Section 293a
This query is : Resolved
Moumita Sinha
(Querist)
19 July 2013
Whether a company have to take approval from shareholders if it want to make contribution in political party an amount exceeding the limit as specified in the section,that is 5% of the average net profit for last 3 financial years.
Provided the Co.is not a Govt. co or co. in existence for less than 3 financial years.
Provided the Co.is not a Govt. co or co. in existence for less than 3 financial years.
Ajay Mishra
(Expert)
20 July 2013
Hi
Government Companies and Companies which have been in existence for less than three financial years can not make any contribution to politically party or for any political purpose to any person.
Government Companies and Companies which have been in existence for less than three financial years can not make any contribution to politically party or for any political purpose to any person.
Moumita Sinha
(Querist)
23 July 2013
Hi!
I want to know that any company other than Govt. company which has been in existence for more than 3 years can make contribution to any political party in excess of 5% of average net profit for last 3 financial years?
I want to know that any company other than Govt. company which has been in existence for more than 3 years can make contribution to any political party in excess of 5% of average net profit for last 3 financial years?
Ajay Mishra
(Expert)
23 July 2013
This section does not empower any company to make any contribution to any political party or for any political purpose, to any individual or body, in the absence of provisions to that effect in the 'objects' clause of its Memorandum of Association.
Source: Letter No. 8/16(1)/61-PR, dated 9-5-1961
Source: Letter No. 8/16(1)/61-PR, dated 9-5-1961
Moumita Sinha
(Querist)
24 July 2013
Thanks.But i want to know whether it can make contribution in excess of 5% of average net profit?
Ajay Mishra
(Expert)
24 July 2013
No, the section has used the word "shall not contribute in excess of 5%". So you can not contribute more than that.
Moumita Sinha
(Querist)
25 July 2013
thanks a lot
Moumita Sinha
(Querist)
26 July 2013
Whether the company can make Political contribution if it has made loss in current year?
23 July 2025
Can the company make political contributions if it incurred a loss in the current year?
✅ Yes, provided:
The company has been in existence for at least 3 financial years, and
The average net profits of the last 3 preceding years is positive.
The contribution cap is based on average of prior 3 FYs, not the profit/loss in the current year.
However, if the average of the past 3 years is nil or negative, then no contribution is allowed—because 5% of a negative or zero profit is zero.
✅ Yes, provided:
The company has been in existence for at least 3 financial years, and
The average net profits of the last 3 preceding years is positive.
The contribution cap is based on average of prior 3 FYs, not the profit/loss in the current year.
However, if the average of the past 3 years is nil or negative, then no contribution is allowed—because 5% of a negative or zero profit is zero.
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