What are the powers provided to the company Board in India?



As the company is an artificial person, it acts through its directors. The directors enjoy such powers as are given to them by the act, memorandum or article. Section 291 to 293-A contain the powers of the board and the restrictions thereon. The powers of directors are discussed under the following heads.

General Powers:

Section 291 empowers the board to exercise all such powers and do all such acts and things, as the company is authorized to exercise and do. But the board cannot do any act which is to be done by the company in general meeting. In exercising any power, the board will be subject to the provisions of this or any other act, the memorandum or the articles.

Power to be exercised by board only at meeting:

Under section 292, the following powers can be exercised by the board, only by resolutions passed at the board meeting:

i) The power to make calls;

ii) The power to issue debentures;

iii) The power to borrow money otherwise than on debentures;

iv) The power to invest the funds of the company;

v) The power to make loans.

Power specified in points (iii), (iv) and (v) above can be delegated by the board, at a meeting by means of a resolution to a committee of directors, to the managing director, to the manager or to other principal officer of the company.

Restrictions on powers:

The board of directors of a public company or of a private company which is a subsidiary of a public company shall not exercise the following powers except with the consent of the company in general meeting:

i) Power to sell, lease or otherwise dispose of the whole or substantially the whole of the undertaking of the company;

ii) Power to remit or give time for repayment of any debt due to the company by a director. However, no such consent is required for renewal or continuance of an advance made by a banking company to its director in the ordinary course of its business;

iii) Power to invest otherwise than in trust securities, the amount of compensation received by the company in respect of the compulsory acquisition of any undertaking or property of the company;

iv) Power to borrow money, where the money to be borrowed together with the moneys already borrowed by the company will exceed the aggregate of the paid-up capital of the company and its free reserves;

v) Power to contribute to charitable and other funds not directly relating to the business of the company or the welfare of its employees, any amount exceeding in any financial year Rs. 50,000, or five per cent of the average net profits of the three preceding financial years, whichever is greater.

Section 293- A puts a restriction on the powers of the board of directors to contribute any amount to any political party or for any political purpose to any individual or association. If the company contravenes this provision, it shall be punishable with fine which may extend to Rs. 5, 000.