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Which of the following powers of Directors cannot be exercised without the consent of shareholders in General Meeting?
- a)Power to make calls on shareholders
- b)Power to make loans
- c)Power to buy back its shares
- d)Power to borrow monies exceeding the aggregate of the paid-up capital of the company and its free reserves
Correct answer is option 'D'. Can you explain this answer?
Verified Answer
Which of the following powers of Directors cannot be exercised without...
Section 291 of the Indian Companies Act, 1956 provides that the Board of Directors of a company is entitled to exercise all such powers and to do all such acts and things as the company is authorised to exercise and do. This means that the powers of the Board of Directors are co-extensive with those of the company.
(a) The power to make calls on shareholders in respect of money unpaid on their shares
(b) The power to authorise the buy back of shares
(c) The power to issue debentures
(d) The power to borrow monies otherwise than on debentures
(e) The power to invest the funds of the company
(f) The power to make loans
(g) The power to forfeit shares
Directors don't have powers to borrow monies exceeding the aggregate of the paid-up capital of the company and its free reserves.
(a) The power to make calls on shareholders in respect of money unpaid on their shares
(b) The power to authorise the buy back of shares
(c) The power to issue debentures
(d) The power to borrow monies otherwise than on debentures
(e) The power to invest the funds of the company
(f) The power to make loans
(g) The power to forfeit shares
Directors don't have powers to borrow monies exceeding the aggregate of the paid-up capital of the company and its free reserves.
Most Upvoted Answer
Which of the following powers of Directors cannot be exercised without...
Understanding Directors' Powers in a Company
In corporate governance, the powers of directors are crucial for the smooth functioning of the company. However, certain powers require the consent of shareholders in a General Meeting. Among the options provided, the power to borrow monies exceeding the aggregate of the paid-up capital and free reserves is the correct answer.
Key Reasons for Shareholder Consent
- Protection of Shareholders' Interests:
Borrowing beyond the company's capacity can jeopardize the financial health of the business. Shareholders need assurance that the company is not over-leveraging.
- Limits on Borrowing:
The law often imposes restrictions on how much a company can borrow based on its capital structure. This ensures that the company remains solvent and can meet its obligations.
- Corporate Governance:
Engaging shareholders in significant financial decisions fosters transparency and accountability. It allows shareholders to voice concerns and influence the company's direction.
Comparison with Other Powers
- Power to Make Calls on Shareholders:
Directors can call for unpaid amounts on shares without needing shareholder approval, as this is a routine administrative function.
- Power to Make Loans:
Directors can approve loans within specified limits and do not typically need shareholder consent unless it involves a significant amount or specific conditions.
- Power to Buy Back Shares:
While this requires adherence to legal provisions, it does not necessarily need prior consent from shareholders unless specified by the company’s articles or bylaws.
Conclusion
In summary, among the options provided, the power to borrow more than the paid-up capital and free reserves requires shareholder consent to ensure that the interests of the shareholders are safeguarded and the company remains financially sound.
In corporate governance, the powers of directors are crucial for the smooth functioning of the company. However, certain powers require the consent of shareholders in a General Meeting. Among the options provided, the power to borrow monies exceeding the aggregate of the paid-up capital and free reserves is the correct answer.
Key Reasons for Shareholder Consent
- Protection of Shareholders' Interests:
Borrowing beyond the company's capacity can jeopardize the financial health of the business. Shareholders need assurance that the company is not over-leveraging.
- Limits on Borrowing:
The law often imposes restrictions on how much a company can borrow based on its capital structure. This ensures that the company remains solvent and can meet its obligations.
- Corporate Governance:
Engaging shareholders in significant financial decisions fosters transparency and accountability. It allows shareholders to voice concerns and influence the company's direction.
Comparison with Other Powers
- Power to Make Calls on Shareholders:
Directors can call for unpaid amounts on shares without needing shareholder approval, as this is a routine administrative function.
- Power to Make Loans:
Directors can approve loans within specified limits and do not typically need shareholder consent unless it involves a significant amount or specific conditions.
- Power to Buy Back Shares:
While this requires adherence to legal provisions, it does not necessarily need prior consent from shareholders unless specified by the company’s articles or bylaws.
Conclusion
In summary, among the options provided, the power to borrow more than the paid-up capital and free reserves requires shareholder consent to ensure that the interests of the shareholders are safeguarded and the company remains financially sound.
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Which of the following powers of Directors cannot be exercised without...
Section 291 of the Indian Companies Act, 1956 provides that the Board of Directors of a company is entitled to exercise all such powers and to do all such acts and things as the company is authorised to exercise and do. This means that the powers of the Board of Directors are co-extensive with those of the company.
(a) The power to make calls on shareholders in respect of money unpaid on their shares
(b) The power to authorise the buy back of shares
(c) The power to issue debentures
(d) The power to borrow monies otherwise than on debentures
(e) The power to invest the funds of the company
(f) The power to make loans
(g) The power to forfeit shares
Directors don't have powers to borrow monies exceeding the aggregate of the paid-up capital of the company and its free reserves.
(a) The power to make calls on shareholders in respect of money unpaid on their shares
(b) The power to authorise the buy back of shares
(c) The power to issue debentures
(d) The power to borrow monies otherwise than on debentures
(e) The power to invest the funds of the company
(f) The power to make loans
(g) The power to forfeit shares
Directors don't have powers to borrow monies exceeding the aggregate of the paid-up capital of the company and its free reserves.
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Which of the following powers of Directors cannot be exercised without the consent of shareholders in General Meeting?a)Power to make calls on shareholdersb)Power to make loansc)Power to buy back its sharesd)Power to borrow monies exceeding the aggregate of the paid-up capital of the company and its free reservesCorrect answer is option 'D'. Can you explain this answer? for UGC NET 2025 is part of UGC NET preparation. The Question and answers have been prepared according to the UGC NET exam syllabus. Information about Which of the following powers of Directors cannot be exercised without the consent of shareholders in General Meeting?a)Power to make calls on shareholdersb)Power to make loansc)Power to buy back its sharesd)Power to borrow monies exceeding the aggregate of the paid-up capital of the company and its free reservesCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for UGC NET 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following powers of Directors cannot be exercised without the consent of shareholders in General Meeting?a)Power to make calls on shareholdersb)Power to make loansc)Power to buy back its sharesd)Power to borrow monies exceeding the aggregate of the paid-up capital of the company and its free reservesCorrect answer is option 'D'. Can you explain this answer?.
Which of the following powers of Directors cannot be exercised without the consent of shareholders in General Meeting?a)Power to make calls on shareholdersb)Power to make loansc)Power to buy back its sharesd)Power to borrow monies exceeding the aggregate of the paid-up capital of the company and its free reservesCorrect answer is option 'D'. Can you explain this answer? for UGC NET 2025 is part of UGC NET preparation. The Question and answers have been prepared according to the UGC NET exam syllabus. Information about Which of the following powers of Directors cannot be exercised without the consent of shareholders in General Meeting?a)Power to make calls on shareholdersb)Power to make loansc)Power to buy back its sharesd)Power to borrow monies exceeding the aggregate of the paid-up capital of the company and its free reservesCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for UGC NET 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following powers of Directors cannot be exercised without the consent of shareholders in General Meeting?a)Power to make calls on shareholdersb)Power to make loansc)Power to buy back its sharesd)Power to borrow monies exceeding the aggregate of the paid-up capital of the company and its free reservesCorrect answer is option 'D'. Can you explain this answer?.
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Which of the following powers of Directors cannot be exercised without the consent of shareholders in General Meeting?a)Power to make calls on shareholdersb)Power to make loansc)Power to buy back its sharesd)Power to borrow monies exceeding the aggregate of the paid-up capital of the company and its free reservesCorrect answer is option 'D'. Can you explain this answer?, a detailed solution for Which of the following powers of Directors cannot be exercised without the consent of shareholders in General Meeting?a)Power to make calls on shareholdersb)Power to make loansc)Power to buy back its sharesd)Power to borrow monies exceeding the aggregate of the paid-up capital of the company and its free reservesCorrect answer is option 'D'. Can you explain this answer? has been provided alongside types of Which of the following powers of Directors cannot be exercised without the consent of shareholders in General Meeting?a)Power to make calls on shareholdersb)Power to make loansc)Power to buy back its sharesd)Power to borrow monies exceeding the aggregate of the paid-up capital of the company and its free reservesCorrect answer is option 'D'. Can you explain this answer? theory, EduRev gives you an
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