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CS Professional · Strategic Management and Corporate Finance · Raising of Funds from Equity and Procedural Aspects - Public Funding

A Producer Company is preparing its articles. Which matter must the articles specifically contain under the mandatory provisions of section 378G(3)?

The articles must state the basis and manner of allotting equity shares in lieu of the whole or part of sale proceeds of produce or products supplied by members. The other options contradict the section, which requires equitable surplus distribution, authorisation for mergers and member information rights.

  1. AThe basis and manner of allotment of equity shares in lieu of whole or part of sale proceeds of produce supplied by membersCorrect
  2. BA requirement that all surplus be distributed only to directors
  3. CA bar on any amalgamation or merger in all circumstances
  4. DA provision that members have no right to information about general business

Explanation

Section 378G(3)(i) requires the articles to state the basis and manner of allotment of equity shares in lieu of the whole or part of sale proceeds of produce or products supplied by members. The other options contradict the text: surplus is distributed equitably, the articles must authorise division, amalgamation or merger, and members have a right to information on general business.

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