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CSEET · Business Laws and Management · Elements of Company Law

Ten farmers in Nashik and two producer institutions wish to form a Producer Company. Which statement is correct under the Companies Act, 2013?

The Registrar, if satisfied, registers the documents within thirty days of receipt. The Producer Company is treated as a private limited company without any limit on members and never becomes public. Members' liability is limited to unpaid share amounts, so the other options are wrong.

  1. AIt becomes a public limited company once it has more than 200 members
  2. BThe Registrar must register within thirty days of receiving the documents if satisfied that requirements are complied with, and the company is treated as a private limited company with no limit on membersCorrect
  3. CMembers' liability is unlimited since it is a cooperative-type body
  4. DIt can be formed only by exactly ten individuals and no institutions

Explanation

Section 378C allows ten or more individual producers, two or more Producer Institutions, or a combination to form it. The Registrar registers within thirty days if satisfied. It is a body corporate as if a private limited company without limit on members and shall never become a public company. Liability is limited to the unpaid amount on shares.

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