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CS Executive · Company Law and Practice · Meetings of Board and its Committees

Zenith Agro Ltd's Managing Director, Mr. Rao, informally signs a letter to a bank accepting a decision to buy back some of the company's shares. Under the Companies Act, 2013, how must the power to authorise a buy-back of securities be exercised by the Board?

The power to authorise a buy-back of securities must be exercised by the Board through a resolution passed at a Board meeting. It is one of the powers listed in section 179(3) and is not delegable to the Managing Director or any officer.

  1. ABy a resolution passed at a meeting of the BoardCorrect
  2. BBy the Managing Director acting alone under general authority
  3. CBy circulating an informal email to all directors without any resolution
  4. DBy the company secretary on the Board's behalf

Explanation

Section 179(3) lists the authorisation of buy-back of securities among the powers that the Board must exercise by means of resolutions passed at Board meetings. The buy-back power is not among clauses (d) to (f), so it cannot be delegated to the Managing Director. A letter signed by him alone is therefore not valid authority.

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