Monthly Archives: January 2013

Board of Directors

Meaning of ‘Board of directors’ [Section 252(3)]

Q.2 Explain the term ‘Board of directors’

Ans. The term ‘Board of directors’ means a body duly constituted to direct control and supervise the activities of affairs of a company. In other words, the Board of directors is the ‘directing mind and will’ of the company.

Board has management and the control of the company. The ‘Board of directors’ is the supreme authority having the management and control of the affairs of a company. It is entitled to exercise all such powers as the company is authorized to exercise. However, certain powers are required to be exercised in general meeting by the shareholders, and therefore such powers shall not be exercised by the Board.

Functions of the Board. The Board directs controls, manages and superintends the affairs of a company. It formulates the general policy of the company, establishes organizational set up for implementing these policies, and directs its affairs to achieve the objectives laid down by it. The success of the company depends on the efficient functioning of its directors. Therefore, Board has been referred to as the eyes, ears, brains, nerves and essential limbs of the company.

 

 

  1. 1.    The terms ‘Board of directors’, ‘Board’ and ‘directors’ are synonymous

The directors collectively are referred to as the ‘Board of directors’ or the ‘Board’ [Section 252(3)]. In practice, the expression ‘directors’ is also used to mean the ‘Board of directors’

  1. 2.    Directors can exercise powers only when they act collectively

All the powers vested in the Board of directors are exercisable by the directors collectively, i.e., by the Board. An individual director has no authority to act on behalf of the company, unless he is so authorized by the Act, articles, a resolution of the Board of Directors or a resolution of the shareholders.

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R K Kumawat & Associates

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