Political Contributions under New Companies Act 2013 - Modifications
Sec 182 of Companies Act, 2013 corresponds to Sec 293A of the Companies Act, 1956.
The New section has dropped the restriction relating to contribution to any person for political purpose. Hence, now contributions are allowed.
However, there are few modifications.
The Punishment for contravention has been increased wherein company is punishable with fine which may extend upto 5 times the amount so contributed.
Every officer in default shall be punishable with Imprisonment of upto 6 months plus fine upto 5 times the political contribution.
The Limits for contributions has been increased from 5% to 7.5% of the net profits during the three immediately preceding financial years.
You may refer the Circular issued by MCA in this regard
The modification is nicely presented. I have some basic doubts on this.
- Which companies can donate to political Parties?
- How much they can contribute (Is there any monetory limit) ?
- Do we have to pass a board resolution for donations to political parties?
- Which office or director will be held repsonsible?
- Is there any creteria fixed for political parties? Which parties can be given donations? Can we donate to any political party or only National parties?
1. Any Company other than a Government Company which is in existence for 3 or more financial years may contribute
2. There is a upper limit of 7.5%. of Average Net profits of 3 preceding FYS. No Specific permissible Amount is prescribed.
3. Yes passing a board resolution is necessary and is sufficient compliance of the Act
4. The Officer in default is yet to be prescribed by the act. However, we can safely presume that board of directors as officers in default.
5. No Criteria as such has been prescribed till now. However, there are 2 deemed clauses which spellout the circumstances in which the amounts paid shall be considered as Political contributions.