Section 182 of CA 2013 : Section 182: Prohibitions And Restrictions Regarding Political Contributions

Explanation using Example

Imagine a scenario where XYZ Pvt. Ltd., a company that has been in business for over three years, decides to support a political party during an election campaign. To do this legally, they first convene a Board of Directors meeting where a resolution is passed authorizing a contribution of $50,000 to the political party. This is done in compliance with Section 182(1) of the Companies Act, 2013.

Additionally, XYZ Pvt. Ltd. places an advertisement in a magazine that is known to support the political party, incurring an expense of $10,000. According to Section 182(2)(b), this expense is considered an indirect political contribution.

At the end of the financial year, XYZ Pvt. Ltd. includes in its profit and loss account a disclosure of the total $60,000 political contributions, as required by Section 182(3).

All contributions are made through account payee cheques from the company's bank account, ensuring compliance with Section 182(3A).

If XYZ Pvt. Ltd. had failed to follow these steps, it would face a fine of up to five times the amount contributed, and the officers in default could face imprisonment and fines as per Section 182(4).