Political contribution is always been a hot topic and the introduction of the same under the commercial law is mandatory and seen as an uplifting effect to the economy, as contribution are the most common source of campaign support, and Power and finance has always been the two most important pillars of an economic cycle of any country.

Section 182 of the companies Act, 2013 contains the provisions regarding Prohibitions and Restrictions on Political Contributions by Companies.

Section 182 of the Companies Act, 2013 prohibits certain companies to make political contribution as well as restricts some companies to make political contribution subject to the compliances of section 182.

These are the Companies which are prohibited to make political contribution:

♦ A Government Company.

♦ A company which has been in existence for less than three financial years.

Other than above mentioned companies all companies can make political contribution to a Political party subject to the following compliances:

♦ Every company shall pass a Board resolution at a meeting of the Board of Directors to authorise such political contribution

♦ Every company shall disclose in its profit and loss account the total amount contributed by it under this section during the financial year to which the account relates.

♦ The contribution shall be made by an account payee cheque drawn on a bank or an account payee bank draft or use of electronic clearing system through a bank account:

♦ A company may make contribution through any instrument, issued pursuant to any scheme notified under any law for the time being in force, for contribution to the political parties.

For the Purpose of Section 182 “political party” means a political party registered under section 29A of the Representation of the People Act, 1951.

Without prejudice to the generality of the political party contribution, these are some transactions which shall be treated as Political party contribution.

♦ A donation or subscription or payment caused to be given by a company on its behalf or on its account to a person who, to its knowledge, is carrying on any activity which, at the time at which such donation or subscription or payment was given or made, can reasonably be regarded as likely to affect public support for apolitical party shall also be deemed to be contribution of the amount of such donation, subscription or payment to such person for a political purpose;

♦ The amount of expenditure incurred, directly or indirectly, by a company on an advertisement in any publication, being a publication in the nature of a souvenir, brochure, tract, pamphlet or the like, shall also be deemed:

♦ where such publication is by or on behalf of a political party, to be a contribution of such amount to such political party,

♦ where such publication is not by or on behalf of, but for the advantage of a political party, to be a contribution for a political purpose.

Penal Provisions

If a company makes any contribution in contravention of the provisions of section 182, the company shall be punishable with fine which may extend to five times the amount so contributed and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months and with fine which may extend to five times the amount so contributed.

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The article is written by Team Anupama Tripathi & Associates and solely for the purpose of education and comment, for more you can connect us # 8800839633 or [email protected]

Author Bio

Qualification: CS
Company: Anupama Tripathi & Associates
Location: New Delhi, Delhi, India
Member Since: 07 Apr 2021 | Total Posts: 20
Anupama Tripathi, the co-founder of Alliance Professional, she is a Company Secretary in Practice and pursuing Law from University of Delhi and did her graduation from Jesus & Mary Collage, University of Delhi. She has an experience of more than 5+ years. She did her internships from PSU liste View Full Profile

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