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

Under the articles of Narmada Foods Ltd., the sale of a particular asset must be approved by the company in general meeting. The Board passes a resolution selling it without such approval. What is the position under section 179?

The sale is not validly authorised. The second proviso to section 179(1) stops the Board from doing any act that the Act, memorandum, articles or otherwise requires the company to do in general meeting. A unanimous Board vote or the Managing Director's signature cannot override that requirement.

  1. AValid, because the Board may exercise all powers the company is authorised to exercise
  2. BValid, if the Board resolution is unanimous
  3. CInvalid, because the Board cannot do any act that is required to be done by the company in general meetingCorrect
  4. DValid, if the Managing Director signs the deed

Explanation

Section 179(1) gives the Board all the company's powers, but its second proviso bars the Board from doing any act that the Act, the memorandum, the articles or otherwise requires to be done by the company in general meeting. Unanimity or the Managing Director's signature does not cure this.

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