CMA Intermediate · Business Laws and Ethics · Company Types, Promotion, Formation and Related Procedures
Which statement about investments by a Producer Company under section 378ZL is correct?
A Producer Company must keep a register of all its investments at its registered office, and any Member may inspect it and take extracts. Disposal of certain investments needs members' special resolution, and reserves are invested in approved securities, not simply listed shares.
- AIts general reserves must be invested only in shares of listed companies
- BIt may dispose of investments in subsidiaries or other companies by Board resolution alone
- CIt must maintain a register of investments at its registered office, open to inspection by any Member who may take extractsCorrect
- DIt may acquire shares of another Producer Company only with Central Government approval in every case
Explanation
Section 378ZL(7) and (8) require a register of investments kept at the registered office, open to inspection by any Member, who may take extracts. Disposal of investments under sub-sections (3) and (4) needs previous approval of Members by special resolution, so the Board alone cannot do it. General reserves go to approved securities, deposits, units and bonds, not listed shares.
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