Funding topic 2 of 12
Company authority and approvals
A lawful purpose, proper approval and a workable agreement come before expenditure.
Check the objects
Map the proposed work to section 378B and the actual Memorandum of Association. Farmer education, technical services and facilities can fit permitted producer-company activities, but assess the actual beneficiaries and project. A socially useful activity is not automatically within every company’s objects. Obtain lawful amendments and approvals if required before proceeding.
Approve the actual obligations
Put the donor, amount, budget, objectives, conditions, deliverables, tax exposure, asset ownership and refund risk before the Board. Identify matters requiring members’ approval, borrowing approvals, charge filings or other action. Authorise a named signatory within limits. A Board resolution cannot waive tax, FCRA, CSR or donor-scheme conditions.
Control interests and commitments
Record directors’ interests and apply the relevant conflict and related-party approval rules to vendor selection, premises rent and professional fees. Separate project approval from approval to contract with a connected person. Do not promise unrestricted profit distributions, preferential shares or guaranteed procurement rights in a donation acceptance letter.
Practical questions
Can we accept support for any socially useful activity?
Check section 378B and the company’s actual Memorandum. A useful social purpose alone does not establish corporate authority. Address any required object amendment or approval before undertaking the activity.
Read the topic and sourcesIs a Board resolution sufficient?
It is an important internal approval, but does not replace member approval where needed, contractual authority, tax review, CSR eligibility, licence conditions or FCRA permission. Record all conditions precedent and the officer responsible for meeting them.
Read the topic and sourcesCan the donor demand shares or extra voting rights?
That changes the transaction from a simple contribution. Shares require eligible membership, lawful issue and the statutory voting framework. A contribution does not create membership, and a promise of extra votes cannot override section 378D or the Articles.
Read the topic and sources