CORPORATE GOVERNANCE

Module – 4
Role of board of directors in corporate governance
The board’s roles may vary based on the goals and purpose of the business. For-profits and
nonprofit boards differ in their responsibilities. As companies and the era they operate in
continue to evolve, boards should be able to address issues and make adjustments that are the
best fit for the organization. Below are the top responsibilities of boards to uphold corporate
governance.

1. Establish or redefine the corporate vision, mission, and purpose

2. Create and monitor the organizational strategic plans
3. Appoint and evaluate the chief executive
4. Nominate directors and make decisions on committee membership
5. Provide proper financial oversight
6. Protect the company’s assets and members’ investments
7. Evaluate the company’s practices for business continuity and resiliency
8. Oversee and assess the annual operations and budgets
9. Ensure legal compliance and stay updated with regulatory changes
10. Uphold integrity in the company’s financial reports and disclosures on sustainability
performance

Corporate board management

Corporate board management refers to the governance and oversight of a company's board
of directors. The board of directors is responsible for making important decisions about the
company's direction, strategy, and major policies. Effective board management is essential for
ensuring that the company operates in the best interests of its shareholders and stakeholders
while complying with legal and regulatory requirements.

Board Structure:
1. Chairperson: The chairperson leads board meetings, ensures effective
communication among board members, and represents the board externally.
2. Board Committees: Typically, boards have committees such as audit,
compensation, nominating/governance, and sometimes other specialized
committees like risk management or technology.
3. Independent Directors: These are directors who don't have a significant
financial or personal relationship with the company and are crucial for
providing unbiased perspectives and oversight.
4. Executive Sessions: These are meetings held without the presence of
management to facilitate open discussions among independent directors.

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Board Composition:
1. CEO/Chairperson Separation: Some companies have separate individuals
serving as CEO and board chairperson to ensure a balance of power and
oversight.
2. Industry Experience: Having directors with relevant industry experience can
provide valuable insights into market trends, challenges, and opportunities.
3. Financial Expertise: It's common to have directors with financial expertise,
especially on audit and compensation committees, to ensure sound financial
management and governance.
4. Diversity: Boards are increasingly focusing on diversity in terms of gender,
ethnicity, skills, and backgrounds to bring a wide range of perspectives to
decision-making.
5. Stakeholder Representation: In some cases, boards may include
representatives from major shareholders or other stakeholders to ensure their
interests are considered.

Types of board
The board of directors of a company is the highest governing authority within its management
structure. Chosen by shareholders, the directors are considered as the trustees of the company's
property and money, and they act as the agents in transactions that are entered into by them on
behalf of the company. Their primary responsibility is to look out for the interests of the
shareholders. The role of the board is supervisory in nature. It sets strategies, oversees the
company’s activities and assesses its performance. The members of the board typically meets
at regular intervals.
In order to decide on the best approach to corporate governance, it is first important to identify
what kind of Board a company has. In the following paragraphs is a quick overview of the
different types of Board based on the ways they function.

1. Governing Board - A Board where the Promoter of the company is not a part, is said to be
a Governing board. The board members consist of persons other than the promoters and the
intention of the Board is to provide direction to the owners w.r.t. the best way of running the
organisation. The BOD is concerned mainly with the bigger picture and delegate managerial
task to people employed in the organisation.

2. Working Board - As opposed to a governing board, a Working board not only deals with
the big picture but also simultaneously implements the policies and strategies. This type of
board is generally found in smaller or new organisations.

3. Managing or Executive Board - This type of board has its members as Executive Directors
and together they runs everything in the organisation on a day-to-day monitoring basis. Such
Board will have necessary subcommittees for quick addressing of specific situations within the
organisation.

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4. Advisory Board - Advisory boards are similar to governing boards and they provide advice
and direction to those who are actually running the organisation; the difference is that in case
of governing boards the directions are given to employees, in case of Advisory Board, the
advice is given to the Board of Director which is essentially in the form of an Executive or
Working board. The role of Advisory Board is important in critical matters and delicate
situations.

5. Policy Board - This board is similar to the Advisory board, except that in the Policy board
instead of advising, the stress is on formulation of organisational policies, practices and
directions to guide employees. The CEO or promoter of the company, or other employees
implement the work of the policy board.

6. Cooperation Board - As the name suggests, the Cooperation board is one where all
members work and vote equally on all points of business. All members are people elected to
represent the members of a co-operative or other non-profit organisation. All board members
have a singular goal and work to achieve the same.

7. Cortex Board - The Cortex model emphasizes on the value that an organisation creates in
the community. The performance of the organisation is measured on the basis of parameters
like community standards, giving back, societal expectations etc.

8. Competency board: This type of board has members with specific expertise that brings
distinct advantages to the company. For instance, a board may consist of a member with
experience in product design, another in advertising, another in finance and another in law.

9. One-tier & two-tier board - One-tier board of directors or Unitary board of directors) is a
system in which a company has a single body of directors that performs all the functions of the
board. The board comprises of both executive directors and non-executive directors and it
performs both managerial and supervisory duties. As compared to this the two-tier board of
directors has two distinct boards of directors, a Management Board and a Supervisory Board
and their roles are distinct too. The management board is the lower tier and is accountable to
the supervisory board. It makes decisions related to operational aspects of the company while
the supervisory board makes strategic decisions.

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Types of directors
Minimum and Maximum Number of Directors in a Company
The Companies Act, 2013 ('Act') prescribes the minimum and maximum number of directors
in a company. The minimum number of directors is as follows:
 In the case of public limited companies - 3 directors
 In the case of private limited companies - 2 directors
 In the case of One-Person Companies - 1 director
The maximum number of directors a company can have is 15 directors. However, a company
can appoint more directors by passing a special resolution in its general meeting.

Residential Director
As per the Act, every company needs to appoint a director who has been in India and stayed
for not less than 182 days in a previous calendar year. Such a director will be a residential
director.
Independent Director
Independent directors are non-executive directors of a company and help the company to
improve corporate credibility and enhance the governance standards. In other words, an
independent director is a non-executive director without a relationship with a company which
might influence the independence of his judgment.
The tenure of the independent directors is five consecutive years; however, they shall be
entitled to reappointment by passing a special resolution with the disclosure in the Board’s
report. Every listed public company must have at least one-third of a total number of directors
as independent directors. Following unlisted public companies need to appoint at the least two
independent directors:
 Public Companies with Paid-up Capital of Rs.10 Crores or more,
 Public Companies with Turnover of Rs.100 Crores or more,
 Public Companies with total outstanding loans, deposits, and debenture of Rs.50 Crores
or more.
Small Shareholders Directors
A listed company, could upon the notice of a minimum of 1000 small shareholders or 10% of
the total number of the small shareholder, whichever is lower, shall have a director which
would be elected by small shareholders.
Women Director
A company, whether be it a private company or a public company, would be required to appoint
a minimum of one woman director in case it satisfies any of the following criteria:
The company is a listed company and its securities are listed on the stock exchange.

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The paid-up capital of such a company is Rs.100 crore or more with a turnover of Rs.300 crores
or more.
Additional Director
A person could be appointed as an additional director and can occupy the post until the next
Annual General Meeting. In absence of the AGM, such term would conclude on the date on
which such AGM should have been held.
Alternate Director
Alternate director refers to personnel appointed by the Board, to fill in for a director who might
be absent from the country, for more than 3 months.
Nominee Directors
Nominee directors could be appointed by a specific class of shareholders, banks or lending
financial institutions, third parties through contracts, or by the Union Government in case of
oppression or mismanagement.
Executive Director
An executive director is the full-time working director of the company. They look after the
affairs of the company and have a higher responsibility towards the company. They need to be
diligent and careful in all their dealings.
Non-executive Director
A non-executive director is a non-working director and is not involved in the everyday working
of the company. They might participate in the planning or policy-making process and challenge
the executive directors to come up with decisions that are in the best interest of the company.
Managing Director
A managing director means a director entrusted with the substantial powers of management of
the company by virtue of the articles of a company, agreement with the company, resolution
passed in the company general meeting or by the board of directors.

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Power of board of directors

 To make calls on shareholders in respect of money unpaid on their shares;

 To authorise buy-back of securities under section 68;
 To issue securities, including debentures, whether in or outside India;
 To borrow monies;
 To invest the funds of the company;
 To grant loans or give guarantee or provide security in respect of loans;
 To approve financial statement and the Board’s report;
 To diversify the business of the company;
 To approve amalgamation, merger or reconstruction;
 To take over a company or acquire a controlling or substantial stake in
another company;
 To make political contributions;
 To fill a casual vacancy in the Board;
 To enter into a joint venture or technical or financial collaboration or any
collaboration agreement;
 To commence a new business;
 To shift the location of a plant or factory or the registered office;
 To appoint or remove key managerial persons and senior management personnel one
level below the key managerial personnel;
 To appoint internal auditors;
 To adopt a common seal;
 To take note of the disclosure of Director’s interest and shareholding;
 To sell investments held by the company, constituting five percent or more of the
paid-up share capital and free reserves of the investee company;
 To accept public deposits and related matters;
 To approve quarterly, half-yearly and annual financial statements.

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Responsibilities of directors
1. Act within their powers
A director must act within his powers under the company’s constitution and only exercise his
powers for the purpose for which they were conferred (CA 2006, s171).

2. Promote the success of the company

A director must ‘act in a way he considers, in good faith, would be most likely to promote the
success of the company for the benefit of its members as a whole’ (CA 2006, s172). This duty
applies to all directors’ actions, not just those exercised at board meetings. When making
decisions, directors must ensure they have regard to the likely consequences of the decision
over the long term, which means they must take account of the:
• interests of employees
• impact on the community and environment
• need to foster business relationships with suppliers, customers and others
• need to act fairly between members
• a need to maintain a reputation for high standards of business and conduct

3. Exercise independent judgement

A director must exercise independent judgement (CA 2006, s173). This duty largely codifies
the requirement in common law for directors to exercise their powers independently, without
subordinating their powers to the will of others and without fettering their discretion.

4. Exercise reasonable care, skill and diligence

A director must exercise such reasonable skill, care and diligence as would be exercised by a
reasonably diligent person with:
• the general knowledge, skill and experience that could reasonably be expected from a
person carrying out the director’s functions; and
• the director’s actual general knowledge, skill and experience (CA 2006, s174).

5. Avoid conflicts of interest

A director has a statutory duty to avoid any situations in which he has, or could have, a direct
or indirect interest that conflicts, or could conflict, with the interests of the company (CA
2006, s175). This applies in particular to the exploitation of property, information or
opportunity regardless of whether the company could take advantage of it. It applies to a
conflict of duty, as well as a conflict of interest and includes the interests of ‘connected
persons’.

6. Not accept benefits from third parties

A director has a statutory duty not to accept a benefit from a third party which is given
because of the position held by the director or because of anything the director has done in
his capacity as a director (CA 2006, s176). In brief, acceptance of benefits is not subject to
any ‘de minimis’ limit and is only permitted where the matter is approved by the company’s
members or it can reasonably be regarded that it will not give rise to a conflict of interest with
the company.

7. Declare interests in transactions or arrangements

A director of a company has a statutory duty to disclose any direct or indirect interest he has
in a proposed transaction or arrangement with the company (CA 2006, s177). Furthermore,
the director has a duty under CA 2006, s182 to declare any interest held, direct or indirect, in
an existing transaction or arrangement.

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 CORPORATE GOVERNANCE

Functions of board
As the primary governing group for a company, the board has several important
responsibilities. Here's a list of the board's primary functions:
1. Hiring and evaluating the CEO
The board decides who the CEO of a company is, when they might replace one and how they
might measure the CEO's success. When hiring a new CEO, board members may analyze the
company's current performance and goals to determine their most important needs. This can
help them design the job description and solicit applications for other executives within the
industry. For example, if a company hopes to increase its digital presence, the board may seek
a CEO with a background in technology or digital [Link] the company hires a new
CEO, the board oversees their responsibilities, team and success metrics. The board determines
what initiatives they want the CEO to accomplish within their first years of service. If the CEO
doesn't meet their expectations, the board can select a new CEO to better achieve their goals.
2. Creating the company's vision
Board members can define a company's values and its plans for the future. This includes short-
and long-term goal setting, strategic planning and work environment. For example, an
educational technology company might have a goal to implement its course platform in 50%
of schools nationwide. Team members might also draft different goals for their visions and
hold meetings to decide which goals to pursue. The leadership team, including the CFO and
CEO, can then communicate the vision to their teams. The board might have monthly meetings
to review this vision and ensure employees understand and agree with the plans and have the
tools to execute them.
3. Defining strategies
Strategy setting is another primary function of a board of directors. Once the board establishes
its mission and purpose, it can decide how to achieve its goals. For example, a technology
company may choose between outsourcing or hiring new internal employees. The board for
this company may consider the positives and negatives of both options before deciding which
may help the company best achieve its goals.
4. Allocating and protecting resources
Allocating resources can mean determining where to place financial resources, employees or
tools to best serve a business. Whether executives or shareholders, all members on the board
must determine which departments or teams will receive additional or fewer resources in
response to their strategic goals and mission. For example, if a company's primary goal is to
increase revenue generated from social media engagement, its board may agree on additional
funding for advertising and new algorithm tools that can target customers more accurately.
5. Ensuring legal compliance
Companies often ensure their employees and organizations comply with local, state and federal
laws. They can achieve compliance with behavioral requirements, like ethics training, proper

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recording of financial records and appropriate documentation for conflicts. For example, if a
photo department frequently uses proprietary images for marketing, the board may decide to
invest in technology that can identify rights or permissions quickly or invest in training to
ensure they're compliant.
6. Overseeing finances
A board determines the company's budget and sales goals and may meet regularly to discuss
current financial figures and future predictions. Companies may also establish automated
controls or manual checks to ensure all team members are following proper financial protocol.
Besides these controls, some companies also create internal auditing teams or hire external
ones to review their financial activity and reports to ensure compliance.
7. Making financial decisions
Beyond general financial oversight, the board makes some of the largest financial decisions for
a company. This can include if a company merges with or acquires another company, divests
from certain assets or moves to a new office building. A company may benefit from a board
with a diverse group of individuals that must agree on these financial decisions.
8. Managing board members
The directors also share responsibility for managing each other. When a board chooses a CEO,
they may hire or release board members in response to the business needs. For example, the
board may notice they need additional support in a specific area and consider candidates who
are currently executives from an internal department or outside investors with specific
expertise. The board can write the job description, monitor performance and evaluate new
board members. Sometimes, the board might perform self-evaluations to find opportunities for
change.
9. Improving public opinion
Since a company's board may have outside stakeholders on the team, it's important that they're
transparent with one another and with the public. For example, a company might communicate
earnings publicly throughout the year, and the board might communicate if the company met
its expectations and what its outlook is. This might influence new shareholders to purchase
stocks and help build trust in the organization.
10. Investing in company programs
Having a clear mission may influence what kind of programs the company invests in or
provides to the community. This requires the board to decide what's most beneficial to the
company's employees. This can involve specialized training, community programs or volunteer
opportunities. Determining which programs can best uphold the company's culture may also
require the board to research the value, overall satisfaction and outcomes of each program.

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Code of conduct for board members

A code of conduct is a set of rules and guidelines that outline expected behaviors and ethical
standards for individuals or groups within an organization. It serves as a framework for
decision-making and helps establish a culture of integrity, professionalism, and accountability.
HONESTY AND INTEGRITY
All Directors and Senior Management Personnel of the Company shall conduct their activities
on behalf of the Company and on their own behalf, with honesty, integrity and fairness. The
Directors and Senior Management Personnel of the Company will act in good faith,
responsibly, with due care, competence and diligence, without allowing their independent
judgement to be subordinated. The Directors and Senior Management of the Company will act
in the best interest of and fulfil their fiduciary obligations to the Company and its shareholders.
CONFLICT OF INTEREST
The Directors and Senior Management Personnel of the Company should not enter into any
transaction or engage in any practice, directly or indirectly, that would tend to influence
him/her to act in any manner other than in the best interests of the Company. Every Director
and Senior Management Personnel should make a full disclosure to the Board of any
transaction that they reasonably expect, could give rise to actual conflict of interest with the
Company and seek Board authorization to pursue such transaction.
COMPANY PROPERTY
Every Director and Senior Management Personnel should endeavor to ensure that they use the
Company’s assets, proprietary information and resources only for legitimate business purpose
of the Company and not for personal gains.
CONFIDENTIAL INFORMATION
The Directors and Senior Management Personnel should maintain confidentiality of
information entrusted to them in carrying out their duties and responsibilities. The matters
discussed at the Board/ Committee Meetings must not be disclosed outside appropriate and
reasonable circles. The Company’s confidential information and proprietary information shall
not be inappropriately disclosed or used for personal gain or advantage of any Director. These
obligations apply not only during a Directors term, but thereafter as well unless the said
information becomes public.
GIFTS, DONATIONS & ENTERTAINMENT
The Directors and Senior Management Personnel shall neither receive nor offer or make,
directly or indirectly, any illegal payments, remuneration, gifts, donations or comparable
benefits which are intended to or perceived to obtain business or uncompetitive favours for the
conduct of its business. However, the Directors and Senior Management Personnel may accept
and offer nominal gifts, which are customarily given and are of a commemorative nature, for
special events.
Gift, donations, hospitality and/ or entertainment carried out for Company exceeding the value
of Rs. 5,000/- should be accepted and/ or offered by the Directors only with the approval of the
Audit Committee and in case of Senior Management Personnel, the same should be accepted

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and/ or offered only with the approval of the Managing Director & CEO of the Company if its
value exceeds Rs. 5000/-.
FAIR DEALING
The Directors and Senior Management Personnel should endeavor to deal fairly and not seek
to take unfair advantage of the Company through manipulation, concealment, abuse of
privileged information, misrepresentation of material facts or other unfair dealing
SAFETY
The Directors and Senior Management Personnel shall respect safety and health of all
employees and provide working conditions, which are safe and healthy.
EQUAL OPPORTUNITIES
The Directors and Senior Management Personnel shall endeavor to provide equal opportunities
to all employees and aspirants for employment in the Company irrespective of gender, caste,
religion, race or colour, merit being the sole differentiating factor. The Directors and Senior
Management Personnel shall prevent and redress sexual harassment at work place and institute
good employment practices.
NON-COMPETE
The Directors and Senior Management Personnel shall not take up directly or indirectly any
activities competing with the business of the Company.
CORDIAL RELATIONS
The Directors and Senior Management Personnel shall endeavor to make all efforts to establish
cordial relationships with all stakeholders of the Company with whom they interface while
carrying out their duties for the Company and would try to make positive contributions to the
communities in which they perform such duties.
COMPLIANCE WITH LAWS AND REGUALTIONS
In carrying out their duties and responsibilities, Directors and Senior Management Personnel
should comply and endeavor to ensure that the management is causing the Company to comply
with applicable laws, rules and regulations. The Directors and Senior Management Personnel
should comply with all applicable laws, rules and regulations for the time being in force. In
addition, if any Director becomes aware of any information that he believes constitutes
evidence of a material violation of any laws, rules or regulations applicable to the Company or
operation of its business, by the Company, any employee or another Director, then such
Director should bring such information to the attention of the Chairman of the Audit
Committee.
INSIDER TRADING
None of the Directors or the Senior Management Personnel shall derive any benefit nor assist
to derive any benefit by giving investment advice from access to and possession of information
about the Company, which is not in public domain or constitutes insider information.

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DUTIES OF DIRECTORS
Every Director of the Company shall endeavor to comply with the provisions of Section 166
of the Companies Act, relating to the duties of directors. In addition, Independent Directors
shall also perform the duties as prescribed in Schedule IV of the Companies Act, 2013, as
amended from time to time.
NON-COMPLIANCE
Suspected violations of this Code may be reported to the Chairman of the Board or the
Chairman of the Audit Committee. All reported violations shall be appropriately investigated.
Any waiver of this Code must be approved by the Board of Directors and publically disclosed
if required by any applicable law.
DISCLOSURE
All Directors and Senior Management Personnel shall acknowledge receipt of this Code or any
modification thereto, in the acknowledgement form as at Annexure – I(a) and forward the same
to the Company Secretary indicating that they have received, read, understood and agreed to
comply with the Code. Further, the Board Member and the Senior Management Personnel shall
also affirm the compliance with the Code on annual basis in the form as at Annexure –I(b).

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Training for Board of directors

Board governance training acts as a refresher for experienced board members and provides
new board members with valuable knowledge that can be used to help the organization as
well as their own individual careers.
The Board of Directors have a pivotal role to take decision to fulfilment the key objectives of
any company and conduct in the best interest of the Company. In view of this, the training of
Board members is also imperative for effective corporate governance requirements. As per
Corporate Governance Guidelines issued by Department of Public Enterprises, the company
shall undertake the training programs for its new Board members and also advised to have a
policy specifying training requirements for Board members. The objective of this training
policy is to offer orientation and training programs for Board members to upgrade their
knowledge and discharge their roles & responsibilities in a most efficient manner.
Coverage
This policy shall cover whole time Directors, official part-time Directors and non-official
part-time Directors (Independent Directors) on the Board of the Company. In accordance
with DPE guidelines, preference shall be given to new Board members.
Period of Training
The training requirements across the Board may differ with respect to their nomination into
the Board and duration spent in the Board. However, it will be endeavoured that at least 50%
of the Directors shall be nominated for a training of a minimum three days atleast thrice in
their tenure. This could vary depending on the availability of the program, requirement of
individual concern and also availability of the Director for the period of training.
For new Board member, the Company may also provide familiarization training for a
minimum period of three days including visit of one of the NTSC / field office of NSIC with
in-house/external training program.
Training Programmes
The training program / seminar / conference / certificate courses or any other structured
learning and developmental program could cover any area which is considered as being
relevant or useful for the Board members, based on organizational needs including training
through online / virtual mode.
In house Training Program:- A training program can be facilitated, designed, developed and
conducted within the Company, with or without the assistance of outside agency.
External Training Program:- A training program can be facilitated, designed, developed and
conducted by an outside agency.
Training Resources / Centres
Services of Government, Semi-Government institutes, multilateral agencies like IFC, ADB,
BRIC Bank, JICA, World Bank, SCOPE conducting training courses and also management
institutions like IIMs, Harvard, Sloan school, Oxford may be availed for training purposes.

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Budget
All expenditure incurred on training program for Board members related to the fees, transport
(air / rail / road), boarding and lodging, hospitality, venue etc. shall be borne by the
Company.

Effectiveness of board members

The effectiveness of board members can vary widely depending on various factors such as their
experience, skills, knowledge of the industry, commitment, and ability to work collaboratively
with others. Here are some key aspects that contribute to the effectiveness of board members:
1. Experience and Expertise: Board members with relevant experience and expertise in
areas such as finance, strategy, governance, and industry knowledge can contribute
significantly to board effectiveness.
2. Strategic Vision: Effective board members have a clear understanding of the
organization's mission, vision, and strategic goals. They actively participate in setting
strategic direction and making decisions that align with the organization's long-term
objectives.
3. Governance Skills: Board members should have strong governance skills, including
understanding legal and regulatory requirements, risk management, and ethical
standards. They play a crucial role in overseeing the organization's governance
framework.
4. Commitment and Preparation: Effective board members are committed to their roles
and responsibilities. They attend meetings regularly, actively participate in discussions,
and come prepared with relevant information and insights.
5. Collaboration and Communication: Board members need to work collaboratively
with each other, management, and stakeholders. Effective communication, both within
the board and with external parties, is key to ensuring alignment and transparency.
6. Decision-Making: Board members contribute to decision-making processes by asking
critical questions, challenging assumptions, and weighing risks and opportunities. They
should prioritize the best interests of the organization and its stakeholders in their
decision-making.
7. Continuous Learning and Development: Effective board members engage in
continuous learning and development to stay updated on industry trends, governance
practices, and emerging challenges. They seek feedback and strive for ongoing
improvement in their roles.

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 CORPORATE GOVERNANCE

Powers of board
According to Section 179, CA 2013, the powers of the board of directors are as follows.

 Board of Directors can exercise all such powers for which the company is authorised.

 Board of Directors can take all actions on matters in which the company has authority.

Power of Board subject to other Provisions’

While using the power vested in the board of directors, the board must adhere to the rules and
provisions of the following –

1. The Companies Act

2. The Memorandum of Association

3. The Articles of Association

4. Any Regulation, made by the company during general meetings.

Specifically, one can say that the authority of the company is the powers of the board. However,
if necessary the power of the board can be restricted by the Companies Act, the Memorandum,
the Articles. Resolutions passed by shareholders can also limit the powers of the board.

Power Exercised by Company in General Meeting

The board of directors are not allowed to exercise any power or take any decisions, which are
specifically to be exercised or a decision to be taken in a General Meeting.

New Regulations Do Not Invalidate Acts made by the Board

According to Section 179, Companies Act 2013, any resolutions that are passed in a General
Meeting cannot invalidate any provisions that the board of directors made prior to the resolution.

Power Exercised by Passing Resolution at Board Meetings

There are also certain powers of the board that those resolutions can only be passed by calling a
board meeting. This is done as per Section 175, Companies Act 2013. Thus, the board of directors
can exercise the following powers, only by passing a resolution in the meetings of the board:

 Make calls on shareholders

 Authorise the buyback of securities and shares

 Issue securities and shares

 Borrow monies

 Investing the funds

 Grant loans

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 Approve the financial statement

 Approve amalgamation/merger

 Diversify the business

 Take over a company

Also, in accordance with Section 117, CA 2013, a copy of every board resolution must be
submitted with the Registrar within 30 days of the passing of the resolution.

In addition to this, Rule 8 of Companies Rules 2014 has given certain more powers to the board.
Namely, resolutions that can be passed at board meetings:

1. Making political contributions

2. Appointing or removing key managerial personnel.

3. Appointing internal auditors and secretarial auditors.

The Delegation of Powers of the Board

The Board of Directors may delegate powers such as investing monies, granting loans, giving
guarantee or security by passing a resolution in the board meeting:

1. Committee of Directors

2. Managing Director

3. Manager

4. Any other principal officer of the company

5. The principal officer of a branch office

Restrictions of Powers of the Board

In accordance with provisions of Section 179, the company can impose restrictions and conditions
on the power of the board of directors. Moreover, the shareholders are responsible for imposing
restrictions and conditions of the power of the board. Thus, the shareholders pass an ordinary
resolution at a general meeting to do this.

By Prof. Nensi Solanki