Sections 378ZG, 378ZH, 378ZI, 378ZJ, 378ZK and 378ZL of the Companies Act, 2013

The auditor shall additionally report on:

(a) the amount of debts due along with particulars of bad debts, if any;

(b) verification of cash balance and securities;

(c) details of assets and liabilities;

(d) transactions appearing to be contrary to Chapter XXIA;

(e) loans given by the Producer Company to directors;

(f) donations or subscriptions given by the Producer Company; and

(g) any other matter considered necessary by the auditor.

A Producer Company may, by special resolution, make a donation or subscription to an institution or individual for:

(a) promoting the social and economic welfare of Producer Members, producers or the general public; or

(b) promoting the mutual assistance principles.

The aggregate amount of such donations and subscriptions in a financial year shall not exceed three per cent of the net profit of the Producer Company in the immediately preceding financial year.

The section further prohibits a Producer Company from making, directly or indirectly, any contribution or subscription to a political party or for a political purpose to any person, or making available facilities including personnel or material for such purpose.

(1) Every Producer Company shall maintain a general reserve in every financial year, in addition to any reserve maintained by it as may be specified in its articles.

(2) If the Producer Company does not have sufficient funds in a financial year for transfer to maintain the reserves specified in its articles, the contribution to the reserve shall be shared among the Members in proportion to their patronage in the business of the company in that year.

On the recommendation of the Board and after a resolution is passed in the general meeting, a Producer Company may issue bonus shares by capitalisation of amounts from the general reserves referred to in section 378ZI. The bonus shares are issued in proportion to the shares held by Members on the date of issue.

(a) A credit facility may be provided to a Member in connection with the business of the Producer Company for a period not exceeding six months.

(b) Loans and advances may be provided against security specified in the articles, repayable within a period exceeding three months but not exceeding seven years from the date of disbursement.

A loan or advance to a director or the director's relative may be granted only after approval by the Members in general meeting.

(1) General reserves shall be invested to secure the highest returns available from approved securities, fixed deposits, units, Government or co-operative or scheduled-bank bonds, or another prescribed mode.

(2) A Producer Company may acquire shares of another Producer Company for promotion of its objects.

(3) By special resolution, it may subscribe to the share capital of, or enter into an agreement or arrangement with, a body corporate, including through a subsidiary or joint venture, for promotion of its objects.

(4) Investment in shares of another company, other than the Producer Company investment covered by sub-section (2) or capital subscription under sub-section (3), is subject to the statutory limit of thirty per cent of the aggregate paid-up capital and free reserves. Investment beyond that limit requires a special resolution in general meeting and prior approval of the Central Government.

(5) Investments must be consistent with the objects of the Producer Company.

(6) The Board may dispose of investments referred to in sub-sections (3) and (4) with previous approval of Members by special resolution.

(7) The Producer Company must maintain a register containing the prescribed particulars of investments and disposals.

(8) The register must be kept at the registered office and be open to inspection by any Member, who may take extracts from it.