Director’s Roles, Powers and Restrictions under Companies Act 2013

As per section 2(34) of the Act, the director is defined as – “director” which means a director appointed to the Board of a firm.[1] A Director is a member of the Board, a group of other Directors charged with overseeing, controlling, and directing the activities of the organization.[2] Following are the roles and duties of the directors[3]:

To take actions in the peripheral of AOA.
To behave ethically to advance the goals of the business for the good of all of its stakeholders, and for the preservation of the ecosystem.
To carry out his responsibilities with the proper care, skills, effort, as well as independent judgment.
To refrain from getting involved in anything where he could have a direct or indirect interest that is at odds with or potentially at odds with the interests of the firm.
To refrain from attempting to or achieving any unauthorized benefit for himself, his loved ones, partners, or colleagues.
To refrain from assigning his position, etc

The said duties and responsibilities of the Board are envisaged via the powers and restrictions imposed by the legislature directly and indirectly in the process of its operations, the board must adhere to the rules and provisions of the following[4]–

The Companies Act
The Memorandum of Association
The Articles of Association
Any Regulation, made by the company during general meetings.

Section 179 of the Act provides Power to the Board of Directors on the other hand Section 180 of the Act imposed certain restrictions on the general powers of the Board to regulate the activities by the way of Special resolution, some of which are as follows[5]:

S. No.	Powers to Board u/s 179 of the Act	Restrictions on Board u/s 180 of the Act
1.	To call uncalled and unpaid amount on shares	To sell, lease or otherwise dispose of (includes the mortgage) the whole of the undertaking or substantially the whole of the undertaking not in the case of the ordinary course of business.
2.	To approve amalgamation, merger, or reconstruction	To invest the amount received as a result of any merger or amalgamation except in the trust societies.
3.	To borrow monies	The restriction is imposed on borrowings that include already borrowed money except temporary loans taken from financial institutions in the ordinary course of business, more than the amount of the total of the company’s paid-up share capital, amount of free reserves, and balance of securities premium account.
4.	To authorize the buy-back of securities under section 68	To pay off any outstanding owed by a director or to extend the period for payment.
*Note: The above-mentioned list is not exhaustive. [6]

Conclusion: Directors’ roles, powers, and restrictions within the Companies Act 2013 are crucial to ensuring effective governance and ethical conduct. Understanding these aspects is vital for maintaining compliance and fostering the growth of businesses in alignment with legal and ethical principles.

[2] CS S. Dhanapal, Roles and Responsibilities Of Directors Under Companies Act, 2013 available at:

https://taxguru.in/company-law/roles-responsibilities-directors-companies-act-2013.html published on 31 January, 2014; Dhanapal Sreepathi, Roles And Responsibilities Of Directors Under The New Regime available at: https://www.taxmanagementindia.com/visitor/detail_article.asp?ArticleID=5526 published on 15 March, 2014

[3] Companies Act 2013; Richa Bhandari and Praneet Kaur, India: Doctrine Of Corporate Opportunity -An Indian Perspective available at: https://www.mondaq.com/india/shareholders/1241228/doctrine-of-corporate-opportunity-an-indian-perspective published on 18 October, 2022

[4] Powers of Board of Directors available at: https://www.toppr.com/guides/business-law-cs/elements-of-company-law-ii/powers-board-directors .

[5] Kunal Madhukar, Restriction on Powers of Board of Directors available at: https://www.legalserviceindia.com/legal/article-2668-restriction-on-powers-of-board-of-directors.html

By – Adv. Vidhi Jain (B.Com Hons, LLB, LL.M)