Page 177 - DCOM106_COMPANY_LAW

Company Law

Notes The duties of the directors are usually regulated by the company’s Articles. While performing
their duties, they must display reasonable care, honesty, good faith, skill and diligence. As they
stand in a fiduciary relationship to the company and they are agents and trustees in certain
respects, they are bound to exercise in the performance of their duties a reasonable degree of
skill and care.
Self Assessment

State whether the following statements are true or false:
12. The board of directors can make political contribution by passing a resolution at its
meeting only.
13. The board of directors can fill a casual vacancy in the office of a director by passing a
resolution by circulation.

14. The board of directors can appoint an additional director by passing a resolution either at
a meeting or by circulation.
15. The board of directors can enter into a joint venture agreement by passing a resolution
either at a meeting or by circulation.
16. The board of directors can invest in another body corporate by passing a resolution at its
meeting.

Case Study Reliance Industries

eliance Industries, the largest shareholder in Reliance Energy, has voted in favour
of entrusting itself with the power to appoint the majority of directors on the REL
Rboard.
Earlier these powers were vested with Mr. Anil Ambani, REL Chairman and Managing
Director.
According to sources, RIL was among the 97.24-per cent REL shareholders who voted in
favour of the changes to its Articles of Association, a set of rules that govern day-to-day
workings of a company, through a postal ballot. The result of which was announced.
The altered Article envisages that so long as the Reliance Group of Companies holds
26 per cent or more of REL’s paidup voting equity share capital, it will have the right to
appoint majority of REL’s directors on the board of the company.
Reliance Industries had earlier said that it had not sought in any withdrawal of powers
conferred on Mr. Anil Ambani. It had also said that RIL had not been consulted by REL
before the proposed re-amendment of the relevant articles of association. The move to
alter the articles of association was seen as part of the ongoing differences between the
Ambani brothers over control of the 99,000-crore Reliance Group, of which REL is a
subsidiary.
REL had, by way of a special resolution, asked shareholders to mail their votes through
postal ballot for a change in its Articles of Association.
The company had sought permission to change Article 131 (a), 131 (a) (ii) and 131 (aa),
which allowed Mr. Anil Ambani the power to appoint one-third or majority of the total
Contd...

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