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Thursday 18 June 2020

Board Resolution Format for Giving Power of Attorney

Board Resolution Format for Giving Power of Attorney


RESOLVED THAT Mr. (____), Managing Director of the Company, be and is hereby authorized to execute on behalf of the Company, a Power of Attorney in favour of Mr.(___), General Manager Operations (“the
Attorney”) of the Company granting full power and authorities on behalf of the Company for the following purposes:

1. To execute the agreement with all the clients for the aircrews aviation private ltd.
2. To negotiate and finalize the commercials for the company.
3. To submit tenders with any organizations or authorities for the above purposes.
4. To manage the day to day affairs in carrying out the execution of project undertaken for the aircrews aviation services.
5. To do all such acts, deeds, and things as may be necessary for completion of the projects undertaken for aircrews aviation services.
RESOLVED FURTHER THAT any work carried out by the Attorney about the purposes mentioned above shall be valid and binding upon the Company.

RESOLVED FURTHER THAT the power so granted to the Attorney under this resolution may be revoked,
for cause, or without cause, by a resolution of the Board or by a written order by Mr. (___), Managing
Director, at any time in the future.

RESOLVED FURTHER THAT Mr. (______), Managing Director and Mr. (___), Company Secretary of the Company be and are hereby severally authorized to do all such acts, deeds, and things as may be necessary to give effect to this resolution.

Certified True Copy,

For __________________ (Company Name)


A Company can make investment through not more than two layers of investment companies, Without prejudice to the provisions contained in the Act, unless otherwise prescribed, below mention two exceptions of this:
A company from acquiring any other company Incorporated in a country Outside India, if such other company has investment subsidiaries beyond two layers as per the laws of such country.
A subsidiary company from having any investment subsidiary for the purposes of meeting the requirements under any law or under any rule or regulation framed under any law for the time being in force.
 As per Section 2(87) (d) “Layers” in relation to a holding company means its subsidiary or subsidiaries.
APPROVAL: [Section 186(2)]  No Company Shall Directly or Indirectly without Board Resolution Give any LOAN to Give any GURANTEE & provide SECURITY to
Acquire by way of Subscription, Purchase & otherwise, the Securities to
Any Person or Body Corporate.
Section 2(81) provides that ‘securities’ means the securities as defined in Section 2(h) of Securities Contracts (Regulation) Act, 1956.
 Body Corporate
Section 2(11) provides that ‘Body Corporate’ and ‘Corporation’ includes Company incorporated outside India.
But not include,
A Co-operative Society
A Body Corporate-notify by Central Government
Examples of Body Corporate: Indian Company, Foreign Company, Corporation, PFI, NBFC, LLPs.
Not Bodies Corporate:
Proprietorship, Partnership firm (Other than LLPs), HUFs, Societies, Mutual Funds managed by trustee (UTI is a body Corporate it is governed by UTI Act)
The Word Person has not been defined in the Act.
Section 2(42) of General Clauses Act, 1987 provides that “Person” shall include any Company, association or body of individuals, whether incorporated or not.
Any person includes employees of company (Loan to employee covered u/s 186)
 Board Approval: [Section 186(2)&(5)]
Company can give loan or guarantee or providing any security or the acquisition by Passing of Unanimous Board Resolution at the meeting of Board of Directors, when limit does not exceed:
60% of Paid up share capital + Free Reserve + Security Premium Account
100% of Free Reserve + Security Premium Account
(Whichever is more)
  General Meeting Approval: [Section 186(3)]
Where any Loan & Guarantee or providing any security or the acquisition exceeds the limit mention above then:-
prior approval of Shareholder
By passing of Special Resolution in General Meeting
Section 2(47) defines “free reserves” as such reserves which, as per the latest audited balance sheet of a company, are available for distribution as dividend:
Provided that- any amount representing unrealised gains, notional gains or revaluation of assets, whether Shown as a reserve or otherwise, or any change in carrying amount of an asset or of a liability recognized in equity, including surplus in profit and loss account on measurement of the asset or the liability at fair value, shall not be treated as free reserves;
Prior Approval of Concerned Public Financial Institution is require, if term loans subsisting is (Aggregate of Loan, Investment, Guarantee & Security already made along with Loan, Investment, Guarantee & Security proposed to be made) exceed the limit mention above.
Provided that, No approval of PFI is required if there is no default made by company on repayment of loan installment or payment of interest there on as per T&C of such loan to the Public Financial Institution.
Prior approval of shareholders by way of special resolution is required in case the above limit is exceeded. However, as per Rule 11 of Companies (Meetings of Board and its powers) Rules 2014, this will not be applicable in case of specified transactions entered into by a holding company with its wholly owned subsidiary company or to a loan or guarantee given or security provided by a company to a joint venture company.
A Resolution passed at a general meeting in terms of sub-section (3) of section 186 to give any loan or guarantee or investment or providing any security or the acquisition under sub-section (2) of section 186 shall specify the total amount up to which the Board of Directors are authorised to give such loan or guarantee, to provide such security or make such acquisition.
 conditions: No Company
Which is Registered under section 12 of the SEBI Act, 1992 and covered under such class or classes of companies as may be prescribed, shall take inter-corporate loan or deposits exceeding the prescribed limit and furnish in financial statement the details of the loan and deposits. [Section 186(6)]
Which is in default in the repayment of any deposits accepted before or after the commencement of this Act or in payment of interest thereon, shall give any Loan, Guarantee, Security & Investment till such default is subsisting. [Section 186(8)]
No loan shall be given under this section at a rate of interest lower than the prevailing yield of 1 year, 3 year, 5 year or 10 year Government Security closest to the tenor of the loan. [Section 186(7)]
Note: [Section 186(4)]
The Company shall disclose to the member
in the financial statement
the full particular of Loan, Guarantee, and Security & Investment made and
Purpose for which the same is proposed to be utilized by the recipient of it.
Register of Loans, Investments, Guarantee or Security [Section 186(9)&(10)]
Form Every company giving loan or giving guarantee or providing security or making an acquisition of securities shall, from the date of its incorporation, maintain a register in Form MBP-2 (w.e.f 1st April, 2014) and enter therein separately, the particulars of loans and guarantees given, securities provided and acquisitions made as aforesaid.
Entries in Register:
The entries in the register shall be made chronologically in respect of each such transaction within 7 days of making such loan or giving guarantee or providing security or making acquisition
Place of Keeping :The register shall be kept at the registered office of the company and the register shall be preserved permanently and shall be kept in the custody of the company secretary of the company or any other person authorised by the Board for the purpose.
Authentication : The entries in the register (either manual or electronic) shall be authenticated by the company secretary of the company or by any other person authorised by the Board for the purpose
Maintenance :The register can be maintained either manually or in electronic mode.
Inspection The register shall be open to inspection at registered office of the company
Extract from Register: The extracts from the register may be furnished to any member of the company on payment of such fee as may be prescribed in the Articles of the company which shall not exceed Rs.10/- for each page
 EXEMPTION [Section 186(11)]: The Provision of this Section Not Apply:
– Loan, Guarantee & Security provide by
Banking Company (in ordinary course of business)
Insurance Company (in ordinary course of business)
Housing Finance Company (in ordinary course of business)
Company Engage in Business of Financing of Companies “NBFC”
Company engage in Business of Providing Infrastructure Facility
Providing By Holding Company to Its WOS
Providing By Holding Company to Joint Venture Company
– To Any Acquisition

Made by NBFC Whose Principle Business is Acquisition of Security
Made by Company Whose Principle Business is Acquisition of Security
Shares Allotted in Pursuance of Section 62(1) (a)
By Holding Company in WOS.
“Business of financing of companies” shall include, with regard to a Non-Banking Financial Company registered with Reserve Bank of India, “business of giving of any loan to a person or providing any guaranty or security for due repayment of any loan availed by any person in the ordinary course of its business”.
Investment Company” means a company whose principal business is the acquisition of shares, debentures or other securities;
“Infrastructure facilities” means the facilities specified in Schedule VI.
Ordinary Course of Business: It is not defined under the Companies Act, 2013 or rules made there under. It seems that the ordinary course of business will cover the usual; transaction, customs and practices of a business and of a company.
Penalty [Section 186(13)]:-
Company – Fine of Rs.25,000/- to Rs.5,00,000
Officer- Imprisonment up to 2 years and Fine of Rs.25,000/- to Rs.1,00,000/-
Whether offence under the Section can be compounded?
Ans.: Section 441 of the Act provides for compounding of offences punishable with:
a) Fine only
b) Fine or imprisonment
c) Fine or imprisonment or both.
Offences punishable with imprisonment only or imprisonment and fine both are not Compoundable.
However, Section 441 has not yet come into force and hence presently offences under the Act are not compoundable.
Procedure for entering into specified transactions?

– In case the ceiling exceeds specified limits.
Take prior approval of members by special resolution
File return with ROC in Form MGT-14 with copy of special resolution.
Take prior approval of public financial institutions in case any term loan is subsisting and there is any default in repayment of loans and/or payment of interest or if the total amount of specified transactions is exceeding limit as specified above.
In case the ceiling does not exceeds specified limits.
Pass Board resolution in a meeting with the approval of all directors present in the meeting.
File return with ROC in Form MGT-14 with copy of Board resolution.
Disclosure to be made in the financial statements of the full particulars of the loans given, investment made or guarantee given or security provided and the purpose for which the loan or guarantee or security is proposed to be utilised by the recipient of the loan or guarantee or security.
Particulars of loans/guarantees/security/investments to be entered into register maintained for this purpose at the registered office, which shall be open for inspection and extracts may be taken by members on payment of prescribed fee.
1. Up to what limit shareholders can give approval for such transactions?
Ans: The Act does not prescribe any limit up to which the shareholders can give approval for such   transactions. However, on a query under corresponding Section 372A of Companies Act 1956, the Department of Company Affairs vide circular No. 8 dated 4.6.1999 had clarified as under:

I. The companies are expected to obtain the approval for making investments into securities or grant of loan to other companies of amounts which are linked with company’s available financial resources and the resolution, for investment much beyond the net worth should not be passed by the companies.

II. The companies should specifically indicate in the explanatory statement to the resolution, the specific securities in which it is proposed to invest the amount. En bloc approval should normally be avoided (except in the case of guarantee where the resolution can indicate an amount on annual basis).

If the above broad parameters are not complied with, the Government will be constrained to take suitable action against those who contravene these.”

Hence above clarification may be kept in mind while passing special resolutions under Section 186 of Companies Act, 2013 also.

2. Whether various advances and deposits will also be covered under the Section?
Ans: There is a difference between advance and loan. Loan is lending of money with absolute promise to repay whereas advances is to be adjusted against supply of goods and services. Genuine trade advances given to suppliers against orders for supply of goods will not be considered as loans and hence will be out of purview of Section 186. Similarly, advances given to employees against current month’s salary will also not be in the nature of loans.

Sale on credit is also not a loan. [Bombay High Court in Fredie Ardeshir Mehta v. Union of India (1991)]

3. Whether book debts will also be considered as loans?
Ans: Courts have held in various judgements that credit extended beyond normal credit period may be considered in the nature of loans and hence provisions of the Section may get attracted to such book debts also.

4. Whether investments in mutual funds are also covered under the Section?
Ans.: As per SEBI regulations, most of the mutual funds are managed by trusts which are not body corporates. Hence investments in mutual funds are not covered under the Section. However, Unit Trust of India is an exception since it has been constituted under UTI Act and is a body corporate.

Board resolution on making contribution to political

RESOLVED THAT pursuant to the provisions of Section 182 of the Companies Act, 2013 and other applicable provisions, if any, of the Companies act 2013, (including any statutory modification or re- enactment thereof for the time being in force) and subject to the Articles of Association of the Company, the approval of the Board be and is hereby given to the company for contribution to (Name of the Party) an amount not exceeding seven and a half percent of the average net profits as determined in accordance with the provisions of Section 182 of the Companies Act, 2013 during the three immediately preceding financial years.”

“RESOLVED FURTHER THAT (Name of the authorized person(s) )be and are hereby authorized jointly / individually on behalf of the Company to make the political contribution on behalf of the Company and to do all acts, deeds and things that may be necessary, proper, expedient or incidental for the purpose of giving effect to the aforesaid Resolution.”

Certified True Copy,
For __________________ (Company Name)

NOTICE is hereby given that Mr. ....................... resident of
....................... ....................... is no longer in the employment of our company with effect from ........ ............... He is not authorised to represent the company in any matters whatsoever. Any person dealing with him shall do so at his own risk and responsibility.
                                                                         For and on behalf of

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