A Board Resolution for availing a bank loan is a mandatory corporate resolution passed at a duly convened Board meeting under Section 179(3)(d) of the Companies Act, 2013. It formalizes acceptance of credit facilities, authorizes designated directors to sign loan and security deeds, approves hypothecation or mortgage of assets, and mandates filing e-Form CHG-1 with the Registrar of Companies within 30 days.
Draft working formats for preparing bank-ready Certified True Copies of Board Resolutions for Term Loans, Cash Credit (CC), Overdraft (OD), and LC/BG limits. Features real-time Section 180(1)(c) borrowing limit checks, G.S.R. 464(E) private company exemptions, Form CHG-1 charge extracts, and formal Bank Covering Letters in editable Word (.docx) & printable PDF.
Private Limited Companies are fully exempt from Section 180 by MCA Notification G.S.R. 464(E) dated 5th June 2015. Ordinary Board Resolution suffices without EGM Special Resolution or Form MGT-14.
CIN: U72900DL2022PTC123456
Regd. Office: Plot No. 42, Okhla Industrial Area, Phase-III, New Delhi - 110020
PRESENT:
1. Mr. Rajesh Sharma (Director & Chairperson, DIN: 01234567)
2. Ms. Sunita Sharma (Director, DIN: 02345678)
3. Mr. Amit Verma (Whole-time Director, DIN: 03456789)
CHAIRPERSON: Mr. Rajesh Sharma, Director, took the Chair.
The Chairperson informed the Board that in order to finance Procurement of advanced automated manufacturing machinery and factory modernization, the Company approached State Bank of India, Commercial Branch, Barakhamba Road, Connaught Place, New Delhi. The Board was further apprised that the Bank has sanctioned the credit facility vide Sanction Letter Ref. No. SBI/CB/ADV/2026-27/842 dated 02/09/2026.
RESOLVED THAT pursuant to Section 179(3)(d) of the Companies Act, 2013 and other applicable provisions, approval of the Board be and is hereby accorded to avail Term Loan Facility up to an aggregate principal limit of ₹1,50,00,000 (Rupees One Crore Fifty Lakh Only) from State Bank of India, Commercial Branch, Barakhamba Road, Connaught Place, New Delhi for Procurement of advanced automated manufacturing machinery and factory modernization, on the terms and conditions outlined in the Sanction Letter dated 02/09/2026.
Facility Type: Term Loan Facility
Sanctioned Limit: ₹1,50,00,000 (Rupees One Crore Fifty Lakh Only)
Rate of Interest: 9.15% per annum floating linked to 1-Year MCLR / EBLR plus spread
Tenure & Repayment: 60 Months (including 6-month moratorium on principal repayment); Repayable In 54 equated monthly instalments of principal plus monthly servicing of interest
RESOLVED FURTHER THAT for securing the due repayment of the credit facility, consent of the Board be and is hereby accorded for the creation of security by way of First exclusive charge by way of hypothecation over all present and future plant, machinery, equipment, tools, and accessories purchased out of the bank facility, along with hypothecation of current assets. in favour of State Bank of India on an exclusive first charge basis.
RESOLVED FURTHER THAT Mr. Rajesh Sharma, Director (DIN: 01234567) or Ms. Sunita Sharma, Director (DIN: 02345678) be and is/are hereby authorized on behalf of the Company to finalize, sign, and execute the duplicate Sanction Letter, Loan Agreement, Hypothecation Deed, Promissory Notes, and all related documentation.
RESOLVED FURTHER THAT pursuant to Section 77 of the Companies Act, 2013, the Directors or Company Secretary of the Company be authorized to file e-Form CHG-1 with the Registrar of Companies within 30 days of charge creation and obtain the Certificate of Registration of Charge (CHG-2).
RESOLVED FURTHER THAT a certified true copy of this resolution signed by any Director or Company Secretary be furnished to State Bank of India and that the Bank be requested to act upon the same.
Date: 15/09/2026
Place: New Delhi
For ACME TECHNOLOGIES PRIVATE LIMITED
(Mr. Rajesh Sharma)
Director / Authorised Signatory
DIN: 01234567
Statutory distinction between Board powers to borrow and shareholder approval thresholds under the Companies Act, 2013.
| Statutory Parameter | Section 179(3)(d) — Board Power | Section 180(1)(c) — Shareholder Limit |
|---|---|---|
| Applicable Authority | Board of Directors at a formal Board Meeting | Members / Shareholders at General Meeting (EGM) |
| Nature of Resolution | Board Resolution (Simple Majority) | Special Resolution (75% Majority) |
| Circulation Allowed? | NO — Circular resolution barred by Section 179(3) | Postal Ballot or Physical/VC EGM |
| Statutory Threshold | Any borrowing from Banks, FIs, or Directors | When total borrowings exceed Paid-up Capital + Free Reserves + Securities Premium |
| Private Company Status | Mandatory for all companies | EXEMPT by MCA Notification G.S.R. 464(E) dt. 05/06/2015 |
| ROC Filing Requirement | None for private cos (CHG-1 if secured) | e-Form MGT-14 within 30 days (Public Cos only) |
Overview of core banking facilities and necessary operational covenants required in the Board Resolution.
| Facility Type | Primary Purpose | Repayment Structure | Mandatory Resolution Clauses |
|---|---|---|---|
| Term Loan | Capex, plant & machinery, building purchase | Fixed EMIs (36 to 84 months) with moratorium | Moratorium period, EMI schedule, hypothecation of plant |
| Cash Credit (CC) | Working capital (raw material, stock, debtors) | Revolving limit; monthly interest servicing | Drawing power (DP), monthly stock statements, book debt audit |
| Overdraft (OD) | Short-term liquidity / contingency cash flow | Interest on utilized balance; payable on demand | Lien on FDs, mutual funds, or personal property |
| Letter of Credit (LC) | Domestic & import procurement of materials | Sight or usance (90-180 days) upon document acceptance | Margin money, issuing bank authorization, counter-indemnity |
| Bank Guarantee (BG) | Performance, bid bonds, advance payment security | Invoked only on contractual default; annual commission | Unconditional counter-guarantee and indemnity by company |
Statutory procedure for registering charges under Section 77 and Section 87 of the Companies Act, 2013.
| Timeline from Deed Execution | Statutory Window | MCA V3 Filing Fee Bracket | Governing Provision |
|---|---|---|---|
| Within 30 Calendar Days | Standard Statutory Window | Normal filing fee (₹200 to ₹600 based on share capital) | Section 77(1) |
| Day 31 to Day 60 | First Delayed Window | Normal fee + Additional ad-valorem fee (3x to 6x) | Section 77(1) First Proviso |
| Day 61 to Day 120 | Second Delayed Window | Normal fee + Higher ad-valorem fee (up to 0.05% of loan) | Section 77(1) Second Proviso |
| Beyond 120 Days | ROC Gateway Closed | Requires Petition to Regional Director (RD) in Form CHG-8 | Section 87 (Condonation of Delay) |
State stamp acts determine the enforceability of loan agreements under the Indian Stamp Act, 1899.
| State / Jurisdiction | Governing Stamp Act Article | Rate on Loan Agreement | Rate on Hypothecation / Mortgage |
|---|---|---|---|
| Maharashtra | Maharashtra Stamp Act (Art. 6 & 33) | 0.1% to 0.2% (Capped at ₹10 Lakhs) | 0.2% to 0.5% (Max ₹10 Lakhs) |
| NCT of Delhi | Schedule 1A (Art. 6 & 35) | ₹100 / ₹200 (Fixed stamp) | 0.5% of loan secured |
| Karnataka | Karnataka Stamp Act (Art. 6 & 34) | 0.1% to 0.2% of loan value | 0.5% (Max ₹10 Lakhs) |
| Tamil Nadu | Tamil Nadu Stamp Act (Art. 6 & 40) | 0.5% (Capped at ₹40,000 for title deposit) | 1% for simple mortgage |
| Uttar Pradesh | UP Stamp Act (Art. 6 & 40) | ₹100 to ₹500 (Agreement) | 0.5% for deposit of title deeds |
| Gujarat | Gujarat Stamp Act (Art. 6) | 0.25% of loan amount | 0.25% (Capped at ₹4.2 Lakhs) |
| West Bengal | Bengal Stamp Act (Art. 6) | ₹100 to 0.2% | 0.5% of loan amount |
Standard compliance deliverables required by nationalised and private banks prior to fund drawdown.
Statutory guidance covering borrowing limits, circular resolutions, stamp duties, and ROC charge creation under the Companies Act, 2013.
Under Section 179(3)(d) of the Companies Act, 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014, a company can borrow monies only by passing a resolution at a duly convened Board meeting. The resolution approves the sanction letter terms (sanctioned limit, interest rate, tenure, repayment), authorizes designated directors to execute loan agreements and security documents, approves the creation of security/charge on assets, and directs filing of statutory e-Form CHG-1 with the ROC within 30 days.
No. Under Section 179(3)(d) of the Companies Act, 2013, the power to borrow monies must be exercised by the Board of Directors ONLY by means of resolutions passed at meetings of the Board. Passing this resolution by circulation under Section 175 is strictly invalid in law, unless specifically delegated under the provisos of Section 179(3) to a committee of directors or managing director within defined limits.
Under Section 180(1)(c), the Board of Directors cannot borrow money, where the money to be borrowed together with the money already borrowed by the company (apart from temporary loans obtained from the company’s bankers in the ordinary course of business) exceeds the aggregate of its Paid-up Share Capital + Free Reserves + Securities Premium, without prior shareholder approval via a Special Resolution at a General Meeting (EGM).
No. By virtue of MCA Exemption Notification No. G.S.R. 464(E) dated 5th June 2015, Section 180 does NOT apply to a private limited company, provided it has not committed a default in filing its financial statements (AOC-4) or annual returns (MGT-7) with the ROC. Consequently, a private company can borrow funds exceeding its paid-up capital and free reserves purely through an Ordinary Board Resolution without seeking shareholder approval, unless its Articles of Association (AOA) expressly provide otherwise.
Form CHG-1 is the statutory electronic return filed under Section 77(1) of the Companies Act, 2013 read with Rule 3 of the Companies (Registration of Charges) Rules, 2014 for creation or modification of charges on company assets (other than debentures, which require CHG-9). It must be filed on the MCA V3 portal within 30 days of the execution of the loan agreement or hypothecation deed. Upon approval, the ROC issues a Certificate of Registration of Charge in Form CHG-2.
Under Section 77, if Form CHG-1 is not filed within 30 days, the ROC may allow filing within an additional 30 days (total 60 days from creation) upon payment of additional ad-valorem fees. If not filed within 60 days, an extension of another 60 days (total 120 days) may be granted on payment of ad-valorem fees. Beyond 120 days from creation, the company must file a formal condonation petition in Form CHG-8 before the Regional Director (RD) under Section 87.
Yes. If the credit facility is clean or unsecured (i.e. no mortgage, hypothecation, pledge, or lien is created on any company assets or book debts), no charge is created under Section 2(16) of the Act. Consequently, Form CHG-1 is NOT required to be filed with the ROC. Only the Board Resolution under Section 179(3)(d) is required.
No. The Companies (Amendment) Act, 2015 made the Common Seal optional for Indian companies. Under Section 22(2) and Section 22(3) of the Companies Act, 2013, documents and contracts can be validly executed on behalf of the company by any two Directors, or by one Director and the Company Secretary. If the company chooses not to have a common seal, banks accept execution by two directors.
An exclusive charge gives the lending bank the sole and primary right over the specified secured asset to recover dues before all other creditors. A pari-passu charge is created when multiple lenders (in a consortium or multiple banking arrangement) share equal ranking and proportionate rights over the same secured assets in proportion to their outstanding debt.
Yes. Commercial banks frequently stipulate the unconditional personal guarantee of promoter directors as collateral credit comfort. Under RBI guidelines (RBI/2022-23/24), banks may obtain personal guarantees of promoters/directors without paying any guarantee commission to them. The board resolution authorizes the company to record and accept such third-party guarantee arrangements.
Under Section 2(43) of the Companies Act, 2013, "free reserves" means such reserves which, as per the latest audited balance sheet, are available for distribution as dividend. It EXCLUDES: (1) Any unrealized gains or revaluation reserves; (2) Changes in carrying value of assets; and (3) Any reserve created on amalgamation. However, Section 180(1)(c) explicitly permits adding the Securities Premium balance to paid-up capital and free reserves.
Standard banking documentation includes: (1) Certified True Copy of Board Resolution signed by a Director/CS; (2) Duplicate copy of Sanction Letter signed by authorized signatories; (3) Executed Loan Agreement and Hypothecation/Mortgage Deeds; (4) List of Directors with DIN and specimen signatures; (5) Statutory Declaration under Section 179(3)(d) / Section 180; (6) Certificate of Incorporation, MOA & AOA; and (7) MCA Form CHG-1 challan and CHG-2 certificate upon ROC registration.
Stamp duty is a state subject and varies by jurisdiction. In Maharashtra, stamp duty on loan agreements under Article 6/33 is 0.1% to 0.2% of the loan amount (capped at ₹10 Lakhs). In Delhi, it is governed by Schedule 1A (Article 6/35) ranging from ₹100 to 0.5%. In Karnataka, stamp duty on loan agreements is 0.1% to 0.2%. Always pay the requisite stamp duty via e-stamping or franking before deed execution.
Filing e-Form MGT-14 with the ROC is mandatory within 30 days whenever a Public Limited Company passes a Special Resolution under Section 180(1)(c) (for borrowing beyond capital + free reserves) or Section 180(1)(a) (for creating security on company undertakings). For Private Companies, filing MGT-14 for Section 179(3)(d) borrowing powers was exempted under MCA Notification No. G.S.R. 464(E).
Yes. A company can accept unsecured loans from its directors, provided the director submits a written declaration confirming that the funds are not given out of borrowed or accepted funds from others. Such director loans are exempt from the definition of "deposit" under Rule 2(1)(c)(viii) of the Companies (Acceptance of Deposits) Rules, 2014, and must be disclosed in Form DPT-3 and the Board Report.
You can download the official, ready-to-sign Board Resolution format in editable Microsoft Word (.docx) and printable PDF format directly from this page using the 1-click download buttons above. You can customize the facility type (Term Loan, Cash Credit, Overdraft, LC/BG), loan amount, bank particulars, and security covenants to generate an exact certified copy in seconds.