Contribution to charitable/ political funds

[VIMAL SHARMA Compliance]

Heading of Section	Companies Act, 1956	Companies Act, 2013	Comment
Contribution to bona fide and charitable funds, etc.	Section- 293 (1) (e) of the Companies Act, 1956 RESTRICTIONS ON POWERS OF BOARD     The Board of directors of a public company shall not, except with the consent of such public company in general meeting, -       Contribute, after the commencement of this Act, to charitable and other funds not directly relating to the business of the company or the welfare of its employees, any amounts the aggregate of which will, in any financial year, exceed Rs. 50,000/-, or 5% of its average net profits as determined in accordance with the provisions of sections 349 and 350 during the three financial years immediately preceding, whichever is greater.	Section- 181 of the Companies Act, 2013 -Company to contribute to bona fide and charitable funds, etc.   The Board of Directors of a company may contribute to bona fide charitable and other funds up to 5% of its average net profits for the three immediately preceding financial years.   Provided that prior permission of the company in general meeting shall be required for such contribution in case any amount the aggregate of which, in any financial year, exceed 5% of its average net profits for the three immediately preceding financial years.	Section 181 is a new insertion and also applicable on Private Companies.   Limit of Rs. 50,000/- has been removed.   5% Limit is same.
Prohibitions and restrictions regarding political contributions	293A. PROHIBITIONS AND RESTRICTIONS REGARDING POLITICAL CONTRIBUTIONS     A company that is not a Government company and which is in existence for at least last 3 financial years may contribute up to 5% % of its average net profits determined in accordance with the provisions of sections 349 and 350 during the three immediately preceding financial years  to any political party or for any political purpose to any person.     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   Every company shall disclose in its profit and loss account any amount or amounts contributed by it to any political party or for any political purpose to any person during the financial year to which that account relates, giving particulars of the total amount contributed and the name of the party or person to which or to whom such amount has been contributed.   Any contribution in contravention of the provisions of this section, -   (a) the company shall be punishable with fine which may extend to three times the amount so contributed ; and   (b) every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to three years and shall also be liable to fine.	Section 182 of the Companies Act, 2013-Prohibitions and restrictions regarding political contributions.   A company that is not a Government company and which is in existence for at least last 3 financial years may contribute up to 7.5% of its average net profits during the last three years to a political party/parties registered under the representation of Peoples Act, 1951.       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.   Every company shall disclose in its profit and loss account any amount or amounts contributed by it to any political party during the financial year to which that account relates, giving particulars of the total amount contributed and the name of the party to which such amount has been contributed.       Any contribution in contravention of the provisions of this section, the company shall be punishable with fine which may extend to five times the amount so contributed and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months and with fine which may extend to five times the amount so contributed	Corresponding section (293A) was also having same provisions except the word ‘political purpose’ which has been  removed.   Limit of 5% increased to 7.5%

 

 

--

Thanks & Regards,

Vimal Sharma

Move out of your comfort zone, You can only grow, if you are willing to feel awkward and uncomfortable, when you try something New..

[csyogan .]

mr. vimal,

one other thing that you could have mentioned in your comment is that previously the net profits were to be calculated as per s.349 & 350, but the current provision doesnt direct to any provision.. so what could be the definition of net profit in the absence of any specific definition neither in s.2 nor in the specification of definitions rules..

regards,
yogan.

--
--
************************************************
Mail your comments, feedback and suggestions on CSMysore to Moderator: datta...@gmail.com and Manager: vivekhe...@gmail.com
---
You received this message because you are subscribed to the Google Groups "CSMysore" group.
To unsubscribe from this group and stop receiving emails from it, send an email to csmysore+u...@googlegroups.com.
For more options, visit https://groups.google.com/d/optout.