National Bank Limited advanced certain loans to Silver Limited while the memorandum of the borrower company did not provide for such borrowing. What are the consequences? Does it make any difference if the memorandum con

Section 179 of the Companies Act, 2013 provides that the Board of Directors of a company shall be entitled to exercise all such powers, and to do all such acts and things, as the company is authorised to exercise and do. Provided that in exercising such power or doing such act or thing, the Board shall be subject to the provisions contained in that behalf in the Companies Act, 2013, or in the memorandum or articles, or in any regulations not inconsistent therewith and duly made there under, including regulations made by the company in general meeting. The act of borrowing of loan by Silver Ltd from National Bank Ltd is valid as the memorandum of association of the company is silent for on borrowings, it is neither allowing nor restricting. The Board of Directors of a company shall exercise the powers of borrowing the money and investing the funds of the company on behalf of the company by means of resolutions passed at meetings of the Board. The National Bank Ltd can recover the loan from the Silver Ltd. In case, the memorandum contained a provision for taking mortgage loans, the directors can exercise such power. The power to provide security in respect of loans is there with the directors under section 179(3) of the Companies Act, 2013. It is not required to give specific authority to directors for this purpose.