Section 293a

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Moumita Sinha (Querist)
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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.

Ajay Mishra

Ajay Mishra (Expert)
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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.

Moumita Sinha

Moumita Sinha (Querist)
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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?

Ajay Mishra

Ajay Mishra (Expert)
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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

Moumita Sinha

Moumita Sinha (Querist)
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24 July 2013 Thanks.But i want to know whether it can make contribution in excess of 5% of average net profit?

Ajay Mishra

Ajay Mishra (Expert)
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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

Moumita Sinha (Querist)
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25 July 2013 thanks a lot

Moumita Sinha

Moumita Sinha (Querist)
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26 July 2013 Whether the company can make Political contribution if it has made loss in current year?

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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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.

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