Powers of Directors

The powers of the directors are normally written in the articles of association of the company. The shareholders cannot meddle with the affairs undertaken by the board of directors till the board makes the decisions within their specified power. The general powers of the board of directors are specified in section 291 of the Companies Act, 1956.

●      The director must not exhibit any power or do any act, which is not in accordance with the memorandum of association of the company or which violates the Companies Act, 1956.

●      No powers are given to the directors individually.

●      Directors have their powers only when they are with the board of directors.

●      Directors are considered to be the first shareholders of the company.

●      Any decision is made if majority of directors from the board of directors agree to the decision.

●      Resolutions must be passed at the meetings held by the board of directors for the directors to enjoy any special powers.

Some of the powers exhibited by the directors are as follows −

●      The power to call shareholders on the context of any unpaid money

●      The power to announce buy-back of shares

●      The power of issuance of debentures

●      The power to borrow any amount of money in case of debentures

●      The power of investing funds of the company on various commercial ventures

●      The power of making loans

The board of directors is entitled to do all such acts and exhibit such powers as authorized by the memorandum of association and articles of association of the company and as prescribed by the Companies Act, 1956. However, when an authorization is required by a law to be invoked, the directors can do such an act only when they are authorized to do so.

●      However, whenever a delegation is required, the board of directors can delegate their powers to their lower ranking officers.

●      The delegation is done by passing a resolution in the presence of a committee comprising of the directors, the managing director, the managers and other high ranking officers of the company.

●      Delegation is defined as the transfer of powers of a higher officer to a lower ranking officer with the consent of the officer whose power is to be delegated, the officer to whom the power is being delegated and other important officers of the company as and when required.

●      Usually delegation is done in case of the absence of the higher officers.

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