Companies Act Section 378R — Powers and functions of Board

CHAPTER XXI

Commercial / Corporate

Summary

Sub-section (1) says that, as long as it follows the Act and the company's articles, the Board of Directors of a Producer Company can use all the powers and do all the acts and things that the company itself is allowed to do.

Sub-section (2) lists examples of what those powers may include, without limiting the general powers from sub-section (1). Under clause (a), the Board can decide the dividend to be paid. Under clause (b), it can decide how much price to withhold and recommend patronage to be approved at a general meeting. Under clause (c), it can admit new members. Under clause (d), it can set the organisational policy and objectives, establish long-term and annual goals, and approve corporate strategies and financial plans. Under clause (e), it can appoint a Chief Executive and other officers as specified in the articles. Under clause (f), it can supervise, direct, and control the Chief Executive and other officers it appoints. Under clause (g), it must ensure proper books of account are kept and prepare annual accounts to be placed before the annual general meeting, along with the auditor's report and replies to any qualifications the auditors make. Under clause (h), it can acquire or dispose of the company's property in the ordinary course of business. Under clause (i), it can invest the company's funds in the ordinary course of business. Under clause (j), it can sanction a loan or advance to any member, in connection with the company's business activities, as long as that member is not a director or a relative of a director. Under clause (k), it can take other measures or do other acts needed to carry out its functions or exercise its powers.

Sub-section (3) states that all the powers mentioned in sub-sections (1) and (2) must be exercised by the Board through a resolution passed at a Board meeting, acting on behalf of the Producer Company. The explanation clarifies that a single director or a group of directors who do not make up the full Board cannot exercise any of these powers.

Official Text

(1) Subject to the provisions of this Act and articles, the Board of Directors of a Producer Company shall exercise all such powers and to do all such acts and things, as that Company is authorised so to do.

(2) In particular and without prejudice to the generality of the foregoing powers, such powers may include all or any of the following matters, namely:—

(a) determination of the dividend payable;

(b) determination of the quantum of withheld price and recommend patronage to be approved at general meeting;

(c) admission of new Members;

(d) pursue and formulate the organisational policy, objectives, establish specific long-term and annual objectives, and approve corporate strategies and financial plans;

(e) appointment of a Chief Executive and such other officers of the Producer Company, as may be specified in the articles;

(f) exercise superintendence, direction and control over Chief Executive and other officers appointed by it;

(g) cause proper books of account to be maintained; prepare annual accounts to be placed before the annual general meeting with the report of the auditor and the replies on qualifications, if any, made by the auditors;

(h) acquisition or disposal of property of the Producer Company in its ordinary course of business;

(i) investment of the funds of the Producer Company in the ordinary course of its business;

(j) sanction any loan or advance, in connection with the business activities of the Producer Company to any Member, not being a director or his relative;

(k) take such other measures or do such other acts as may be required in the discharge of its functions or exercise of its powers.

(3) All the powers specified in sub-sections

(1) and

(2) shall be exercised by the Board, by means of resolution passed at its meeting on behalf of the Producer Company.

Explanation.—For the removal of doubts, it is hereby declared that a director or a group of directors, who do not constitute the Board, shall not exercise any of the powers exercisable by it.