Section 180 — Restrictions on powers of Board

(1) The Board of Directors of a company shall exercise the
following powers only with the consent of the company by a special resolution, namely:—

(a) to sell, lease or otherwise dispose of the whole or substantially the whole of the undertaking of
the company or where the company owns more than one undertaking, of the whole or substantially the
whole of any of such undertakings.
Explanation.—For the purposes of this clause,—
(i) “undertaking” shall mean an undertaking in which the investment of the company exceeds
twenty per cent. of its net worth as per the audited balance sheet of the preceding financial year or
an undertaking which generates twenty per cent. of the total income of the company during the
previous financial year;
(ii) the expression “substantially the whole of the undertaking” in any financial year shall mean
twenty per cent. or more of the value of the undertaking as per the audited balance sheet of the
preceding financial year;
(b) to invest otherwise in trust securities the amount of compensation received by it as a result of
any merger or amalgamation;
(c) to borrow money, where the money to be borrowed, together with the money already borrowed
by the company will exceed aggregate of its 1[paid-up share capital, free reserves and securities
premium], apart from temporary loans obtained from the company’s bankers in the ordinary course of
business:
Provided that the acceptance by a banking company, in the ordinary course of its business, of
deposits of money from the public, repayable on demand or otherwise, and withdraw able by cheque,
draft, order or otherwise, shall not be de emed to be a borrowing of monies by the banking company
within the meaning of this clause.
Explanation.—For the purposes of this clause, the expression “temporary loans ” means loans
repayable on demand or within six months from the date of the loan such as short-term, cash credit
arrangements, the discounting of bills and the issue of other short -term loans of a seasonal character,
but does not include loans raised for the purpose of financial expenditure of a capital nature;
(d) to remit, or give time for the repayment of, any debt due from a director.
(2) Every special resolution passed by the company in general meeting in relation to the exercise of the
powers referred to in clause ( c) of sub-section (1) shall specify the total amount up to which monies m ay
be borrowed by the Board of Directors.
(3) Nothing contained in clause (a) of sub-section (1) shall affect—
(a) the title of a buyer or other person who buys or takes on lease any property, investment or
undertaking as is referred to in that clause, in good faith; or
(b) the sale or lease of any property of the company where the ordinary business of the company
consists of, or comprises, such selling or leasing.
(4) Any special resolution passed by the company consenting to the transaction as is referred to in
clause (a) of sub-section (1) may stipulate such conditions as may be specified in such resolution, including
conditions regarding the use, disposal or investment of the sale proceeds which may result from the
transactions:
Provided that this sub-section shall not be deemed to authorise the company to effect any reduction in
its capital except in accordance with the provisions contained in this Act.
(5) No debt incurred by the company in excess of the limit imposed by clause ( c) of sub -section (1)