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CS Executive · Company Law and Practice · Board Composition and Powers of the Board

The articles of Kaveri Textiles Ltd. authorise it to buy back its own securities. Which statement correctly describes how the Board may exercise the power to authorise a buy-back of securities under section 179?

The Board must authorise a buy-back by a resolution passed at a Board meeting. Section 179(3) lists buy-back among the powers exercisable only by meeting resolutions, and the power to delegate covers only borrowing, investing and giving loans, guarantees or security, not buy-back.

  1. ABy a resolution passed at a meeting of the Board, as this power must be exercised by means of Board resolutionsCorrect
  2. BBy circular resolution signed only by the Managing Director
  3. CBy delegation to the Managing Director through a resolution at a Board meeting
  4. DBy the Chairman alone, acting under the articles

Explanation

Section 179(3) lists authorising buy-back of securities among the powers the Board must exercise by resolutions passed at its meetings. The proviso allows delegation only for the powers in clauses (d) to (f), namely borrowing, investing and loans/guarantees/security. Buy-back is not among them, so delegation to the Managing Director is wrong.

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