06 October 2011
RMC Limited, a company incorporated in India in which foreign interests have more than 50% of its equity shareholding, desires to make a political contribution to the extent of less than 5% of its average net profits for the last three financial years. Can RMC Limited make such a Contribution?
If you read provisions of section 2 (1)(e)(vi) of the Foreign Contribution Regulation Act which provides definition for foreign source.... so the companies having more than 50% of their equity shareholding held by non resident/or having interest more than 50% of equity shareholding by some foreign entity will be treated as "foreign source"
in the present case the contribution is deemed to be coming from foreign source....
now read section 4 of the same Act which provides no foreign contribution shall be accepted by political party (4)(1) (e)coming from foreign source ...... they have to take approval from central government...
even definition given in section 2(c) of the same act which provides meaning of foreign contribution throws light on it...
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