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Power of Board of Directors


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.