Power of Board of Directors

The Board of Directors of a Company are entrusted with the rights and obligations for the conduct of the company. Hence, the Board of Directors of a company enjoy certain powers and privileges to conduct business operations smoothly without repetitive approvals from the shareholders. In this article, we look at such powers enjoyed by Board of Directors of a company.

Power of Board - Allowed without Board Resolution

The Board of Directors of a company is entitled to exercise all such powers, and to do all such acts and things, as the company is authorised to exercise and do as per the memorandum of association or articles of association or any other regulations made by the company in a general meeting.

Power of Board - Allowed by Resolution Passed at Meeting of the Board

The Board of Directors of a company can exercise the following powers on behalf of the company only by means of resolutions passed at meetings of the Board:

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, including debentures, whether in or outside India;
To borrow monies;
To invest the funds of the company;
To grant loans or give guarantee or provide security in respect of loans;
To approve financial statement and the Board’s report;
To diversify the business of the company;
To approve amalgamation, merger or reconstruction;
To take over a company or acquire a controlling or substantial stake in another company;
To make political contributions;
To fill a casual vacancy in the Board;
To enter into a joint venture or technical or financial collaboration or any collaboration agreement;
To commence a new business;
To shift the location of a plant or factory or the registered office;
To appoint or remove key managerial persons and senior management personnel one level below the key managerial personnel;
To appoint internal auditors;
To adopt a common seal;
To take note of the disclosure of Director's interest and shareholding;
To sell investments held by the company, constituting five percent or more of the paid-up share capital and free reserves of the investee company;
To accept public deposits and related matters;
To approve quarterly, half-yearly and annual financial statements.

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Frequently Asked Questions

Common questions about Board of Directors Powers in a Company.

The primary role of the Board of Directors in a company is to exercise the rights and obligations for the conduct of the company. The Board of Directors enjoys certain powers and privileges to conduct business operations smoothly without repetitive approvals from the shareholders.

No, the Board of Directors can only exercise those powers that are authorized as per the company's memorandum of association, articles of association, or any other regulations made by the company in a general meeting.

The Board of Directors can exercise all such powers and do all such acts and things as the company is authorized to do as per the memorandum of association or articles of association, without the need for a board resolution.

The Board of Directors can exercise certain powers, such as issuing securities, borrowing monies, investing funds, granting loans or providing guarantees, approving financial statements, diversifying business, approving mergers or acquisitions, making political contributions, and appointing or removing key managerial personnel, only through a resolution passed at a board meeting.

No, the Board of Directors cannot make certain crucial decisions related to the company's business operations, such as diversifying the business, commencing a new business, shifting the location of a plant or factory, or entering into collaborations, without passing a resolution at a board meeting.

The Board of Directors has the power to appoint or remove key managerial personnel and senior management personnel one level below the key managerial personnel, but this power can only be exercised through a resolution passed at a board meeting.

No, the Board of Directors cannot accept public deposits and handle related matters without passing a resolution at a board meeting.

The Board of Directors has the power to approve quarterly, half-yearly, and annual financial statements of the company, but this power can only be exercised through a resolution passed at a board meeting.

No, the Board of Directors cannot sell investments held by the company that constitute five percent or more of the paid-up share capital and free reserves of the investee company without passing a resolution at a board meeting.

The Board of Directors has the power to adopt a common seal for the company, but this power can only be exercised through a resolution passed at a board meeting.