QS Study

Power of Directors

The directors regulate corporate affairs of a public limited company. They are responsible for formulating plans, policies, and strategies. Power of Directors is described in Articles of Association (AOA). Otherwise, it is expressed by the Companies Act-1994 (India).

According to the Articles of Association: In every company, directors enjoy the following power:

  • Issuance of shares
  • Demanding payment
  • Calling for general meetings
  • Conversion of profit into capital
  • Make reserve from profit etc.

Announcement of AGM: In annual general meeting power of directors are presented as follows;

  • Selling and leasing of the assets of the company.
  • Taking loan from the company
  • An expense for welfare purposes, etc.

Government Approval Power: Directors can enjoy the following power under the approval of government:

  • Give loan to any director
  • Appointment of whole time director or managing director etc.

In spite of above all discussion, powers of the directors have some executive powers;

(a) To determine vision, mission, and objective of the company,

(b) Leading and controlling subordinates,

(c) Preparation of framework of the company,

(d) Planning, programming and making a budget for the company, etc.

Whenever the authority of the company thinks to reduce the power of directors then it would be possible in Annual General Meeting or by special order of the company or government.

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