Powers of Board Under CA, 2013

Powers of Board under CA, 2013

 By 

CS D Hem Senthil Raj and CS K Vinoth

Overview of Section 179:

Section 179 of Companies Act, 2013 provides the powers of board of directors as mentioned below in sub sections (a) to (k) as detailed below:

(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:

    Overview of Rules:

Powers of Board as per Chapter XII of the Companies (Meetings of Board and its Powers) Rules, 2014.

(1)	to make political contributions;
(2)	to appoint or remove Key Managerial Personnel (KMP);
(3)	to take note of appointment(s) or removal(s) of one level below the  Key Managerial Personnel (KMP);
(4)	to appoint internal auditors and secretarial auditor;
(5)	to take note of the disclosure of director’s interest and shareholding;
(6)	to buy, sell investments held by the company (other than trade investments), constituting five percent or more of the paid up share capital and free reserves of the investee company;
(7)	to invite or accept or renew public deposits and related matters;
(8)	to review or change the terms and conditions of public deposit;
(9)	to approve quarterly, half yearly and annual financial statements or financial results as the case may be.

Delegation of Powers to Committee(s), Managing Director/Manager/Principal Officer:

Pursuant to the provisions of the Companies Act, 2013, the Board of directors has the authority to delegate its powers as mentioned in clause (d) to (f) to any committee of directors, the managing director, the manager or any other principal officer of the company  

Or

In the case of a branch office of the company, the principal officer of the branch office on such conditions as decided by the board.

Composition of Committee(s):

The Composition of Committee shall be a combination of Directors and Principal Officers of the Company.

However in general parlance, it is advisable to have at least three directors in the committee as a matter of good corporate governance.

Quorum for the Committee(s):

Minimum two directors present shall be fixed as the quorum for such committee(s).

 List of Committee(s) which can be delegated with Board Powers as per the provisions of Companies Act, 2013:

Following are the Committee(s) which can be delegated with Board Powers, namely:

1.      Borrowing Committee

2.      Investment Committee

3.      Loan and Guarantee Committee

Legality of the Resolution passed by the Committee(s):

In legal parlance, the Resolutions passed by the committee shall be deemed to be passed by the Board of Directors of the Company.

The Resolutions passed by such committee(s) shall be legally valid and can bind the company for those items which are transacted through such committee(s).

Taking Note/Minuting of the Resolutions passed by the Committee(s):

“Resolutions passed by the committees shall be taken note in the subsequent Board Meeting and the same shall form part of the Minutes of the Board Meeting in which the resolution passed by committees is taken note off.

Company shall file the Resolution passed by the Board of Directors for delegation of Power to the Committees to Registrar of Companies in e-form MGT 14 as a matter of good governance even though Section 117 of the Companies Act, 2013 read with Rules does not mandate the filing of this Resolution.”

Note:

In respect of dealings between a company and its bankers, the exercise by the company of the power specified in clause (d) shall mean the arrangement made by the company with its bankers for the borrowing of money by way of overdraft or cash credit or otherwise and not the actual day-to-day operation on overdraft, cash credit or other accounts by means of which the arrangement so made is actually availed of.

BY

CS K VINOTH

CS D HEM SENTHIL RAJ