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Unit 10: Management of Company

However, the Board cannot exercise any power or do any act or thing which is directed or Notes
required, whether by this or any other Act or by the memorandum or articles of the company or
otherwise, to be exercised or done by the company in general meeting. In exercising any such
power or doing any such act or thing, the board will be subject to the provisions contained in
that behalf in this or any other Act, or in the memorandum or articles of the company, or in any
regulations not inconsistent therewith and duly made thereunder, including regulations made
by the company in general meeting.
Thus, the Board may exercise all powers of the company and can do all such acts and things that
the company can do. But the exercise of such powers of the Board shall be in conformity with the
provisions of the Companies Act or any other Act and memorandum, articles and resolutions of
the company in general meetings. Thus, a general meeting may, by amending the articles,
restrict the powers of the board. But the meeting cannot invalidate any act validly done by the
board except in the following cases: (1) where the directors are either unable or unwilling to act
[Barron vs. Potter (1914) 1 Ch. 895]; (2) when the directors act for their own personal interests in
complete disregard to the company [Marshall’s Value Gear Co. Ltd. vs. Manning Wardle & Co.
Ltd (1909) Ch. 267]; (3) when the Board has become incompetent to act e.g. where all the directors
constituting the Board are interested in a dealing or where none of the directors was validly
appointed [B.N. Vishwanathan vs. Tiffins B.A. and Ltd. AIR (1953) Mad 510].

10.13.2 The Mode or Manner of Exercise of Board’s Powers

Section 292 provides that the Board of directors of a company shall exercise the following
powers on behalf of the company and it shall do so only by means of resolutions passed at
meeting of the Board:
(i) The power to make calls on shareholders in respect of money unpaid on their shares;

(ii) The power to buyback its shares under s. 77A;
(iii) The power to issue debentures;
(iv) The power to borrow money otherwise than on debentures;
(v) The power to invest funds of the company (subject to sections 293 and 372A); and
(vi) The power to make loans. (subject to sections 293 and 372 A).

The Board may, however, 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, the
powers specified in clauses (iv), (v) and (vi) on such conditions as the Board may prescribe.
Besides the powers specified in s.292, there are certain other powers also which can be exercised
only at the meeting of the Board. These are:
1. The power of filling casual vacancies in the Board (s.262);
2. Sanctioning of a contract in which a director is interested [s.297];
3. The power to recommend the rate of dividend to be declared by the company at the
Annual General Meeting, subject to the approval by the shareholders.
In the following cases, not only that the powers be exercised at the Board’s meeting but also that
every director present and entitled to vote must consent thereto:
1. The power to appoint a person as managing director or manager, who is already managing
director or manager of another company (Ss.316 and 386).

2. The power to invest in any shares and debentures of any other body corporate (s.372).

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