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CS Executive · Company Law and Practice · Debt Instruments - Concepts

Under the Companies Act, 2013, who may be given special rights, and through which route can a Producer Company issue instruments for them?

Special rights can be held by producers who are active Members, provided the articles so provide. The Producer Company may then issue appropriate instruments in respect of those rights. A Board decision alone, a Tribunal order or an ordinary resolution is not the basis.

  1. AAny Member, if the Board so decides, with no article provision
  2. BOnly nominee Members, through a Tribunal order
  3. CActive Member producers, if the articles so provide, with appropriate instruments issued to themCorrect
  4. DAny shareholder holding preference shares, by an ordinary resolution

Explanation

Section 378ZC(1) says producers who are active Members may, if so provided in the articles, have special rights, and the company may issue appropriate instruments for those rights. The articles must provide for it and the holder must be an active Member, so the other options fail.

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