Charjee Biotech Private Limited is a two year old company. The Board of Directors of the company wants to contribute 2.8% of its average net profits of the last years to the Prime Minister's National Relief Fund. Referri

Section 181 of the Companies Act, 2013 states that the Board of Directors of a company may contribute to bona fide charitable and other funds, provided that 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 five per cent of its average net profits for the three immediately preceding financial years. In the given case, Charjee Biotech Private Limited wants to contribute 2.8% of its net profits of the last two years, as it has been in existence for the last two years only. Prime Minister's National Relief Fund is a bona fide charitable fund. As the rate of contribution does not exceed 5% of the average net profits, prior permission of members in general meeting is not required. A resolution passed by the Board of Directors shall suffice for making the said contribution.