Section 32 of EXIM Bank Act : Section 32: Arrangement With Exim Bank On Appointment Of Directors To Prevail

Explanation using Example

Imagine a scenario where the Export-Import Bank of India (Exim Bank) extends a substantial loan to a company called XYZ Renewables Pvt. Ltd. to finance its expansion plans for green energy projects. As part of the loan agreement, Exim Bank includes a clause that allows them to appoint two directors to the board of XYZ Renewables to oversee the company's operations and ensure the funds are utilized appropriately.

Despite the Companies Act, 1956 stipulating certain qualifications and conditions for director appointments, the directors appointed by Exim Bank do not have to meet these criteria due to the provisions of Section 32 of The Export-Import Bank of India Act, 1981. The appointed directors can serve without concern for share qualification, age limits, or other such conditions.

One of the directors appointed by Exim Bank suggests a new strategic direction for XYZ Renewables, which, despite being initially unpopular, turns out to be very successful. Even though this director is not a shareholder and is younger than the company's typical retirement age for directors, he is protected from liability for his decisions made in good faith due to the protections afforded by Section 32.