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Introduction:-
1. The Board of Directors of a public company, or of a private
company which is a subsidiary of a public company, can contribute
to charitable and other funds, even which are not directly related
to the business of the company or the welfare of its employees.
However, the aggregate of the amount of contribution, in any
financial year, shall not exceed fifty thousand rupees (INR
50,000), or five per cent (5%), of its average net profits during
the three financial years immediately preceding the date of the
contribution. The quantum of the contribution shall be the greater
of either of the above.
2. Incase the
sum exceeds the above limit, consent of the shareholders will be
required in a general meeting of the company by way of resolution
and the total amount, which may be contributed to charitable and
other funds in the financial year has to be specified.
3. Under
Indian law, a government company or company which has been in
existence for less than three financial years, is prohibited to
contribute any amount, directly or indirectly to any political
party or for any political purpose to any person.
4. Any company
other than the above mentioned, may contribute to a political
party or for any political purpose, an amount, directly or
indirectly, subject to the condition that the aggregate of that
amount contributed by the company in any financial year shall not
exceed five per cent (5%) of its average net profits during the
preceding three financial years. Such contribution shall be
authorised by the Board of Directors.
5. Further,
the Company is required to disclose in its profit and loss account
such amount contributed by it to any political party or for any
political purpose to any person or to any charitable organisation
during the financial year to which that account relates, giving
particulars of the total amount contributed and the name of the
party, person or organisation to whom such amount has been
contributed.
6. The Reserve
Bank of India has issued guideline requiring the Banks/ Authorised
Dealers that while accepting foreign contribution for onward
credit to accounts of association or organization, it should be
ensured that concerned association or organization is registered
with Ministry of Home Affairs or has their prior permission to
receive such foreign contribution as required under the Foreign
Contribution (Regulation) Act, 1976 (FCRA).
7. Any
donation, delivery or transfer of any article, currency or foreign
security shall be deemed to be foreign contribution when received
by any person from any foreign source , whether directly or
indirectly, through one or more persons.
8. Such
foreign contribution should be received only through the
designated bank, the name of which has been specified in the
application for registration submitted to the Ministry of Home
Affairs.
9. Further, a
candidate for election, a political party or an office-bearer
thereof is prohibited from accepting any foreign contribution.
10.
Organization of political nature, not being a political party may
accept any foreign contribution with prior permission of Central
Government.
11. Under the
Foreign Exchange laws of India, there is a specific provision
stating a person may send into India foreign exchange without any
limit and in any form other than currency notes, bank notes and
travellers cheques.
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The
author can be reached at: vedprakash@legalserviceindia.com /
