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Authority to the outsiders

Amisha (Asst. Company Secretary) (205 Points)

25 June 2010

I want to authorize some of My employees and others (who are not employees of the company) to sign some excise related docs on behalf of company.

I have passed a resolution saying that Mr. X , Director of the company is authorised to sign and make etc docs related to excise

Further resolved that he is also authorised to delegate his power to any person as he may deem fit.

Now the Director Mr.X is executing a Power of Attorney in favour of those who are not the employees of the company to sign such documents on the basis of Resolution.

Can he do that..? Is it legally right...?

Also let me know that if the POA is executed by Director of the Company to any person then do i have to affix common seal on the same.

Thanks & Regards,

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24 Replies

Nitin Grover (CS) (1228 Points)
Replied 25 June 2010

Dear Amisha

Yes he can do so but in resolution it must be shown that Mr X is being authorised and to authorised some another person on his/ behalf of company for this act.

thats you have shown already in Resolution.

Its legal and you can affix stamp of Director on it.

in my views no need of common seal

Regards

Yogesh Bhatt (Company Secretary) (475 Points)
Replied 25 June 2010

Dear Amisha,

AS per my opinion Director can not delegete his power only board can delegate power to any director or commitee of Board. :

First Read This:

Section 291 of Companies Act, 1956 provides for general powers of the Board of directors. It mandates that the Board is entitled to exercise all such powers and do all such acts and things, subject to the provisions of the Companies Act, as the company is authorized to exercise and do.

However, the Board shall not exercise any power and do any act or things which is required whether by the Act or by the memorandum or articles of the company or otherwise to be exercised or done by the company in general meeting.

Power of the individual directors - Unless the Act or the articles otherwise provide, the decisions of the Board are required to be the majority decisions only. Individual directors do not have any general powers.

So . If u analysis Above sentence in red mark it says that Director can do whatever company do. here not mention anything abt outsider.

Nitin Grover (CS) (1228 Points)
Replied 25 June 2010

Dear Yogesh

Pls solve this problem

1. Comapny Name ABC P.Ltd need Form C - 5 nos then Will Director go for it in Sales Tax - Ans is No he authorise another person

2. Same Company need to file petition u/s 141 then also they authorise the person not even an employee of the company

so they can authorise

Regards

Amisha (Asst. Company Secretary) (205 Points)
Replied 25 June 2010

Thanks yogesg and nitin

but now the question come that the directors who is authorised by the Board can individually authorise outsider or the same has to be done by the consent of the Board.

Best regards,

Yogesh Bhatt (Company Secretary) (475 Points)
Replied 25 June 2010

Dear Nitin,

Both Case 1 and Case 2 are diffrent.

see. 1 st case.. u r right and in that case u can Pass board resolution Means all board consent to authorise one employee for routine work like for bank, s.tax, income tax. etc. and as far as conscern

to purchase S.tax form it is available in market also and to purchase ther is not any legal liability is attached with this activity.

and

in second case to file petition ther is legal liabilty is attached. they can not authorised any person to sign petition they can authorise any representive to appear before authority but they can't delegate such power to outsider . bcoz is ousider is ready to bear any liabilty of order .no ther is not possible.

and pls read section i put in my earlier forum.. u will definitely get idea.. and pls intermingle two case which u ask me bcoz both are diff..in first case no sence to give athority.

anuthoty can give by only board not by any individual director.

u can ask me futher if u can't get it.

Yogesh Bhatt (Company Secretary) (475 Points)
Replied 25 June 2010

Hi, dear Amish u got my point ? or wait for other 's reply.

Amisha (Asst. Company Secretary) (205 Points)
Replied 25 June 2010

dear yogesh

yes i got it. thank you so much.

Beat regards,

Yogesh Bhatt (Company Secretary) (475 Points)
Replied 25 June 2010

i m attaching here one article pls down load it.

Yogesh Bhatt (Company Secretary) (475 Points)
Replied 25 June 2010

i m attaching here one article pls down load it.

Attached File : 29 directors.pdf downloaded: 360 times

Amisha (Asst. Company Secretary) (205 Points)
Replied 25 June 2010

Thanks yogesh. thanks a lot dear.

Best Regards,

Nitin Grover (CS) (1228 Points)
Replied 25 June 2010

Dear Yogesh

Petition can be signed also just like ITR and other legal forms

Dear Amisha

Director can do only that act for which he is authorised

If Director is auth by Board for delegating his power then he can do so

If he does not authorize then Director can not delegate his power on his behalf

Regards

Yogesh Bhatt (Company Secretary) (475 Points)
Replied 26 June 2010

Dear Nitin,

Can u pls send me some resolution where board has pass resolution to give atuthority to director and same he can delegate to others.

i.e board has pass resolution to give authority to director for day to day affairs of company and

same authority he has give to his wife to sign cheque, petition of , or any instrument or document of company, where she is not part of company , she is just outsider for company.

Pls explain me.

Amisha (Asst. Company Secretary) (205 Points)
Replied 28 June 2010

Dear Yogesh & Nitin

Few more queries

Its True that Director dont have any power individually and Board as a whole has a power to act on behalf of Company.

My situation is bit different:

My Board consist of Five Directors and they all have taken a Decision in Board Meeting that Mr.X Director of the Company be authorised to do so and so act.

Also he is further authorised to do delegate the above powers to any person as he may deem necessary.

So here My Board is taking the decision on behalf of the company (which has the power to act on behalf of the company) to delegate the power to director and further sub delegate that power to any person he may deem fit.

If still it is not digestable to you then think it in this way...

There are many documents Like cheques, invioces, letters, income tax related papers, excise related papers and what not.

My Directors cant be present everywhere and cant even sign all the papers at a go.

Its not practical to sign that many papers by a single person. He authorize others to carry out that work on behalf of the company by passing a Board Resolution. You mignt have seen a resolution where you authorize CEO, COO CFO , CS who are not Directors but are authorized signatories.

As per my view and discussions i had with my friends and seniors that any employee of the Company can be authorized by Board Resolution and any person who is not employee of the company can be authorized to act by giving him a POA in his favour.

Now some more questions arise after this:

1. Whether the Power of Attorney given by the Director need to be sealed i.e. affix common seal. as it is given by Director and not by company

2. That some one told me that First General POA need to be given to Director and then Director can give to other. My question is why cant a Board resolution be accepted which clearly says that power is given to Director.

Best regards,

Nitin Grover (CS) (1228 Points)
Replied 28 June 2010

Dear Amisha

I have said you the same thing Director have authority to delegate his power

For an eg Mr. Ratan Naval Tata is a director is 9 companies and all are VIPs are directors in these companies. but they dont sign chq's etc they delegate the powers to others.

its a diff conditions which power can be delgate to employees and which can also for other then empl.

1. Stamp of Director is also sufficient ( no need for common seal) or affix both

2. In second situation i also dont think so to give POA to director except where any govt authority needed like VAT Authority demand for it (its execptional cases) other no need to give POA to director from Board only BR is sufficient.
Director is authorize can sub delegate the power by general POA or by Special POA.

Regards