Payments controlled by the Companies Act, 1956

1. Under sub-section (1A) of section 227 Clause (e) requires personal expenses charged to the revenue account of a company should be reported.
2. Under section 293, the Board of Directors of a public company or of a private company which is a subsidiary of a public company, shall not, except with the consent of such public company or subsidiary in general meeting.

  •  Sell, lease or otherwise dispose of the whole, or substantially the whole of the undertaking of the company, or where the company owns more than one undertaking, of the whole, or substantially the whole, of any such undertaking;
  • remit, or give time for the re-payment of, any debt due by a directors (except in the case of renewal or continuance of an advance made by a banking company to its director in the ordinary course of business);
  • invest, otherwise than in trust securities, (the amount of compensation received by the company in respect of the compulsory acquisition, after the commencement of this Act), of any such undertaking as is referred to in clause (a), or of any premises or properties used for any such undertaking and without which it cannot be carried on or can be carried on only
    with difficulty or only after a considerable time ;
  •  borrow monies where the amount borrowed together with monies already borrowed by the company apart from the temporary loans obtained from the company’s bankers in the ordinary course of business, exceeds the aggregate of the paid up capital of the company and its free reserves ; and
  •  contribute amounts to charitable and other funds, not related to the business of the company or the welfare of the employees, the aggregate whereof exceeds in a financial year Rs. 50,000 or 5% of the average net profit, during the three financial years immediately preceding, whichever is greater.

3. Section 293A deals with prohibition and restriction regarding political contributions. According to this section, a government company or any other company which has been in existence for less than three years cannot contribute any amount directly or indirectly to any political party or for any political purpose to any person. In other cases, contribution should not exceed 5% of average net profits in any financial year determined in accordance with the provision of section 349 and 350 during the three immediately preceding financial years.

4. Section 293B permits the Board and other person to make contributions to the National Defence
Fund to any extent as it thinks fit.

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