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 contribution be valid in above question if A Ltd made contribution through Cash or Cheque which was not crossed.

Yes, as contribution to political party does not necessarily have to be in account payee instrument

No, as account payee instruments are necessary as stipulated in Companies Act

Yes, as the amount is <= 10% of the turnover of the Company the use of Account payee instruments is not mandatory

No, as the amount is >= 10% of the turnover of the Company, hence the use of Account payee instruments is mandatory

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Explanation:

According to Sec 182 (2) Without prejudice to the generality of the provisions of sub-section (1),—

(a) a donation or subscription or payment caused to be given by a company on its behalf or on its account to a person who, to its knowledge, is carrying on any activity which, at the time at which such donation or subscription or payment was given or made, can reasonably be regarded as likely to affect public support for a political party shall also be deemed to be contribution of the amount of such donation, subscription or payment to such person for a political purpose;
(b) the amount of expenditure incurred, directly or indirectly, by a company on an advertisement in any publication, being a publication in the nature of a souvenir, brochure, tract, pamphlet or the like, shall also be deemed,—
(i) where such publication is by or on behalf of a political party, to be a contribution of such amount to such political party, and
(ii) where such publication is not by or on behalf of, but for the advantage of a political party, to be a contribution for a political purpose.