Section 179 of CA 2013 : Section 179: Powers Of Board

Explanation using Example

Imagine a technology company, "InnovTech Ltd.", where the Board of Directors is considering expanding their operations. The Board wants to take a loan to fund this expansion. Under Section 179(3)(d) of the Companies Act, 2013, the Board has the power to borrow monies on behalf of the company. However, they must do so by passing a resolution at a Board meeting.

The Board calls a meeting and passes the necessary resolution to borrow funds from a bank. In doing so, they comply with Section 179, exercising their power within the limits set by the company's memorandum and articles of association.

However, if InnovTech Ltd. had just held an Annual General Meeting (AGM) where the shareholders passed a regulation stating that any borrowing over a certain amount must have shareholders' approval, then the Board's decision to borrow funds would need to comply with this new regulation, as per Section 179(2).

If the Board later decides that they want to delegate the task of managing the loan to the company's finance committee, they can do so under Section 179(3) by passing a resolution that specifies the conditions under which the committee can operate.

In this scenario, InnovTech Ltd.'s Board of Directors has effectively used Section 179 of the Companies Act, 2013 to exercise their powers to borrow money for the company's expansion, while adhering to the company's internal regulations and the provisions of the Act.