Corporate houses line up 'Electoral Trusts' to fund polls

Dec 17 2013, 20:23 IST
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Most of these trusts have been named in such a manner that they do not give any reference to the associated business groups (Reuters) Most of these trusts have been named in such a manner that they do not give any reference to the associated business groups (Reuters)
SummaryThese trusts have been incorporated as non-profit companies under Section 8 of the new Companies Act

As general elections draw closer, at least five large corporate houses including those of Ambanis, Mittals and Birlas, have set up 'Electoral Trusts' for providing funds to political parties and more than two dozen other business groups are firming up similar plans.

These new trusts are being registered under a new framework that provides for mandatory inclusion of 'Electoral Trust' in their names and enables applicable tax benefits for funds given to various political outfits.

The groups that have set up their respective 'Electoral Trusts' under this new regime, put in place by the government earlier this year, include Anil Agarwal-led Vedanta Group, Sunil Mittal-led Bharti Group, Anil Ambani-led Reliance Group and Kolkata-based K K Birla Group.

These trusts have been incorporated as non-profit companies under Section 8 of the new Companies Act, 2013, and the Section 25 of the previous version of the Companies Act in the last few months, according to information available with the Corporate Affairs Ministry.

According to government officials and executives at leading consultancy and legal firms dealing in corporate affairs, at least 25 other large business houses are currently in the process of registering their own 'Electoral Trusts'.

Interestingly, most of these trusts have been named in such a manner that they do not give any reference to the associated business groups, although this new structure has been apparently put in place with an aim to bring in greater transparency in corporate funding of political parties.

However, these new companies share their addresses and directors with certain companies belonging to their related groups.

Among these, Janhit Electoral Trust is related to Vedanta group, Satya Electoral Trust to Bharti group, People's Electoral Trust to Reliance group and Samaj ElectoralTrust Association with K K Birla group.

Besides, a new company by name of Pratinidhi Electoral Trust has also been registered, although its association could not be ascertained.

These electoral trusts are being set up ahead of one of the most keenly watched general elections in Indian history.

Besides, the issue of corporate funding of political parties has also drawn lot of attention in recent past, with a controversy recently erupting over funding by Aditya Birla Group, although the business house has denied any violation in its donation of funds to political outfits through a trust.

Many corporate houses have made donations to various political parties through their trusts in the past also, but the government notified an 'Electoral Trusts Scheme' earlier this year.

This was to streamline the

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