Sec 293(1)(e) of the Companies Act, 1956

[SAUMEN CHATTERJEE]

Dear Memebers,

 

Please provide your opinion on the following-

 

The company was incorporated as a Private Ltd Company on 8/1/2007. The Company was made a public one in the financial year 2008.

 

First accounts was prepared for a period from 8/1/2007 to 31/3/2008.

 

Second accounts was for a period from 1.4.2008 to 30.6.2009 (extension of financial year was availed of).

 

 In the financial year 2009-2010, a donation of Rs. 30 lacs was made.

 

The company had no profits in year 2007-08, 2008-09.

 

However, year 2009-10 had profits & out of which the said donation was made. The donation was within the limit of 5% of its average net profits during the financial years immediately preceding year of donation. However, the fact is immediate preceding years had losses.

 

Now, should we get the donation ratified by shareholders in the ensuing AGM by drafting a suitable resolution and simultaneously pass an enabling resolution authorizing the Board to contribute in future u/s 293(1)(e) or we don’t need to do ratify since the amount is within the Board limit. And simply pass an 293(1)(e) enabling resolution.

 

Or what other escapes are available or how do I set it right if any wrong has been done.

 

Regards.

 

Chattopadhyay 

[VIKAS GUPTA]

Hello Saumen!!

As per provisions of the Companies Act, there is limit of average of 5% of profits immediately preceding three years.

U didnt tell us that the amount of donation is within that limit?

In my opinion, if that amount in that limit, then it ok or otherwise ratified by the shareholders.

Correct me if I am wrong!!!

 

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THANKYOU
CS VIKAS GUPTA
Company Secretary
Shree Krishna Paper Mills & Industries Ltd.
vikas...@skpmil.com
9953620278

[paritala srinivasarao]

Dear sir   Please first of all note that Section 293 is not applicable to private limited companies  unless subsidiary of public limited company.   Say your company is a subsidiary of a public limited company - Since there are no profits in the previous financial years, your company is not eligible to make contributions during the financial year 2009-10.    The resolution referred to in section 293 is a prior resolution and the contribution can not be ratified.   Offences under section 293 are compoundable. Warm Regards P Srinivasa Rao Company Secretary 9840152398 --- On Thu, 15/7/10, SAUMEN CHATTERJEE <saumencha...@gmail.com> wrote:

[paritala srinivasarao]

Dear Sir   I missed your query part stating that your company got converted into public limited company.  Other wise my reply stands.

Warm Regards P Srinivasa Rao Company Secretary 9840152398 --- On Thu, 15/7/10, SAUMEN CHATTERJEE <saumencha...@gmail.com> wrote:

From: SAUMEN CHATTERJEE <saumencha...@gmail.com> Subject: [CSMysore] Sec 293(1)(e) of the Companies Act, 1956 To: csmy...@googlegroups.com, csch...@googlegroups.com Date: Thursday, 15 July, 2010, 1:58 PM

[SAUMEN CHATTERJEE]

Mr Vikas,

 

The amount of donation of Rs. 30 lacs has been made in 2009-10. The amount is below 5% of profits of 2009-10 but in the preceeding 3 years, in this case 2 years (since the company was formed 3 years back), there was no profits. If you read the mail in details, you'll find the same.

[Vivek Aggarwal]

Dear Saumen

 

It is advicable to get the donation ratified by shareholders as the section provides for 5% of average net profits for the last 3 financial years but in your case, there is profit in only 1 year & in rest 2 years there are losses.

Regards

Vivek Aggarwal

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From: SAUMEN CHATTERJEE <saumencha...@gmail.com>
To: csmy...@googlegroups.com; csch...@googlegroups.com
Sent: Thu, 15 July, 2010 1:58:19 PM

Subject: [CSMysore] Sec 293(1)(e) of the Companies Act, 1956

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