Power

Question 1

Power

Answer 1

Sure, let’s break it down step by step. The board of directors needs to pass a resolution in a board meeting to make certain important decisions. Here are the key points explained:

1. Issuing Shares and Borrowing Money:
   
   • The board must approve any decision to issue new shares or debentures (a type of debt instrument).
   • They also need to approve borrowing money or investing the company’s funds.
2. Making Loans:
   
   • Any loans made by the company must be approved by the board, except for loans made by a banking company in the normal course of business.
3. Approving Accounts and Bonuses:
   
   • The board must approve the company’s annual and periodic financial accounts.
   • They also need to approve any bonuses given to employees.
4. Capital Expenditure and Asset Disposal:
   
   • The board must approve any significant capital expenditure (large purchases or investments).
   • They also need to approve the sale or disposal of any major fixed assets (like property or equipment).
5. Leasing Contracts:
   
   • Any leasing contracts that exceed a certain amount must be approved by the board.
6. Declaring Interim Dividend:
   
   • The board must approve any interim dividends (dividends paid before the end of the financial year).
7. Authorizing Contracts with the Company:
   
   • The board must approve any contracts between the company and:
     
     • A director.
     • A firm where a director is a partner.
     • A private company where a director is a member or director.
8. Writing Off Debts and Assets:
   
   • The board must approve writing off any bad debts, advances, or receivables if the amount is significant according to Generally Accepted Accounting Principles (GAAP).
   • They also need to approve writing off any inventories or other assets.
9. Compromising Lawsuits:
   
   • The board must approve the terms and conditions for settling any lawsuits or releasing any claims or rights in favor of the company.
10. Acquisitions:
    
    • The board must approve any decisions to take over another company or acquire a significant stake in another company.
11. Other Specified Matters:
    
    • Any other important matters that require board approval as specified by the company’s policies or regulations.

These rules ensure that major decisions are made collectively by the board, promoting transparency and accountability within the company. If you have any specific questions about any of these points, feel free to ask!