Section 181 of the companies act, 2013

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CS Mitesh Mehta (Querist)
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11 July 2018 Respected Learned Members,

As per Section 181 of the Companies Act, 2013, the Board may contribute to bona fide charitable and other funds provided that prior permission of the Company in a general meeting is obtained for making contributions the aggregate of which, in any financial year, exceeds five percent of the average net profits of the Company for the three immediately preceding financial years.

My query is if average net profits of the Company for the three immediately preceding financial years is NEGATIVE, whether board may contribute to bona fide charitable and other funds or loss making company can contribute to charitable fund.

Awaiting for reply

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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11 July 2018 If -ve board can't. In other words ,181 is not applicable for loss making companies.
Inference - corollary of 181 proviso .

CS Mitesh Mehta

CS Mitesh Mehta (Querist)
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11 July 2018 Thanks sir for your prompt reply

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Section 181 of the companies act, 2013

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