CMA Intermediate · Business Laws and Ethics · Company Types, Promotion, Formation and Related Procedures
Ten farmers and two Producer Institutions apply to form a Producer Company. Which statement is correct under section 378C?
A Producer Company is treated as if it were a private limited company, with no cap on the number of members, and it can never become or be deemed a public limited company. Liability is limited and registration is due within thirty days.
- AIt can become a public limited company if its membership exceeds two hundred
- BIt is treated as a private limited company without any limit on the number of members, and can never become a public limited companyCorrect
- CIts members' liability is unlimited since it is a cooperative-type body
- DThe Registrar must register it within sixty days of receiving the documents
Explanation
Section 378C(5) says that on registration the Producer Company becomes a body corporate as if it were a private limited company, without a limit on members, and shall not under any circumstance become a public limited company. Liability is limited by shares (sub-section 3) and the Registrar's time is thirty days (sub-section 2).
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