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CS Professional · Strategic Management and Corporate Finance · Raising of Funds from Debt and Procedural Aspects

Under Section 378G, which matter must the articles of a Producer Company contain in relation to its borrowing?

The articles of a Producer Company must state the amount of reserves, sources from which funds may be raised, limitation on raising of funds, restriction on use of such funds, and the extent of debt that may be contracted along with its conditions, as required by Section 378G(3)(j).

  1. AThe amount of reserves, the sources from which funds may be raised, limitation on raising of funds, restriction on use of such funds and the extent of debt that may be contracted and the conditions thereofCorrect
  2. BOnly the maximum interest rate payable on debentures
  3. CA fixed ceiling of twice the paid-up capital for all borrowings
  4. DThe names of all lenders approved by the Registrar

Explanation

Section 378G(3)(j) requires the articles to state the amount of reserves, sources of funds, limitation on raising funds, restriction on their use and the extent of debt that may be contracted with conditions. The text prescribes no fixed multiple of paid-up capital or list of approved lenders.

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