  • To borrow monies. (In case of Sec. 8 Company, this power can be exercised only by passing circular Board resolution).
  • To invest funds of the Company. (In case of Sec. 8 Company, this power can be exercised only by passing circular Board resolution).
  • To grant loan, give guarantee or provide security in respect of loan. (In case of Sec. 8 Company, this power can be exercised only by passing circular Board resolution).
  • To approve financial statements and Board’s Report.
  • To diversify the business of the Company.
  • To approve amalgamation, merger and reconstruction.
  • To takeover a Company or acquire a controlling or substantial stake in another Company.
  • Any other matter as may be prescribed (Rule 8 of Companies (meeting of Board and its Powers) Rules, 2014 prescribes other matters as:
  1. To make political Contributions;
  2. To appoint or remove KMP;
  • To appoint internal auditor and Secretarial Auditor;

As per the proviso to Section 179(3) of the Companies Act, 2013 and as per the circular passed on 12th June 2014[1], board of directors by means of a resolution passed at a meeting may delegate its powers of borrowing money, investing funds of Company and to grant loan, give guarantee or provide security in respect of loans, to any committee of directors, managing Directors or manager or to any other principal officer of the Company or in case of branch office, to the principal officer of the branch office.

[1] http://ebook.mca.gov.in/notificationdetail.aspx?acturl=6CoJDC4uKVUR7C9Fl4rZdatyDbeJTqg3uaDT7Vp4Q49+CKH/d9S4LWL54BaJVQdoUslz2pkOvfKO5bKRC7uuNJ130Oke6xlWSmvDjfzL0Ak=