Draft Special Resolution for Borrowing in Excess of Paid up Capital and Free Reserves

Special-Resolution-Borrowing-in-Excess-of-Paid-up-Capital-and-Free-Reserves


As per the provisions of Section 180(1)(c) of the Companies Act, 2013 if a company wants to borrow money, where the money to be borrowed, together with the money already borrowed by the company, will exceed aggregate of its paid-up share capital and free reserves, apart from temporary loans obtained from the company‘s bankers in the ordinary course of business, the Board of Directors can do so only with the consent of  shareholders by way of special resolution. 

Draft Special Resolution for Borrowing in Excess of Paid up Capital and Free Reserves

"RESOLVED THAT pursuant to section 180(1)(c) of the Companies Act, 1956 (including any statutory modification or re-enactment thereof, for the time being in force) and Articles of Association of the Company, consent of the Company be and is hereby given to the Board of Directors of the Company to borrow moneys whether rupee loans or foreign currency loans or other external commercial borrowings, from time to time, at their discretion together with the moneys to be borrowed/already borrowed by the Company (apart from temporary loans obtained from the Company’s Bankers in the ordinary course of business) either from the Company’s Bankers and/or any one or more persons or Financial Institutions or from any other sources abroad, such as, Foreign Banks, Foreign Investment/Financial Institutions or Funds or other Bodies, Authorities/Entities abroad whether by way of cash credit, advance, loans or bill discounting, Issue of Non-Convertible Debentures/Fully Convertible Debentures/Partly Convertible Debentures with or without detachable or non-detachable warrants or warrants of any other kind, bonds, external commercial borrowings or other debt instruments, or otherwise and whether unsecured or secured by mortgage, charge, hypothecation or lien or pledge on the Company’s assets and properties whether movable or immovable or stock-in-trade (including raw materials, stores, spare parts and components or stock in transit) and work-in-progress of the Company on such terms and conditions as may be considered suitable by the Board of Directors upto a limit of  Rs.______ /- (Rupees _________ only) in excess of the aggregate of the paid-up-capital of the Company and its free reserves, that is to say, reserves not set apart for any specific purpose."

"RESOLVED FURTHER THAT for the purpose of giving effect to this resolution the Board be and is hereby authorised to do all such acts, deeds, matters and things, as it may in its absolute discretion deem necessary, proper or desirable, and to settle any question, difficulty or doubt that may arise in this regard, to finalise and execute all such deeds, documents and writings as may be necessary, desirable or expedient as it may deem fit."

"RESOLVED FURTHER THAT the Board be and is hereby authorized to delegate all or any of the powers herein conferred to any Committee of Directors or Managing Director or Whole time Director or Director of the Company to give effect to the aforesaid resolution."

Explanatory Statement

Pursuant to Section 180(1)(c) of the Companies Act, 2013 approval of the shareholders is required for increasing the borrowings as suggested above and to authorise the Board to borrow funds from time to time from FIs, Banks, FIIs, International lenders etc.

The Board considered this matter in its meeting held on _______ and recommends this resolution for your approval.

None of the Directors and KMP of the Company and their relatives are, in any way interested or concerned in the resolution.
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