Page 301 - DMGT407Corporate and Business Laws

Corporate and Business Laws

Notes and (d) any expenditure incurred by the company to effect any insurance on the life of, or to
provide any pension, annuity or gratuity for, any of the persons aforesaid or his spouse or child.

Self Assessment

Fill in the blanks:

7. The total managerial remuneration payable by a public company or a private company
which to its directors or manager in respect of any financial year must not exceed
………………...of the net profit.

8. Section 318 provides that no compensation for loss of office may be paid by a company to
any director other than the……………………., or wholetime director, or a director holding
the office of manager.
9. Explanation to s.198 describes the term…………………….

12.4 Powers of the Board of Directors

Section 291 provides for general powers of the Board of directors. It provides:

Subject to the provisions of the Act, 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.
However, the board cannot exercise any power or do any act or thing which is directed or
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 cases: (1) where the directors are either unable or unwilling to act [Barron v.
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. v. 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 v. Tiffins B.A. and Ltd. AIR (1953) Mad 510].
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 issue debentures;
(iii) the power to borrow money otherwise than on debentures; (iv) the power to invest funds of
the company; and (v) the power to make loans.
The Board may, however, by a resolution passed at a meeting delegate to any committee of
directors, the managing directors, the manager or any other principal officer of the company,
the powers specified in clauses (iii), (iv) and (v) on such conditions as the Board may prescribe.

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