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CS Executive · Setting Up of Business, Industrial and Labour Laws · Conversion of Business Entities

Gram Udyog Producer Company, an erstwhile inter-State co-operative society, wants to re-convert into an inter-State co-operative society. Which statement matches the Companies Act, 2013?

The Producer Company applies to the Tribunal for re-conversion, backed either by a resolution of at least two-thirds of members present and voting or by a request from creditors holding three-fourths in value of total creditors. The Tribunal then directs meetings and may sanction.

  1. AIt may apply to the Tribunal after a general meeting resolution passed by not less than two-thirds of members present and voting, or on request of creditors representing three-fourths of total creditors by valueCorrect
  2. BIt may re-convert merely by filing a notice with the Registrar, with no Tribunal involvement
  3. CIt needs a resolution by a simple majority of members and no creditor involvement of any kind
  4. DRe-conversion is not permitted under the Act

Explanation

Section 378ZS(1) permits such a Producer Company to apply to the Tribunal after a resolution by not less than two-thirds of members present and voting, or on request of creditors representing three-fourths in value of total creditors. The Tribunal then directs meetings and must sanction the re-conversion. Simple majority or mere notice is not enough.

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