The net profits of ABC Ltd. as disclosed in the company's balance sheet for three preceding financial years are as under: Financial year ended Net Profit (₹) 31st March, 2013 50 crore 31st March, 2014 70 crore 31st March

Contribution to political parties for political purposes are regulated by the provisions of Section 182 of the Companies Act, 2013. All the companies except the following may contribute any amount directly or indirectly to any political party: Government companies; The company which has been in existence for less than 3 financial years, The aggregate amount which may be contributed by the company in any financial year shall not exceed seven and half per cent of its average net profits during the 3 immediately preceding financial years. It further requires that no such contribution shall be made by a company unless a resolution authorizing the making of such contribution is passed at a meeting of the Board of Directors. The Board's decision to contribute to political party 20% of its average profits for last three years is in excess of the permissible limit of 7-1/2% of the average profits of preceding 3 financial year. Therefore, the decision of the Board is not valid.