Skip to content

CS Executive · Company Law and Practice · Share and Share Capital - Concepts

Which statement about the share capital of a Producer Company is correct under Section 378ZB?

Under Section 378ZB, a Producer Company's share capital consists of equity shares only, and shares held by members are, as far as may be, in proportion to the company's patronage by them. Preference shares and strictly equal holdings are not contemplated.

  1. AShare capital consists of equity shares only, and holdings are, as far as may be, proportional to patronageCorrect
  2. BShare capital may consist of equity and preference shares, with holdings proportional to patronage
  3. CShare capital consists of equity shares only, and holdings must be strictly equal for all members
  4. DShare capital may be of any class, with holdings proportional to paid-up capital

Explanation

Section 378ZB(1) provides for equity shares only and (2) provides that member holdings are, as far as may be, proportional to patronage. Options adding preference shares or requiring strictly equal holdings misstate the section.

Did you get it right without looking?

One question tells you little. A timed set on Share and Share Capital - Concepts shows your real accuracy, how long you take and where you lose marks.

Practise Share and Share Capital - ConceptsFree diagnostic mock

More Share and Share Capital - Concepts questions