Section 292

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VIPIN KUMJAR (Querist)
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24 October 2013 For the purpose of authorisation to MD under provision of section 292 of companies act, 1956, a company can specify percentage of share capital and reserves or it has to specify a certain amount.

Eg. It can be written in resolution paased at Board Meeting:-

MD of the company is authorised to give loan to other company to the extent of 100% of paid share capital or 60% of Paid up share capital and reserves whichever higher. Further 70% of such amount can be given as business Loan and other 30% as other loan. Maximum amount can be outstanding at a time should not exceed 10% of total amount.

Ajay Mishra

Ajay Mishra (Expert)
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24 October 2013 Hi

The powers delegated to the directors by the Articles of a company are vested in them collectively and, therefore as a general rule, must be exercised by them collectively at the Board meeting and duly convened and constituted.
Section 292(1) specifically provides that the Board of directors of a company shall exercise the following powers on behalf of the company, and it shall do so only by means of resolutions passed at the Board meetings:—
(1) Making calls on shareholders in respect of money remaining unpaid on the shares.
(2) Authorise the buy-back referred to in the first proviso to clause (b) of sub-section (2) of section 77A.
(3) Issuance of Debentures.
(4) Borrowing moneys otherwise than by issue of debentures.
(4) Investing funds of the company.
(6) Making Loans.
It is also provided in the section that the Board may delegate by a resolution to a committee of directors, the managing director, manager or a principal officer of the company or in the case branch office to a principal officer of the branch office, any of the powers at items (4), (5) and (6) in the following manner:—
(i) The delegation to borrow shall state the amounts outstanding at any one time up to which money may be borrowed by the delegatee.
(ii) The delegation to invest funds shall state the total amount up to which the fund may be invested and the nature of the investments that may be made.
(iii) The delegation to make loans shall specify the total amount up to which loans may be made by the delegatee, the purpose for which the loans may be made and the maximum amount that can be made for each such purpose in individual cases.

As per this there is no restriction on the Board to specify percentage of loan given as per company's capital. The restriction will apply when you delegate such power to committee.