THE COMPANIES ACT, 2013 & THE

COMPANIES AMENDMENT RULES, 2014

→WEEK 5-SESSION 10- Powers which can be exercised
by the BOD, Interested Directors, Board Meetings,
Quorum, and Remuneration & Remuneration in case of
Insufficient Profits
-Powers which can be exercised by the BOD
General Powers- The board can do what the company
can do except for certain restrictions placed by the AOA.
The shareholders/members can in no case restrict the
power of the BOD.
According to Section 179(3) the Board shall exercise
following powers only by means of resolution passed in
its meeting:
1. make calls on shareholders in respect of money
unpaid on their shares;
2. to authorize buy-back of securities under section 68;
3. to issue securities, including debentures, whether in
or outside India;
4. to borrow monies;
5. to invest the funds of the company;
 6. to grant loans or give guarantee or provide security
in respect of loans;
7. to approve financial statement and the Board’s
report;
8. to diversify the business of the company;
9. to approve amalgamation, merger or reconstruction;
10. to take over a company or acquire a controlling
or substantial stake in another company;
11. Any other matter which may be prescribed.
In addition to the powers specified under sub-section (3)
of section 179 of the Act, According to Rule 8 of the
Companies (Meeting of Boards and its powers) Rules
2014; the following powers shall also be exercised by the
Board of Directors only by means of resolutions passed at
meetings of the Board.-
1. to make political contributions;
2. to appoint or remove key managerial personnel
(KMP);
3. to take note of appointment(s) or removal(s) of one
level below the Key Management Personnel;
4. to appoint internal auditors and secretarial auditor;
5. to take note of the disclosure of director’s interest
and shareholding;
6. buy, sell investments held by the company (other
than trade investments), constituting five percent or
more of the paid up share capital and free reserves
of the investee company;
7. to invite or accept or renew public deposits and
related matters;
8. to review or change the terms and conditions of
public deposit;
9. To approve quarterly, half yearly and annual
financial statements or financial results as the case
may be.
-Interested Directors
-Definition of Interested Directors
As per Section 2 (49) of the Companies Act, 2013,
a) The director is said to be an “interested director” if:
(i) The director, himself or; his,
(ii) Relatives;
(iii) Firm;
(iv) Body corporate;
(v) Other association of individuals;
(b) is a Partner, director or a member,
(c) Interested in the contract or arrangement entered
into,
(d) By or on behalf of the Company,
(e) In which such an “interested director” is a director.
Section 184(1)-Duty of director to disclose his interest in
the first BM
~It is the duty of the director to:
1] Disclose his concern or interest in
i] Any company or companies, or
ii] Any body corporate, or
iii] Any firm, or
iv] Any association of individuals
2] Disclose shareholding

Time of disclosure of above-

a] In the first BM in which he participates as a director
b] In the BM which is held in each FY thereafter
c] After every change in any of the above
Consequences of contravention-
FINE/IMPRISONMENT/BOTH
Section 184(2)- Duty of the director to disclose his
interest and not to participate
Every director of a company must disclose the nature of
his interest if he is in any way concerned or interested in
a contract or arrangement already entered into or
proposed to be entered into-
A] With a body corporate in which
i] Such director + other director(s) holds > 2% of the PSC
of such body corporate
ii] Such director is a promoter, manager or CEO
B] Firm or any other entity in which such director is a
partner, owner or member
This INTERESTED DIRECTOR must disclose the nature of
his interest in the BM in which the said contract or
arrangement is first discussed.
Furthermore, such INTERESTED DIRECTOR shall not
participate in the SAID BM
Consequences of contravention-
A] Contract or arrangement is voidable at the option of
the company.
B] Vacation of office u/s 167
C] Fine/Imprisonment/Both
-Board Meetings
1. Frequency of Meeting:
– First Meeting: First Meeting of Board of Directors
within 30 (Thirty) days from the date of Incorporation of
company. –
– Subsequent Meetings:
One person Company, Small Company and Dormant
Company:
• At least one meeting of Board of directors in each
half of calendar year
• Minimum Gap B/W two meetings at least 90 days.
Other than Companies mentioned above:
• Minimum No. of 4 meetings of Board of Director in a
calendar year
• Maximum Gap B/W two meetings should not be
more the 120 days.
2. Calling of Meeting: Meeting of Board of Director
should be called by giving 7 days’ notice to Directors at
his registered address through:
 • By hand delivery
• By post
• By Electronic means
Meeting at shorter Notice: A meeting of Board of
Directors can be called by shorter notice subject to the
conditions:
• If the company is require to have independent
director:
– Presence of at least one Independent director is
required.
– In case of absence, decision taken at such meeting
shall be circulated to all the directors, and
– shall be final only on ratification thereof by at least
one Independent Director
If the company doesn’t require having independent
director: The meeting can be called at a shorter notice
without any conditions to be complied with.
3. Quorum of Board Meeting:
 • 1/3rd of total strength OR 2 (Two) Directors,
whichever is higher.
• Where meeting of Board could not be held for want
of quorum, the meeting shall
automatically adjourn to same time, same place at
next week (Not being national holiday).
• If number of directors reduced below quorum, then
the remaining directors may hold the meeting for
the following purposes:
o To call a General meeting
o Increase the number of directors.
• Quorum in case of Interested Directors:
o If interested director exceed or equal to 2/3 of
total strength the remaining directors not being
less than 2 (two) shall be the quorum.
Note:
1. Total strength shall not include directors whose
places are vacant.
 2. Interested director means, a director interested in
accordance with section 184(2).
3. Director participating in a meeting through video
conferencing or other audio visual means shall be
counted for the purpose of quorum, unless he is to
be excluded for any items of business under any
provisions of the Act or the rules.
4. OPC Having One Director: Provision of Section 173
and 174 shall not apply to an OPC having one
director.
4. Participation of Directors in Board Meetings:
Directors may, apart from attending the meeting
physically, participates in the meeting by way of video
conferencing & other audio visual means.
• Matter which can’t be dealt at a meeting held
though Video conferencing: IMPORTANT
o Approval of the annual financial statements;
o Approval of the Board’s report;
o Approval of the prospectus;
 o Audit Committee Meetings for consideration of
accounts; and
o Approval of the matter relating to
amalgamation, merger, demerger, acquisition
and takeover.
-Remuneration of Directors
• Just as profits drive business, incentives drive the
managers of business. Managers as we know in their
greatest sense include the persons who manage the
day to day activities of a business namely
“Directors”/”BOD”.
• Section 197-Prescribes the maximum ceiling for
payment of managerial remuneration by a public
company to its Managing Director, Whole-Time
Director and Manager; which shall not exceed 11%
of the net profit of the company in that F.Y.
• Further the company in the GM may with the
approval of the CG, authorise the payment of
remuneration exceeding 11% of the net profits of
 the company subject to the provisions of SCHEDULE
V.
• Net Profits for the Section 197 shall be computed in
the manner referred to in Section 198; which as
elaborated below:
• The remuneration payable to any one managing
director or whole-time director or manager shall not
exceed 5% of the net profits of the company and if
there are more than one such director remuneration
shall not exceed 10% of the net profits to all such
directors and manager taken togather.
• Except with the approval of the company in the
general meeting, the remuneration payable to the
directors who are neither managing directors nor
whole-time directors shall not exceed-
-1% of the net profits of the company, if there is a
managing or whole-time director;
-3% of the net profits in any other case.
• Remuneration by a Company having no Profits or
Inadequate Profits-
→ If in any F.Y. a company has no profits or its profits are
inadequate the company shall not pay to it directors
including managers or whole-time directors or manager,
any remuneration exclusive of any fees payable to the
directors except in accordance with the provisions of
Schedule V and if it is not able to comply with Schedule V
then with the previous approval of the CG.
• Schedule V-
→Section I-Remuneration by Companies having Profits
A company having profits in a F.Y. may pay remuneration
to its managerial persons in accordance with Section 197.
→Section II-Remuneration by Companies having no
profits or inadequate profits without Central
Government approval-
Wherein in any F.Y. during the currency of tenure of a
managerial person, a company has no profits or its
profits are inadequate, it may without CG approval, pay
exceeding the higher of the limits under A] & B] below:
A] Effective Capital Max. Limit of Annual
Remuneration
Negative or less than
5 Crore Rs.30 Lakhs
5 Crore and above but
Less than 100 Crore Rs.42 Lakhs
100 Crore and above
but less than 250 Crore Rs.60 Lakhs
250 Crore and above 60 Lakh plus 0.01% of the
effective capital in excess of
Rs.250 Crore
remuneration to the managerial person not
• If a special resolution is passed by the shareholders,
the above limits shall be doubled.
B] In the case of managerial person who was not a
shareholder, employee or a director of the company at
any time during the 2 years prior to his appointment as
managerial persons-2.5% of the current relevant profit.
• If a special resolution is passed by the shareholders,
the above limits shall be doubled.