Section 378B Companies Act 2013 - Objects of Producer Company

Section 378B of the Companies Act, 2013 specifies the activities that may form the objects of a Producer Company. The provision is part of Chapter XXIA, which governs Producer Companies.

Meaning and scope of Section 378B

A Producer Company is a body corporate whose objects or activities are those specified in Section 378B and which is registered as a Producer Company under the Companies Act. In practical terms, Section 378B permits member-oriented activities connected with primary produce, processing, supplies, education, technical support, infrastructure, insurance, welfare, mutual assistance and related financing.

Objects permitted under Section 378B(1)

The objects of a Producer Company may relate to all or any of the following matters:

1. (a) Production and marketing: production, harvesting, procurement, grading, pooling, handling, marketing, selling and export of the primary produce of Members, or import of goods or services for their benefit. These activities may be carried on by the Producer Company itself or through another institution.
2. (b) Processing: processing of Members' produce, including preserving, drying, distilling, brewing, vinting, canning and packaging.
3. (c) Machinery and consumables: manufacture, sale or supply of machinery, equipment or consumables mainly to Members.
4. (d) Education: providing education to Members and others on the principles of mutual assistance.
5. (e) Technical and professional support: technical services, consultancy, training, research and development and other activities promoting Members' interests.
6. (f) Power and natural resources: generation, transmission and distribution of power; revitalisation, use and conservation of land and water resources; and communications relatable to primary produce.
7. (g) Insurance: insurance of producers or their primary produce.
8. (h) Mutual assistance: promotion of techniques of mutuality and mutual assistance.
9. (i) Member welfare: welfare measures or facilities for Members as decided by the Board.
10. (j) Ancillary activities: activities ancillary or incidental to clauses (a) to (i), and other activities promoting mutuality and mutual assistance among Members.
11. (k) Financing: financing procurement, processing, marketing and the other activities specified in clauses (a) to (j), including credit facilities or other financial services to Members.

Section 378B(2) - Active Members

Sub-section (2) requires every Producer Company, while carrying out its objects under this section, to deal primarily with the produce of its active Members. This requirement keeps the statutory focus on the producers who actively participate in the business of the Producer Company.

Important definitions connected with Section 378B

Section 378A contains definitions used throughout Chapter XXIA. Among the important expressions are primary produce, producer, Producer Company, Producer Institution and active Member. These definitions should be read together with Section 378B when drafting the memorandum and determining whether a proposed activity falls within the permitted objects.

Why the objects clause matters

The statutory objects are central to the formation and operation of a Producer Company. Section 378C links incorporation to the objects specified in Section 378B, while Section 378F requires the memorandum to state the objects of the Producer Company. The proposed memorandum should therefore describe the intended activities accurately and consistently with Section 378B.

Official legal resources

For the authoritative and updated statutory text, refer to the official Companies Act, 2013 on India Code. The insertion of Chapter XXIA can also be checked in the Companies (Amendment) Act, 2020 published by the Ministry of Corporate Affairs.

Note: This page is a general legal reference. For incorporation, alteration of objects or regulatory filings, the current Act, applicable rules, notifications and MCA filing requirements should be checked.