RESTRICTION ON POWERS OF BOARD SEC 180

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RESTRICTION ON POWERS OF BOARD SEC 180
COMPANY LAW

   EXEMPTIONS

1.       SECTION 180 SHALL NOT APPLY TO PRIVATE COMPANY WHICH HAS NOT COMMITTED A DEFAULT IN FILING ITS FINANCIAL STATEMENT UNDER SECTION 137 OF THE SAID ACT OR ANNUAL RETURN UNDER SECTION 92.

2.       SECTION 180 SHALL APPLY IN CASE OF SPECIFIED IFSC PUBLIC COMPANY UNLESS THE ARTICLES OF COMPANY PROVIDE OTHERWISE.

   SECTION 180. RESTRICTION ON POWERS OF BOARD

   THE BOARD OF DIRECTORS OF A COMPANY SHALL EXERCISE THE FOLLOWING POWERS ONLY WITH THE CONSENT OF THE COMPANY BY A SPECIAL RESOLUTION:

a)       TO SELL,LEASE OR OTHERWISE DISPOSE OF THE WHOLE OR SUBSTANTIALLY UNDERTAKING OF THE COMPANY OR WHERE THE  COMPANY OWNS MORE THAN ONE UNDERTAKING OF THE WHOLE OF ANY SUCH UNDERTAKING . UNDERTAKING MEANS:

1. INVESTMENT OF THE COMPANY EXCEEDS 20% OF THE NET WORTH AS PER THE AUDITED BALANCE SHEET OF TH PRECEDING FINANCIAL YEAR
2. OR UNDERTAKING WHICH GENERATES 20% OF THE TOTAL INCOME OF THE COMPANY DURING PREVIOUS FINANCIAL POWER. SUBSTANTIALLY WHOLE OF THE UNDERTAKING MEANS 20% OR MORE OF THE VALUE OF THE UNDERTAKING AS PER AUDITED BALANCE SHEET.

b)       TO INVEST OTHERWISE IN TRUST SECURITIES THE AMOUNT OF COMPENSATION RECEIVED BY IT AS A RESULT OF ANY MERGER OR AMALGAMATION

c)          TO BORROW MONEY WHERE THE MONEY TO BE BORROWED TOGETHER WITH THE ALREADY BORROWED BY THE COMPANY WILL EXCEED AGGREGATE OF ITS PAID UP  SHARE CAPITAL,FREE RESERVES AND SECURITIES PREMIUM APART FROM TEMPORARY LOANS OBTAINED FROM THE COMPANY’S BANKERS IN THE ORDINARY COURSE OF BUSINESS.( TEMPORARY LOAN MEANS REPAYABLE ON DEMAND OR WITH IN SIX MONTHS FROM THE DATE OF THE LOAN SUCH AS SHORT TERM,CASH CREDIT ,DISCOUNTING OF THE BILLS BUT DOES NOT INCLUDE LOANS RAISED FOR THE PURPOSE OF FINANCIAL EXPENDITURE OF  CAPITAL NATURE. IN CASE OF BANKING COMPANY DEPOSIT OF MONEY REPAYABLE ON DEMAND WILL NOT BE DEEMED TO BE BORROWING OF MONIES BY THE BANKING COMPANIES.

d)        TO REMIT OR GIVE TIME FOR THE REPAYMENT OF DEBT ANY DEBT DUE FROM DIRECTOR

• EVERY SPECIAL RESOLUTION PASSED BY THE COMPANY IN GENERAL MEETING
• SPECIFY THE TOTAL AMOUNT UP TO WHICH MONEY MAY BE BORROWED BY THE BOARD OF DIRECTORS

i.            IT WILL NOT AFFECT THE TITLE OF BUYER OR OTHER PERSON WHO BUY OR TAKES ON LEASE ANY PROPERTY/INVESTMENT/UNDERTAKING IN GOOD FAITH

ii.            NOTHING CONTAINED IN CLAUSE a of 180 (1) WILL APPLY TO SALE OR LEASE OF ANY PROPERTY OF THE COMPANY WHERE THE ORDINARY BUSINESS OF THE COMPANY CONSISTS OF SELLING OR LEASING

iii.            SPECIAL RESOLUTION MAY STIPULATE THE CONDITION REGARDING THE USE AND DISPOSAL OR INVESTMENT OF THE SALE PROCEEDS WHICH MAY RESULT FROM TRANSACTION. NO DEBT INCURRED BY THE COMPANY IN EXCESS OF THE LIMIT SHALL VALID OR EFFECTUAL UNLESS THE LENDER PROVES THAT HE ADVANCED THE LOAN IN GOOD FAITH AND WITHOUT KNOWLEDGE.