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CMA Intermediate · Business Laws and Ethics · Company Types, Promotion, Formation and Related Procedures

Which of the following must the articles of a Producer Company contain as a mutual assistance principle under Section 378G?

The articles of a Producer Company must provide that each member has only a single vote irrespective of shareholding, save as otherwise provided in the Chapter. This is one of the mutual assistance principles in Section 378G(2), alongside voluntary membership and limited return on share capital.

  1. AEach member has only a single vote irrespective of shareholding, save as otherwise providedCorrect
  2. BVoting rights proportional to shares held
  3. CMembership restricted to existing promoters
  4. DUnlimited return on share capital

Explanation

Section 378G(2)(b) requires that, save as otherwise provided in the Chapter, each member has only a single vote irrespective of shareholding. The articles must also give particulars on limited, not unlimited, return on share capital, and membership is voluntary and open to eligible persons.

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