A Ltd with turnover of 100 lakhs Contributed 10 Lakh to the Flower Hand Broom Political Party T...........

Companies Act-Phase (I & II) Board-powersandMeetings

A Ltd. with turnover of 100 lakhs Contributed 10 Lakh to the Flower Hand Broom Political Party. The contribution has consented through a BOD resolution. Some members of the

Company objected that Company’s consent for the same shall have been obtained Would the contribution be valid in above question if A Ltd was incorporated 364 days before making such a contribution.

No, as company is in existence for less than 1 FY it is prohibited to make any political contributions

No, as company is in existence for less than 3 FY it is prohibited to make any political contributions

Yes, as the contribution is independent of the time for which the Company has been in existence

Yes, as the Company has completed 180 days as stipulated in the Companies Act, 2013

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Explanation:

According to Sec182. Prohibitions and restrictions regarding political contributions

(1) Notwithstanding anything contained in any other provision of this Act, a company, other than a Government company and a company which has been in existence for less than three financial years, may contribute any amount directly or indirectly to any political party:

Provided that the amount referred to in sub-section (1) or, as the case may be, the aggregate of the amount which may be so contributed by the company in any financial year shall not exceed seven and a half per cent. of its average net profits during the three immediately preceding financial years:

Provided further that no such contribution shall be made by a company unless a resolution authorising the making of such contribution is passed at a meeting of the Board of Directors and such resolution shall, subject to the other provisions of this section, be deemed to be justification in law for the making and the acceptance of the contribution authorised by it.