What the Board Can Never Delegate

Section 179(3) reserves specified powers for exercise by the Board through resolutions passed at duly convened Board meetings. These include, among other matters, borrowing money, investing company funds, approving financial statements and the Board's report, diversifying the business, and approving certain merger, reconstruction, takeover, or acquisition decisions.

Some statutory powers may be delegated within the limits permitted by the Act and a Board resolution. But delegation must be deliberate, documented, and bounded. An informal management understanding, however commercially sensible, is not a substitute for the authority required by law.

Audit actual practice against the statutory list and existing delegations. Check whether borrowings, investments, guarantees, acquisitions, and restructuring decisions were approved by the Board or under a valid authority granted by the Board. Review minutes, committee charters, delegations of authority, bank mandates, and transaction documents.

A failure to obtain the required Board approval can create questions about authority, governance, enforceability, disclosures, and the position of officers who implemented the transaction. For material decisions, begin with a Board resolution and then determine whether implementation can lawfully be delegated.