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The Supreme Court has not outrightly banned political contributions by loss-making companies. Instead, it has deemed specific amendments as unconstitutional.

Flagging the amendments made to the Companies Act, 2013, as unconstitutional, the SC ruled that it was necessary to make a distinction between loss-making and profit-making companies making political contributions.

New Delhi: The Supreme Court of India's recent verdict on electoral bonds has cast a spotlight on the practice of loss-making companies making political contributions. The court deemed certain amendments to the Companies Act, 2013, and the Finance Act, which facilitated these contributions, as unconstitutional, and flagged concerns regarding the potential misuse of "shell companies" in making political contributions. The ruling also highlighted the impact of these amendments on the fairness of elections and how it infringed on the right to privacy of voters, while impeding the right of shareholders of a company to oversee its finances.