Section 179: Powers of Board
This section is for outlining the powers of the Board of Directors of a company and the rules they must follow when making decisions.
The section, clause by clause
What the section says
In plain terms
(1)The Board of Directors of a company shall be entitled to exercise all such powers, and to do all such acts and things, as the company is authorised to exercise and do: Provided that in exercising such power or doing such act or thing, the Board shall be subject to the provisions contained in that behalf in this Act, or in the memorandum or articles, or in any regulations not inconsistent therewith and duly made thereunder, including regulations made by the company in general meeting:
The Board of Directors has the power to make decisions and take actions on behalf of the company, as long as they follow the rules set out in the Act, the company's memorandum or articles, or any regulations made by the company in general meeting.
provisoProvided further that the Board shall not exercise any power or do any act or thing which is directed or required, whether under this Act or by the memorandum or articles of the company or otherwise, to be exercised or done by the company in general meeting.
(2)No regulation made by the company in general meeting shall invalidate any prior act of the Board which would have been valid if that regulation had not been made.
If the company in general meeting makes a new rule, it will not invalidate any previous decisions made by the Board that were valid at the time.
(3)The Board of Directors of a company shall exercise the following powers on behalf of the company by means of resolutions passed at meetings of the Board, namely:—
The Board must make certain decisions, such as issuing securities, borrowing money, and investing funds, by passing resolutions at Board meetings, and may delegate some of these powers to committees or officers under certain conditions.
(3)(a)to make calls on shareholders in respect of money unpaid on their shares;
(3)(b)to authorise buy-back of securities under section 68;
(3)(c)to issue securities, including debentures, whether in or outside India;
(3)(d)to borrow monies;
(3)(e)to invest the funds of the company;
(3)(f)to grant loans or give guarantee or provide security in respect of loans;
(3)(g)to approve financial statement and the Board’s report;
(3)(h)to diversify the business of the company;
(3)(i)to approve amalgamation, merger or reconstruction;
(3)(j)to take over a company or acquire a controlling or substantial stake in another company;
(3)(k)any other matter which may be prescribed:
provisoProvided that the Board may, by a resolution passed at a meeting, delegate 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, the powers specified in clauses (d) to (f) on such conditions as it may specify:
provisoProvided further that the acceptance by a banking company in the ordinary course of its business of deposits of money from the public repayable on demand or otherwise and withdraw able by cheque, draft, order or otherwise, or the placing of monies on deposit by a banking company with another banking company on such conditions as the Board may prescribe, shall not be deemed to be a borrowing of monies or, as the case may be, a making of loans by a banking company within the meaning of this section.
explanationExplanation I.—Nothing in clause (d) shall apply to borrowings by a banking company from other banking companies or from the Reserve Bank of India, the State Bank of India or any other banks established by or under any Act.
explanationExplanation II.—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.
(4)Nothing in this section shall be deemed to affect the right of the company in general meeting to impose restrictions and conditions on the exercise by the Board of any of the powers specified in this section.
The company in general meeting has the right to impose restrictions and conditions on the Board's powers, and this section does not affect that right.
The right-hand column is written from the section text, not quoted from it, and it has no legal force. Where the two differ, the left-hand column is the law.
Amendment notes
- 1. Subs. by s. 58, ibid., for “shall carry out evaluation of every director’s performance” (w.e.f. 7-5-2018).
- 2. Subs. by Act 1 of 2018, s. 58, for the proviso (w.e.f. 7-5-2018).
- 3. Subs. by Act 29 of 2020, s. 36, for certain words (w.e.f. 21-12-2020).
- 4. Subs. by Act 1 of 2018, s. 58, for “non-consideration of resolution of any grievance” (w.e.f. 7-5-2018).
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Referred to by
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Reproduced from the official India Code print for reference. Check the current text on India Code before you rely on it, and read the section alongside its Rules. Nothing here is legal advice.