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Electoral Trusts

Electoral Trusts:

The recently released list of corporate contributors to political parties under electoral bonds is under examination, although many of these have been frequent donors, paying large sums to political parties through electoral trusts.

  • Electoral Trusts are trusts set up by companies with the objective to distribute the contributions received from other companies and individuals to political parties.
  • The companies which are registered under section 25 of the Companies Act, 1956, are only eligible to make an application for approval as an electoral trust.
  • The names of electoral trusts, currently, do not indicate the name of the company/group of companies which set up the trusts.
  • For administrative expenses, the electoral trusts are permitted to set aside a maximum of 5 percent of the total funds collected during a financial year.
  • The remaining 95 percent of total income of the trusts, including any surplus from the previous financial year, is required to be distributed to eligible political parties.