Section 180:
Restriction on Power of Board
·
*
According to section 180(1), Board need the prior approval of shareholders by passing
the SR at GM for exercising the following powers:
a.
Sell,
lease or otherwise dispose of the whole, or substantially the whole of
undertakings of the company.
b.
Invest,
otherwise than in trust securities, the compensation received in respect of
the compulsory acquisition of any undertaking of the company as a result of
merger or amalgamation.
c.
Borrow
moneys, if money already borrowed, together with moneys to be borrowed will
exceed the aggregate of paid up capital
and free reserves of the company.
d.
Remit, or
give time for the repayment of any debt due by a director. However, advance
given in the ordinary course of business to a director may be renewed by a banking company without the approval of
the GM.
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*
Section 180 applies to all companies.
Undertaking
It means undertaking in which company has
made investment more than 20% of its net worth or undertaking which generates
20% of the total income as per the last audited balance sheet.
Net
worth
Aggregate value of paid up capital (+) all
reserves created out of profits and securities premium amount (-) accumulated
losses, deferred expenditure and miscellaneous expenditure not written off as
per last audited balance sheet.
Substantially
the whole of undertaking
It means in any financial year, 20% or more
value of undertaking as per last audited balance sheet.
Section 181: Donation
to charitable funds
·
* BOD of company may contribute or donate to bona fide charitable and other funds with
prior approval of GM when such aggregate
amount of contribution in any financial year, exceeds 5% of its average net profit for 3 immediately preceding
financial year.
·
* Any amount spent for welfare of employees is
within the scope of charitable contribution.
·
* The resolution
passed by the shareholders in GM must
specify the total amount upto which moneys may be contributed by Board.
·
* Section 181 is applicable to all companies.
Section 182:
Political Contributions
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*
Contribution means any payment made without consideration. It includes donation, subscription or any
other payment. It includes contribution made to:
-> Political party
-> Person for political purpose.
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* Section 182 covers
political contribution made whether directly or indirectly. Directly means
company has contributed towards any expenses for political party or donation
made to political party. Indirect contribution means payment made to any person
for benefit which political party has obtained from that person.
Example:
Expenditure incurred by company on printing and distribution of posters and
leaflets for political party.
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*
It also includes any expenditure incurred by a
company on advertisement in any
publication by or on behalf of a political party or for its advantage.
Point
to be noted
Any assistance, donation and contribution
to a political party or for political purpose, made through means other than
money, but which is quantifiable and capable of being expressed in monetary
terms is also covered under section 182.
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* Government
companies and companies which
have been in existence for less than 3 financial years are not allowed to make political contributions.
Political contribution may be made by
any other company subject to the following conditions:
-> The aggregate amounts contributed and proposed
to be contributed by a company in any financial year shall not exceed 7.5% of its average net profits of preceding last 3
financial years.
-> Board
resolution should be passed.
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* Disclosure
in P & L A/C
-> The amount
of contributions during the financial year.
-> The name
of the party or person to which amount has been contributed.
Penalty for contravening the
provisions of section 182
-> Company –
Maximum fine: 5 times the amount so contributed
->Officer
in default – Maximum imprisonment: 6 months, Maximum fine: 5 times the amount so
contributed.
Section 183: Contribution to
National Defence Fund
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*
Company can contribute any amount to national defence fund or any other fund approved by
CG for the purpose of defence fund.
·
* Amount can be contributed to national defence
fund by board of directors or any person
or authority exercising powers of board or of the company in general meeting.
·
* Section
183 overrides section 180, 181, 182 and anything contained in MOA or AOA of
company.
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*
Company should disclose the total amount contributed to national defence fund in its P & L A/C during the
financial year.
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