Net profits of PQR Ltd. during the following years as disclosed in the statement of profit and loss are as under: Financial year ended Net profits (in crore) 31st March, 2013 ₹10, 31st March, 2014 ₹12, 31st March, 2015 ₹

Section 181 of the Companies Act, 2013 provides that the Board of Directors may contribute to 'bona fide' charitable and other funds. Further, the prior permission of company in general meeting is required if such contribution exceeds five percent of its average net profits for the three immediately preceding financial years. The average net profits in the case given are ₹10 crores. Thus any contribution in excess of ₹50 Lacs (5% of average net profits for three immediately preceding financial years) would need members' approval. Board is not empowered to take decisions of contribution in excess of ₹50 Lacs. Board's decision is invalid. Further, if the contribution amount was ₹1 Crore, then also the company would be required to obtain members' prior approval.