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Under section 179 of the Companies Act, 2013, the members in general meeting make a regulation restricting the board’s powers. What is its effect on a prior act of the board that was valid when done?

Question and options

Under section 179 of the Companies Act, 2013, the members in general meeting make a regulation restricting the board’s powers. What is its effect on a prior act of the board that was valid when done?

  1. It invalidates that act from the date it was done

  2. It invalidates that act unless the members ratify it

  3. It leaves the validity of that act unaffected

  4. It makes the directors personally liable for that act

Answer and explanation

Correct answer: C - It leaves the validity of that act unaffected

Section 179(1) of the Companies Act, 2013 makes the board’s powers subject to the Act, the memorandum and articles, and regulations made by the company in general meeting. Section 179(2) adds that no such regulation invalidates any prior act of the board which would have been valid if the regulation had not been made, so the restriction works only for the future.

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