Companies Act Section 182 — Prohibitions and restrictions regarding political contributions
CHAPTER XII MEETINGS OF BOARD AND ITS POWERS
Commercial / Corporate
Summary
Sub-section (1) allows a company to give money to any political party, either directly or indirectly. This permission does not apply to Government companies or to companies that have existed for less than three financial years. A company can only make such a contribution if its Board of Directors passes a resolution at a meeting authorising the contribution, and that resolution is treated as the legal justification for making the contribution.
Under clause (a) of sub-section (2), if a company gives a donation, subscription, or payment to a person who, to the company's knowledge, is carrying on an activity that could reasonably be seen as likely to affect public support for a political party, that amount is also treated as a contribution for a political purpose.
Under clause (b) of sub-section (2), money spent by a company on an advertisement in a publication like a souvenir, brochure, tract, or pamphlet is also treated as a contribution. If the publication is made by or on behalf of a political party, the amount is treated as a contribution to that political party. If the publication is not made by or on behalf of a political party but is for the advantage of one, the amount is treated as a contribution for a political purpose.
Sub-section (3) requires every company to disclose in its profit and loss account the total amount it contributed under this section during the financial year to which the account relates.
Sub-section (3A) states that, despite what sub-section (1) says, a contribution under this section can only be made by an account payee cheque drawn on a bank, an account payee bank draft, or through an electronic clearing system using a bank account. A company may also make a contribution through any instrument issued under a scheme notified under any law in force for contributing to political parties.
Sub-section (4) sets out the penalty for violating this section. If a company makes a contribution in contravention of the provisions, the company is punishable with a fine of up to five times the amount contributed. Every officer of the company who is in default is punishable with imprisonment of up to six months and a fine of up to five times the amount contributed.
The Explanation clarifies that, for this section, a political party means a political party registered under section 29A of the Representation of the People Act, 1951.
Official Text
(1) Notwithstanding anything contained in any other provision of this Act, a company, other than a Government company and a company which has been in existence for less than three financial years, may contribute any amount directly or indirectly to any political party: 1* * * * * Provided 2*** that no such contribution shall be made by a company unless a resolution authorising the making of such contribution is passed at a meeting of the Board of Directors and such resolution shall, subject to the other provisions of this section, be deemed to be justification in law for the making 3*** of the contribution authorised by it.
(2) Without prejudice to the generality of the provisions of sub-section (1),—
(a) 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;
(b) 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,—
(i) where such publication is by or on behalf of a political party, to be a contribution of such amount to such political party, and
(ii) 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. 4[
(3) 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.
(3A) Notwithstanding anything contained in sub-section (1), the contribution under this section shall not be made except 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:
Provided that 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.]
(4) If a company makes any contribution in contravention of the provisions of this section, 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.
Explanation.—For the purposes of this section, “political party” means a political party registered under section 29A of the Representation of the People Act, 1951 (43 of 1951).