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CSEET · Business Laws and Management · Elements of Company Law

Seven individual farmers, each a producer, wish to form a Producer Company. Consider the rule on formation. Which statement is correct?

The seven farmers cannot form a Producer Company by themselves. The Act requires ten or more producer individuals, or two or more Producer Institutions, or a combination of ten or more individuals and Producer Institutions. Seven individuals alone do not meet that minimum requirement.

  1. AThey cannot form it, as at least ten individuals or two Producer Institutions, or a combination of ten or more individuals and Producer Institutions, are requiredCorrect
  2. BThey can form it, since any two individuals may do so
  3. CThey can form it, since seven members are enough for a public company
  4. DThey can form it only as a company limited by guarantee

Explanation

Section 378C(1) permits ten or more individuals who are producers, or two or more Producer Institutions, or a combination of ten or more individuals and Producer Institutions, to form a Producer Company. Seven individuals alone fall short. The company is also a company limited by shares.

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