Clarification on Section 180 of Companies Act, 2013

Section 180 of the Companies Act, 2013 restricts powers of the Board of Directors to certain extent. The Board of Directors may exercise particular powers only with the consent of the company given by way of special resolution passed in general meeting of the company.

These are:

(a)  To sell, lease or otherwise dispose of the undertaking;

(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; and

(d)  To remit, or give time for the repayment of, any debt due from a director.

This provision replaces the earlier provision of Section 293 of the Companies Act, 1956. The Section 293 of the Companies Act 1956 reads as “The Board of Directors of a … company… shall not except with the consent of … company… in general meeting… … …”

This is clear, earlier provision do not ask for special resolution. The requirements of section 293 satisfy by passing an ordinary resolution. In case of borrowing money, companies usually move motion for passing an ordinary resolution in their Annual General meeting. When new provision comes into force on 12th September 2013 annual general meeting of many companies has already held or at least notices for motion of ordinary resolution relating to borrowing powers was send.

When come to new provision of Section 180, this requires companies to pass a special resolution in general meeting and in effect, force companies for extra – ordinary general meeting.

Now, present general circular 04/2014 dated 25/03/2014 simply say, “the resolution passed under section 293 of the Companies Act, 1956 prior to 12.09.2013 with reference to borrowings (subject to the limits prescribed) and / or creation of security on assets of the company will be regarded as sufficient compliance of the requirements of section 180 of the Companies Act, 2013 for a period of one year from the date of notification of section 180 of the Act.”

This eliminate requirement of extra – ordinary general meeting for the purposing of borrowings. Now the companies are required to pass such a special resolution in next Annual General meeting.

The word of caution is; such special resolution under section 180 of the Companies Act, 2013 must be passed in a general meeting (or an annual general meeting) to be held before 12th September 2014.

Please note: I welcome your comments and feedback. This blog post is not a professional advice. Readers may share this post on social media by using buttons given here.


17 responses to “Clarification on Section 180 of Companies Act, 2013

  1. If Resolution passed under Section 293 of Companies Act 1956 is Special resolution, this will still be valid as per Section 465(2)(b) of Companies Act 2013.
    Section 180 of new Act ask for special resolution. Section 293 of old Act ask for ordinary resolution (subject to articles of Company)


    • But section 293 was not applicable to private companies under companies act, 1956, private companies use to pass board resolution under section 292 for borrowings, investments etc. Now can someone please clarify if this section was not applicable to private companies how to apply this circular to private companies, please answer.


  2. If a Private limited company took a loan of rs 2.5cr from bank on 22/02/2014 and having 7 lac paid up capital and surplus reserves of 59 lac..Does it is required to pass special resolution????


  3. An ordinary resolution was passed under sec 293 (1) (a) in 2007. Will this resolution still be valid, or will a new special resolution under 180 (1) (a) have to be passed ?


  4. If i can hold ma AGM in last week of Sep-14..would there be sufficient compliance of this circular??? since i am obtaining shareholders nod for this section not before 12/9/14 but in 25th Sep, 2014…would there make any difference?


  5. Sir I am a student of cs executive…. I am having a doubt in the line. ……. To invest otherwise in trust security the amount received as compensation as a result of merger or amalgamation.In this sentence what is meant by ( otherwise in trust securities )plz explain


  6. what are the consequences if a company could not pass this resolution upto 12/09/2014, what will be the status of loan and if this default is compoundable and if rd is authorised to compound this default


  7. Devender Jaglan


    If company passed Special resolution under Section 180(1)(a) & (c) of the Companies Act, 2013, it requires to file MGT-14 within 30 days from the date of passing the resolution as per Section 117(3)(e).

    My question is when clause (a) of sub-section (3) of section 117 includes all special resolutions, why clause (e) specifically made it mandatory?


  8. dear sir/madam i have one doubt can the company pay directors housing loan and the company is not recovering any amount from directors please clarify


  9. Shubham Agarwal

    Can we pass Special Resolution without holding any Shareholders Meeting, if yes let me know the procedure. Thanks in advance.


  10. Dear sir
    A private company having a total paid capital & reserves of rs 49 cr and it has borrowed in total approximately 200 crores from various banks but no special resolution passed till april 2019 . so what are the complications for violating sec 180 . and suggest a solution for the company to do now.


No professional query in comments (but in mail). Only academic discussion here. Comments moderated. Sometime, I reply to your mail ID.

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.