Section 293A of Companies Act 1956

This query is : Resolved 
 

(Querist)
26 September 2010

I want to know whether there is STILL violation of Section 293A of Co.'s Act,1956 where, ABC co. Pvt.Ltd(which is not completed 3 financial years since incorporation & is a non-Govt.Co.) has paid to a political party on behalf of XYZ Co.Pvt.Ltd (which has completed more than 4 financial years),in such case whether ABC Co.Pvt.Ltd has voliated the said provision of the act?

IN the books of ABC CO.PVT.LTd,accounting entry

XYZ Co.Pvt.Ltd A/c Dr. Rs. 50,00,000.00
To Bank A/c Rs.50,00,000.00
Being chq. drawn in favour of political party,as the said amt.is paid on behalf of XYZ Co.PVtLTD.

In the books of XYZ co.Pvt.LTd,accounting entry
Donation A/c Dr. Rs. 50,00,000.00
To ABC Co.Pvt.LTd 50,00,000
Being paid donation to political party ,the said amt is paid by ABC co,pvt,ltd on behalf of the company




Jagruti (CS) (Expert)
27 September 2010

Yes, ABC can make as it political contribution as it is making payment on behalf of another Comapny. Also make a note of same in Board Meeting.

For XYZ company political contibution need to be approved in Board Meeting and it should not exceed 5 % of average net profit as calculated as per Sec 349 & 350 of co's Act. of preceeding 3 year.



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