Directors in pvt ltd co

In one Pvt Ltd Co, there are 3 shareholders and 2 directors.

In BOD meeting, directors are giving powers to themselves. All are interested.

Is it legally tenable?

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8 Replies

T. Kalaiselvan, Advocate (Advocate) 27 September 2024

A power of attoney deed can be given by a principal to his power attorney agent.

Jayanta Bandyopadhyay 27 September 2024

Sir

Ultimately decisions are taken by 2 directors both interested in the resolution. How to ensure unbiased call in such a scenario. Attorney agent follows directors mandate..then how to fix it. Family owned business. No outsiders. Frequently they deal with other Co, llp, pvt co- all are held by same family.

Auditors are silent-blind

Please guide

T. Kalaiselvan, Advocate (Advocate) 27 September 2024

Practical issues are to to be handled as per the situation prevailing, you can decide about what action can be taken on each and every development, you may not find solutions through law for every development, sometimes you may have to think over it and take decisions which would be suitable to the situation.

Jayanta Bandyopadhyay 27 September 2024

Would appreciate if you could give some hints. I am in a sorry figure. A delicate balance between my seemingly perception about wrong and reality in life.

Regards

T. Kalaiselvan, Advocate (Advocate) 27 September 2024

For all such practical issues you can fix an appointment with an advocate either in the local or outside or one from this forum too and proceed as suggested.

Harish varun 13 November 2024

In a Private Limited Company, when directors intend to grant powers to themselves, especially if they are also shareholders and thus interested parties, they must carefully adhere to legal procedures to avoid conflicts of interest. Under the Companies Act, directors with a direct or indirect interest must disclose their interest to the Board, and typically they should abstain from voting on resolutions where a conflict exists. If all directors are interested, the company may need to seek shareholder approval in a general meeting for greater transparency and compliance. Additionally, depending on the nature of the powers being granted, the Articles of Association (AoA) and company bylaws may provide further guidance or restrictions. Ensuring these actions are well-documented and aligned with statutory requirements is crucial for the validity of such resolutions.

If you want to know more about private limited company click here.

Jayanta Bandyopadhyay 13 November 2024

Thanks. Sir

This is a family owned business.

All 6 family members and one company [ also promoted by the same family] are shareholders and out of 6, three are directors. Male Head has 99.9% stake in that promoted company and 80% stake in this company under review. Ultimately this is one man show.

There is no formal meeting. Only paper based back dated minutes.

In case of vertical split of family, any shareholder other than the KMP, May drag all into proceeding. In such a scenario, how to comply with CA 2013?

Harish varun 13 November 2024

For a family-owned business, even if it operates informally, it’s essential to comply with the Companies Act 2013 to avoid future legal issues, especially in case of family disputes. The Act requires formal meetings with proper records, and backdated minutes are not legally valid. To prevent any shareholder from challenging the company’s decisions, especially non-key members, you should ensure that all major decisions are documented transparently with genuine meetings and voting, following CA 2013 guidelines. Proper compliance will protect the company in case of a family split and provide a solid legal defense if any disputes arise.