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Board resolution of 2 director pvt limited company

BizInt12 (Others) (30 Points)

13 April 2014

Dear Experts,

A Pvt Limited company with two directors has passed a board resolution, authorizing its managing director to act on its behalf in appointing a POA agent to sell its immovable asset. This board resolution is signed only by the managing director himself. (apparently the other director is his wife)

Is this board resolution legally valid?

I happen to be an individual buying that immovable asset from the agent. The agent is also a Pvt Limited company which has authorized its managing director to act its behalf through their board resolution.

Advise of the experts highly appreciated.

Regards, Raju

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P C Agrawal (Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad) (8229 Points)
Replied 14 April 2014

As per Sec.21 of Companies Act 2013, resolution can be signed by any KMP (which includes an MD) or an officer of the company duly authorised by the Board. Hence there is nothing illegal as such if the resolution is signed by MD. However, as a matter of good corporate governance practice it is normally signed by some director other than the director in whose favour some authority is given. Hence you can politely request the MD to get signature of second director also on the resolution which will give you a satisfaction and also avoid dispute that may arise among directors in future. However, if it is difficult, you may just proceed with the existing resolution. You can just check restrictions, if any, on the powers of the Board as per their Articles, a copy of which can be downloaded from MCA website after payment of fee.

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