11 March 2010
Can the company board of a real estate company passes a resolution to provide all powers(all the rights of selling, buying , transferring , loan and all possible activities related to company) to a director or any other person ?
and the person keep on selling any property of the company whether purchased before or later than the resolution passed date ?
11 March 2010
Reply to first query: Yes, it is possible to give such a resolution. It would be completely legal.
Reply to second query: Acts done before passing the resolution have to be ratified by the Board. Acts done after such powers have been given are valid and binding on the company.
12 March 2010
The Company is in the business of real estate and hence buying, selling or dealing in properties is a routine part of the business. It should not be construed as sale of undertaking.
However, considering Ankur's opinion, view of other members is requested.
That resolution is possible but as per my opinion it is not a good idea as the power given by above resolution may be misused against the restrictions of sections 293(1)(a).
So the language of the resolution should be drafted very carefully.
Further am talking about personal properties of the company and not stock of the company which includes ready to sell flats etc. as it is a real state company.
12 March 2010
Hi the below is the content of the resolution. ============================================================== Extracts from Resolution passed in the Meeting of board of directors of the company held at branch office ...............
RESOLVED that Sh. x director of the company is authorised to find buyers , engotiate, settle, fix,price, deals with and dispose of all the assets of teh company including land, buildings and other mscellaneous fixed assets of the company.
"RESOLVED that Sh. X , director of the company, be and is hereby authorised on the behalf of the company to execute the sale deed, mutation/ trasnfer of teh part land, building, houses,shops , and other types of properties of the company and is authorised to appear on the behalf of the company before the competent athority such as sub - Registrar, Registrar of ......... , and other competent authorized as required.
RESOLVED that Sh. X , director od the company be and is hereby empowered to represent , negotiate and settle with the State Govt authorities, Registrar of Companies, Local bodies, Sale Tax, Customs, Central exise, income tax, licensing, and other related matter in connection with the assets/ business of teh company, and to sign necessary documents and papers on the behalf of the company , and to appoint advocates, pleaders, specialists, to represent the company in this behalf and also to sub delegate and/or withdraw any of these powers to any other officer or officers working in the company.
signed by the board members. =========================================================================
12 March 2010
1.If the above resolution is prepared, Can Sh X sell the properties of the company one by one on different dates and to different buyers ?
2. Is there any flaw to the above resolution that can be challenged ?
3. Can this resolution be used to sell any property of the company bought before the date of resolution and after the of resolution?
4. If Mr. X made some mistakes(let say mention incorrect company name or any other mistakes) in the sale registry of the property from company to buyer A, does he has the powers to sign the modified registry (titamba Registry) ? If not , Please site some case examples.
13 March 2010
1. On the basis of the above resolution, Mr. X can sell the properties of the company one by one on different dates and to different buyers.
2. Law is a subject of interpretation . To challenge anybody's interpreation and enter into a long lasting litigation is not difficult. Prima Facie there is not flaw in the resolution but the scope is too broad. If Mr. X is going to sell flats, offices etc for a particular project of say 10 towers, then give him the rights for that project. OR If he is selling land, then give him specific power for selling that particular portion of land. In simple words, if the authority is broken up project-wise, then it would become difficult to challenge the resolution or POA. However, the above given resolution is in order.
3. The resolution given is broad enough to cover all the properties of the company. i.e. even those bought before the date of resolution and after the of resolution
4. Add a point in the resolution authorising Mr. X to also carry out the necessary corrections in case of mistakes and one point indemnifying Mr. X (no liability on Mtr. X) for any errors commited by him in the normal course of action, provided he has carried out his duties in good faith and in the interest of the company.
Further, real estate companies show land in either of the two ways: 1) As Stock in trade: If the company has plans to carry out some activity on the land, it should be shown as stock in trade. 2) Fixed Assets: The land would be converted to stock in trade once the company decides on a project or decides to sell the land in its routine course of business. The benefit of delayed conversion would be on account of higher indexation for LTCG.
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