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

Kisan Mitra Producer Company is an erstwhile inter-State co-operative society. Its members want it re-converted to an inter-State co-operative society. Which statement matches Section 378ZS of the Companies Act, 2013?

The Producer Company may apply to the Tribunal after a resolution by at least two-thirds of members present and voting, or on request by creditors representing three-fourths value of total creditors. The Tribunal then directs meetings and sanctions the re-conversion. Registrar action alone or a simple majority is not enough.

  1. AAn application to the Tribunal may be made after a resolution passed by not less than two-thirds of members present and voting, or on request by creditors representing three-fourths value of total creditorsCorrect
  2. BThe Registrar of Companies may order re-conversion without any application
  3. COnly a simple majority of members at a general meeting is needed, and no Tribunal sanction is required
  4. DThe application must be made by the creditors alone, as members have no right to apply

Explanation

Section 378ZS(1) allows the Producer Company to apply to the Tribunal after a resolution by not less than two-thirds of members present and voting, or on request by creditors representing three-fourths value of total creditors. The Tribunal then directs meetings and must sanction the re-conversion. A simple majority without the Tribunal is wrong.

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