Managing Directors Power in Articles of Association

Dear Experts,

I have a problem and want 2nd openion on the same;

Whether in a Publice Company (unlisted/listed) the Articels of Association prescribe the power of Managing Director to sale any immovable (or other) properties of the Company.

"I know the provision of Section 293(1)(a) restrict and provide the proceedure for sell, leas or otherwise dispose of the whole, or substantially the whole, of the undertaking of the company..................." but managment want to entrust entire power  to sell the properties of the company to the Managing Director. Is it posible to fram Articles in the aforsaid manner.

Or 

Whether the power of Board of Directors [after obtaining consent u/s 293(1)(a)] can be automaticly transferred to Managing Director, if articles provides that "Power to sale any property of the company shall be excercised only by Managing Director".

In my openion such powers are ultra virus to the provision of the Act, and cannot be ecercised by MD unilitrally, but should be execrcised by Board of Director at duly convened meeting but Board of Director may authorised to MD for execution of such power.

Pls. give your comments at earliest. 

Regards

Replies (3)

Dear Santosh,

 

Under Section 293(1)(a) the Board of the public company shall not except with the consent of Shareholders by way of Ordinary Resolution sell or lease or otherwise dispose of the whole or substantially whole of its undertakings.

 

Therefore, after obtaining shareholders approval MD is authorised to sell the properties and enter into agreement to sell.

 

Further, your view is absolutely right, after obtaining approval from shareholders, it should be done in duly executed Board meeting.

Mr. Santosh - You are right.  Such provisions in AOA will violate the Company Law provisions and hence will be void.

 As per Section 293(1)(a),  the Board of Directors of a  public company shall not except with the consent of Shareholders sell or lease or otherwise dispose of the whole or substantially whole of its undertakings.  Hence Shareholders approval is a must.

Agreed with Experts...................

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