Comment on the following situation:
XYZ Ltd. Co. gave a donation of 50000 each to a Charitable Society running a School and a trust set up for the service of Blinds during financial year ending on 31st March, 2009. The average net profitd of the company for the last three years were 15 lakhs.
A public ltd co. can contribute in any financial year to charitable & other funds which are not related directly to its business the highest of the following (without obtaining the consent of shareholders):
1. a maximum of Rs. 50000/- in aggregate or
2. 5% of the avg net profits of the immediately 3 precceding financial years.
As per the inputs provided by you, the avg net profits were Rs. 15 lacs. 5% of which comes to Rs. 75,000/-. Where as the actual amount donated is Rs.1,00,000/-.
As per the provisions the co. can contribute maximum Rs. 75,000/- . If the co. has contributed Rs. 1,00,000/- it should obatin the consent of the co. in general meeting.
CAclubindia
