COMPANIES ACT - 1963 (ACT 179)

    Section - 202 - Limitations on the Powers of the Directors

    (1) Notwithstanding subsection (3) of section 137 of this Code or any provision in the company's Regulations, the directors of a company with shares shall not, without the approval of an ordinary resolution of the company,

    (a) sell, lease or otherwise dispose of the whole, or substantially the whole, of the undertaking or of the assets of the company;

    (b) issue any new or unissued shares, other than treasury shares, in the company unless the same shall first have been offered on the same terms and conditions to all the existing shareholders or to all the holders of the shares of the class or classes being issued in proportion as nearly as may be to their existing holdings;

    (c) make voluntary contributions to any charitable or other funds, other than pension funds for the benefit of employees of the company or any associated company, of any amounts the aggregate of which will, in any financial year of the company, exceed one thousand pounds or two per centum of the income surplus of the company at the end of the immediately preceding financial year, whichever is the greater:

    Provided that,

    (a) no resolution of the company shall be effective as approving of such transaction as is referred to in paragraph (a) of this subsection unless it authorises in terms the specific transaction proposed by the directors;

    (b) no resolution of the company shall be effective as approving of such a transaction as is referred to in paragraph (b) of this subsection if passed more than one year before the issue of the said shares unless such issue is in accordance with a scheme for the time being in force relating to the issue of shares to or for the benefit of persons bona fide in the employment of the company or any of its associated companies.

    (1a) Paragraph (b) of the proviso to subsection (1) of this section shall not apply to a public company some or all of whose equity shares are dealt in on an approved stock exchange; [As inserted by the Companies Code (Amendment) Act, 1994 (Act 474) s. 2(a)].

    (2) Notwithstanding any provisions of this Code or in the company's Regulations or in any resolution of the company in general meeting, no new or unissued shares or treasury shares shall be issued to any director or past director of the company or of any associated company or to his nominee or to any body corporate controlled by him unless the shares shall first have been offered on the same terms and conditions to all the existing shareholders or to all the holders of the shares of the class or classes being issued in proportion to their existing holdings or, in the case of a public company, to members of the public.

    (2a) Subsection (2) of this section may be disapplied with the approval of an ordinary resolution of a public company some or all of whose equity shares are dealt in on an approved stock exchange or in respect of which application has been made to an approved stock exchange for permission to deal in such shares. [As inserted by the Companies Code (Amendment) Act, 1994 (Act 474) s. 2(b)].

    (3) For the purposes of the immediately preceding subsection a body corporate shall be deemed to be controlled by a director if such body corporate or its directors are accustomed to act in accordance with the directions or instructions of such director or his nominee or if at a general meeting of such body corporate such director or his nominee is entitled to exercise or control the exercise of one-third or more of the voting power.

    (4) Nothing in the foregoing subsections of this section shall prohibit,

    (a) the issue of any shares under a bona fide underwriting agreement; or

    (b) the issue to a director at a fair price payable in cash of such shares, if any, as, under the Regulations of the company, he is required to hold by way of share qualification.

    (5) Unless the company's Regulations shall otherwise provide the directors of a company with shares shall not, without the approval of an ordinary resolution of the company, exercise the company's power to borrow money or to charge any of its assets where the moneys to be borrowed or secured, together with the amount remaining undischarged of moneys already borrowed or secured, apart from temporary loans obtained from the company's bankers in the ordinary course of business, will exceed the stated capital for the time being of the company.

    (6) No person dealing with the company in good faith or registering any disposition of, or title to, property shall be concerned to see whether the conditions of this section have been fulfilled and the provisions of sections 139 to 143 of this Code shall apply to any transactions of the type referred to in this section notwithstanding that such conditions have not been fulfilled.