Section 180 of CA 2013 : Section 180: Restrictions On Powers Of Board

Explanation using Example

Imagine XYZ Pvt. Ltd. is a company that specializes in manufacturing electronic goods. The company has been performing well and has multiple manufacturing units. The board of directors is considering selling one of their units which constitutes about 25% of the company's total income. According to Section 180(1)(a) of the Companies Act, 2013, this is considered a substantial part of the company's undertaking. To proceed with this sale, the board must obtain the consent of the company's shareholders through a special resolution.

In a general meeting, the proposal is put forward and a special resolution is passed with the requisite majority. This allows XYZ Pvt. Ltd. to legally sell the manufacturing unit. Additionally, the special resolution ensures that the sale is conducted in the best interest of the company and its shareholders, and it may include conditions regarding the use or investment of the sale proceeds.