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

Under section 378R of the Companies Act, 2013 dealing with a Producer Company, which statement about the exercise of Board powers is correct?

A director or a group of directors who do not constitute the Board cannot exercise the Board's powers in a Producer Company. Section 378R requires powers to be exercised by resolution at a Board meeting, and the Explanation expressly bars individual directors or groups from acting for the Board.

  1. AA director or group of directors who do not constitute the Board cannot exercise the Board's powersCorrect
  2. BAny single director may admit new Members on behalf of the Board
  3. CThe Board's powers may be exercised by any committee including the powers of the Chief Executive
  4. DThe Board may sanction loans to a director or his relative in connection with business activities

Explanation

Section 378R(3) requires the Board's powers to be exercised by resolution passed at its meeting, and the Explanation says a director or group of directors not constituting the Board cannot exercise them. Section 378U proviso bars delegating Board powers or the Chief Executive's powers to a committee. Clause (j) allows loans to Members who are not directors or their relatives, so the last option is wrong.

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