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What are some powers of a company's Board of Directors that require the company's consent through a special resolution?
What are some powers of a company's Board of Directors that require the company's consent through a special resolution?
Selling, leasing, or disposing of a significant part of the company's business operations; Investing compensation from mergers or acquisitions in trust securities; Borrowing money exceeding certain financial thresholds; Extending repayment terms or forgiving debts owed by directors.
What must a special resolution passed by the company specify when it comes to borrowing money?
What must a special resolution passed by the company specify when it comes to borrowing money?
The total amount the Board can borrow.
In what circumstances does the validity of any debt incurred beyond the borrowing limit set by the special resolution come into question?
In what circumstances does the validity of any debt incurred beyond the borrowing limit set by the special resolution come into question?
When the lender must prove they acted in good faith and were unaware of the limit being exceeded.
What exceptions apply when a buyer purchases company assets in good faith according to the outlined powers of the Board?
What exceptions apply when a buyer purchases company assets in good faith according to the outlined powers of the Board?
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What conditions can be set in the special resolution regarding the use or disposal of proceeds from transactions like selling or leasing assets?
What conditions can be set in the special resolution regarding the use or disposal of proceeds from transactions like selling or leasing assets?
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What types of transactions may be considered part of the company's regular business, thus exempt from certain restrictions on the Board's power?
What types of transactions may be considered part of the company's regular business, thus exempt from certain restrictions on the Board's power?
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What type of approval is needed for the Board to exercise certain powers outlined in the section?
What type of approval is needed for the Board to exercise certain powers outlined in the section?
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Study Notes
Powers of the Board of Directors
- Certain powers require a company's consent via a special resolution, including alterations to the company's capital structure or significant financial commitments.
- Borrowing limits set by the special resolution must be clearly specified to define the authority of the Board in financial matters.
Special Resolution Requirements for Borrowing
- A special resolution passed by the company must include precise terms for the amount of money the Board is authorized to borrow.
- It should detail any conditions or limitations on borrowing to ensure compliance and clarity.
Validity of Debt Beyond Borrowing Limit
- Debt incurred beyond the specified borrowing limit in the special resolution may be questioned, potentially affecting its enforceability or repayment obligations.
- Situations that could challenge validity typically involve lender awareness of limits or failure to comply with specified conditions.
Buyer Protections When Acquiring Company Assets
- Buyers purchasing company assets in good faith may be protected, allowing them to retain the assets even if the sale violated internal company regulations.
- Such protections are crucial to ensure smooth transactions and bolster market confidence.
Conditions on Use or Disposal of Proceeds
- The special resolution can set specific conditions regarding the use or disposal of proceeds from asset transactions, ensuring financial accountability.
- Proceeds might be earmarked for particular projects, debt repayment, or reinvestment into the company.
Regular Business Transactions Exemption
- Transactions that fall within the realm of regular business activities may be exempt from restrictions on the Board's power, streamlining operational decisions.
- Examples might include routine purchases or sales necessary for day-to-day operations.
Approval for Board Powers
- Certain powers outlined require formal approval through a special resolution, ensuring that shareholders have a say in significant management decisions.
- This process affirms corporate governance and aligns the Board’s actions with shareholder interests.
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Description
Test your knowledge on the restrictions imposed on a company's Board of Directors as per Section 180 of the Company Law. Learn about the powers that require the company's consent through a special resolution, such as selling business operations, investing in trust securities, and borrowing money.
