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Ordinary Resolution under Section 181 of Companies Act 2013

special resolution under section 181 of the companies act 2013In accordance with section 181 of the Companies Act 2013 - the Board of Directors of a company may contribute to bona fide charitable and other funds.

However, prior permission of the company in general meeting shall be required for such contribution in case any amount the aggregate of which, in any financial year, exceed 5% of its average net profits for the 3 immediately preceding financial years.

Template of shareholders' resolution under section 181 of the Companies Act, 2013—

SAMPLE #1

#. To Contribute to Charitable and other Funds

To consider and, if thought fit, to pass with or without modification(s), to the following resolution as an ORDINARY RESOLUTION.

“RESOLVED THAT pursuant to the provisions of Section 181 of the Companies Act, 2013 read with the relevant rules, circulars, notifications, if any, made thereunder, the consent of the members be and is hereby accorded to the Board of Directors in case of loss or inadequate profit for contributing and/or subscribing from time to time in any financial year to any national, charitable, social, benevolent, public or general and other funds/institutions/ hospitals/ trusts/entities not directly relating to the business of the Company or the welfare of its employees up to an aggregate maximum amount permissible under Section 181 of the Companies Act, 2013 without the approval of the Shareholders exceeding by a sum of INR .............................../- (Rupees .................... only) in each financial year as further increased by an additional amount equivalent to the amount of dividend in respect of which the right to receive the dividend has been waived/forgone by any Shareholder(s) for any financial year(s), to the extent such equivalent amount has not been considered for the purpose of calculating the maximum amount permissible which is utilised / contributed / subscribed pursuant to a Resolution for any financial year, as may be considered proper by the Board of Directors notwithstanding that such amount in any financial year may exceed five per cent of the average net profits of the Company during the three financial years immediately preceding or such sum as may be prescribed under the Companies Act, 2013 or the relevant regulations.”


SAMPLE #2


#. To Contribute to Bona Fide and Charitable Funds etc.

To consider and if thought fit, to pass with or without modification/s the following as an Ordinary Resolution:

“RESOLVED that pursuant to the provisions of section 181 of the Companies Act, 2013 and rules made thereunder, including any modification(s) thereto or re-enactment(s) thereof for the time being in force, Foreign Exchange Management Act, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and such other applicable Regulations, if any, the consent of the members of the company be and is hereby accorded to the Board of Directors of the company or a Committee thereof to contribute, donate, subscribe or otherwise provide assistance from time to time to any bona fide charitable, social, benevolent and other funds, trusties, bodies, associations, hospitals, universities, institutes, societies, etc. for charitable and other purposes in any financial year of upto a total amount of Rs. ................/- (Rupees ............................................ only) or ...% of the company’s average net profits of the three immediately preceding financial years, whichever is higher.

FURTHER RESOLVED that the Board of Directors or a Committee thereof be and is hereby authorized to do all such acts, deeds and things as may be necessary or incidental to give effect to the foregoing resolution.”


SAMPLE #3

#. Contribution to Bona Fide and Charitable Funds.

To consider and if thought fit, to pass with or without modification(s), the following resolution as an Ordinary Resolution:

“RESOLVED THAT, pursuant to the provisions of section 181 of the Companies Act, 2013 and relevant rules made thereunder, including any amendments thereto from time to time, the consent of the members of the company, be and is hereby accorded to donate or contribute to .................... Trust (a public charitable trust), .................................... Ltd., a not-for-profit company registered under Section 8 of the Companies Act, 2013 or such other trusts, not-for-profit entities, NGOs etc for carrying out one or more of the Corporate Social Responsibility activities listed in Schedule VII of the Companies Act, 2013 or such other charitable activities as the Board may deem fit, in each financial year up to the higher of the following:

 a) 5% of the current year's net profit of the Company; or
 b) 2% of the average net profits of the Company in the immediately preceding three financial years computed in accordance with the provisions of Section 197 of the Companies Act, 2013; or
 c) Rs. ......................./- (Rupees ................................. only.

notwithstanding that the aggregate amount of such contribution during a financial year may exceed 5% of its average net profits for the three immediately preceding financial years.”


Explanatory Statement pursuant to section 102(1) of the Companies Act, 2013

In line with your company's CSR policy, the Board is proposing for contribution to various bona fide charitable funds, trusts and NGOs including ................. Trust and ....................., a non-for-profit company, as the Board may deem fit, for carrying out CSR activities listed in Schedule VII of the Companies Act, 2013 or such other CSR activities as the Board may consider appropriate.

In accordance with the provisions prescribed under section 181 of the Companies Act 2013, the Board of Directors of a company have to seek prior permission of the members of the company in general meeting for making contributions to bona fide charitable and other funds for any amount the aggregate of which, in any financial year, exceed 5% of its average net profits for the 3 immediately preceding financial years.

Since the company's contribution in a financial year may exceed such limits as stipulated under section 181 of the Companies Act, 2013, the approval of the shareholders is sought under section 181 of the Companies Act, 2013.

The Board of Directors commends the resolution stated in Item No. ... of the accompanying notice for your approval.

None of the Directors, key managerial personnel of the Company or their relatives are concerned or interested in the resolution.

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Relevant Resolution:

Draft Board and Shareholders' Resolution for Contribution to Charitable fund or trusts - available here



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NOTE: The resolution sample(s) here is only for reference, to help you with drafting. Do refer the exact provisions of the Act, relevant rules framed thereunder and any other applicable laws to be able to not to miss out anything important while drafting.

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