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CS Professional · Strategic Management and Corporate Finance · Raising of Funds from Debt and Procedural Aspects

The Board of Sundaram Textiles Ltd. has passed a resolution at a meeting delegating its power to borrow monies to a committee of directors. Which statement is correct under Section 179?

The delegation is valid. The proviso to Section 179(3) lets the Board, by a resolution passed at a meeting, delegate borrowing, investment and loan powers to a committee of directors, the managing director, the manager or another principal officer, on conditions the Board specifies.

  1. ADelegation is valid, as the Board may by a resolution passed at a meeting delegate the borrowing power to a committee of directors, the managing director, the manager or another principal officer, on conditions it specifiesCorrect
  2. BDelegation is invalid because the power to borrow can never be delegated
  3. CDelegation is valid only if the delegate is the company secretary
  4. DDelegation is valid only if approved by the Registrar of Companies

Explanation

The first proviso to Section 179(3) permits delegation of the powers in clauses (d) to (f), which include borrowing, by a Board resolution passed at a meeting, on specified conditions. No Registrar approval is required and the delegate list does not name only the company secretary.

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