Section 378C Companies Act 2013 - Formation and Registration of Producer Company
Section 378C of the Companies Act, 2013 explains who may form a Producer Company, the conditions for its registration, the nature of members' liability, reimbursement of promotion expenses and the legal status of the company after incorporation.
What is Section 378C of the Companies Act, 2013?
Section 378C forms part of Chapter XXIA of the Companies Act, 2013 dealing with Producer Companies. It lays down the statutory framework for the formation and registration of a Producer Company.
The provision identifies the persons and institutions that may promote a Producer Company and specifies its legal character after incorporation. The objects of the proposed Producer Company must fall within Section 378B of the Companies Act, 2013.
Section 378C - Statutory Provision
Section 378C(1) - Persons who may form a Producer Company
Any ten or more individuals, each of them being a producer, or any two or more Producer Institutions, or a combination of ten or more individuals and Producer Institutions, desirous of forming a Producer Company having its objects specified in section 378B and otherwise complying with the requirements of this Chapter and the provisions of this Act in respect of registration, may form an incorporated company as a Producer Company under this Act.
Section 378C(2) - Registration by Registrar
If the Registrar is satisfied that all the requirements of this Act have been complied with in respect of registration and matters precedent and incidental thereto, he shall, within thirty days of the receipt of the documents required for registration, register the memorandum, the articles and other documents, if any, and issue a certificate of incorporation under this Act.
Section 378C(3) - Limited liability
A Producer Company so formed shall have the liability of its Members limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them and be termed a company limited by shares.
Section 378C(4) - Reimbursement of promotion expenses
The Producer Company may reimburse to its promoters all other direct costs associated with the promotion and registration of the company including registration, legal fees, printing of a memorandum and articles and the payment thereof shall be subject to the approval at its first general meeting of the Members.
Section 378C(5) - Status after registration
On registration under sub-section (2), the Producer Company shall become a body corporate as if it is a private limited company to which the provisions contained in this Chapter apply, without, however, any limit to the number of Members thereof, and the Producer Company shall not, under any circumstance, whatsoever, become or be deemed to become a public limited company under this Act.
Who can form a Producer Company?
Section 378C(1) provides three alternative routes for formation of a Producer Company:
- Ten or more individuals, each of whom is a producer;
- Two or more Producer Institutions; or
- A combination of ten or more individuals and Producer Institutions.
The proposed company's objects must comply with Section 378B, which sets out the permitted objects and activities of a Producer Company.
Meaning of Producer and Producer Institution
The expressions used in Section 378C should be read with the definitions contained in Section 378A of the Companies Act, 2013.
In particular, Section 378A contains the statutory definitions relevant to Producer Companies, including the expressions "producer", "Producer Institution" and "primary produce". Eligibility for formation of a Producer Company should therefore be examined together with Section 378A.
Registration and Certificate of Incorporation
Under Section 378C(2), where the Registrar is satisfied that the applicable statutory requirements relating to registration and matters precedent or incidental to registration have been complied with, the Registrar is required to register the memorandum, articles and other required documents and issue the certificate of incorporation.
Section 378C specifies a period of thirty days from receipt of the documents required for registration, subject to compliance with the statutory requirements.
Liability of Members of a Producer Company
Section 378C(3) expressly provides that a Producer Company is a company limited by shares. The liability of a member is therefore limited by the memorandum to the amount, if any, remaining unpaid on the shares held by that member.
Promoters' Formation and Registration Expenses
Section 378C(4) permits the Producer Company to reimburse its promoters for direct costs connected with promotion and registration. The provision specifically refers to costs such as registration expenses, legal fees and printing of the memorandum and articles.
Such reimbursement is subject to approval at the first general meeting of the members.
Legal Status of a Producer Company
Upon registration, Section 378C(5) gives the Producer Company the status of a body corporate. For the purposes of the provisions applicable under Chapter XXIA, it operates as if it were a private limited company, but without a limit on the number of members.
The same provision expressly states that a Producer Company cannot become, or be deemed to become, a public limited company under the Companies Act.
Section 378C at a Glance
| Provision | Section 378C, Companies Act, 2013 |
|---|---|
| Subject | Formation and registration of Producer Company |
| Individual promoters | Ten or more individuals, each being a producer |
| Producer Institutions | Two or more Producer Institutions |
| Objects | Must be within the objects specified in Section 378B |
| Liability | Limited by shares |
| Registration | Certificate of incorporation issued after statutory requirements are satisfied |
| Legal character | Body corporate treated as a private limited company for the purposes of Chapter XXIA |
| Number of members | No private-company style maximum under Section 378C(5) |
| Public company status | Cannot become or be deemed to become a public limited company |
Related Producer Company Provisions
Section 378C should be read as part of the broader statutory scheme governing Producer Companies. Important related provisions include Section 378A - Definitions, Section 378B - Objects of Producer Company, Section 378D - Membership and Voting Rights, Section 378F - Memorandum of Producer Company and Section 378G - Articles of Association.
Official Legal Resources
For the current statutory text and corporate filing services, readers should also verify the applicable law and requirements through the official Government of India resources.
Updated: September 17, 2026. This page is intended for general legal information. Readers should verify the latest statutory provisions, rules, notifications and filing requirements before acting on the information.