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CS Professional · Strategic Management and Corporate Finance · Raising of Funds from Equity and Procedural Aspects - Public Funding

Under the Companies Act, 2013 provisions on articles of a Producer Company, which of the following is one of the mutual assistance principles that the articles must contain?

The articles of a Producer Company must contain the principle that each member has only one vote irrespective of shareholding, save as otherwise provided in the Chapter. Membership is voluntary and the Board is accountable to the members, not to the Registrar.

  1. AEach member has only a single vote irrespective of shareholding, save as otherwise provided in the ChapterCorrect
  2. BEach member has votes in proportion to the shares held
  3. CMembership is restricted to promoters who subscribed to the memorandum
  4. DThe Board is accountable only to the Registrar

Explanation

Section 378G(2)(b) requires the articles to provide that each member has a single vote irrespective of shareholding, save as otherwise provided in the Chapter. Voting by shareholding is the feature of ordinary companies, not of the mutual assistance principles. Membership must be voluntary and open to eligible persons, and the Board is accountable to the members.

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