Companies Act Section 378F

Companies Act, Section 378F: Memorandum of Association (MoA) of a Producer Company

Section 378F of the Companies Act, 2013 specifies the mandatory contents that must be included in the Memorandum of Association (MoA) of every Producer Company. The MoA is a foundational legal document that defines the constitution and scope of operations of the company. For a Producer Company, which operates on principles of mutual assistance and member participation, the MoA must clearly reflect its structure, purpose, and commitments in accordance with the provisions of this Chapter.

1. Name of the Producer Company

The name clause of the memorandum must clearly state the name by which the company is to be registered. Importantly:

The name of every Producer Company must end with the words “Producer Company Limited”.
This requirement signifies that the entity is a special form of private company governed by the provisions of Chapter XXIA of the Companies Act, 2013 and is not a public limited company, despite using the word "limited".
This naming convention helps in distinguishing Producer Companies from other forms of companies and reflects their cooperative character.

2. Registered Office: State of Incorporation

The State in which the registered office of the Producer Company is to be located must be clearly stated in the MoA.

The location of the registered office determines the jurisdiction of the Registrar of Companies (RoC) and other regulatory authorities. It is important for the purpose of legal notices, government correspondence, and compliance matters.
3. Main Objects of the Producer Company

The memorandum must clearly specify the main objects for which the Producer Company is proposed to be incorporated.

These objects must be consistent with one or more of the permissible objects listed under Section 378B, such as:
Production, processing, marketing of Members’ produce, Mutual assistance activities, Education, finance, technical support, etc.
This clause defines the operational scope and purpose of the company and acts as a boundary for its lawful activities.

4. Subscribers to the Memorandum

The MoA must contain the names and addresses of the persons (individuals or representatives of Producer Institutions) who have agreed to form the company and have subscribed to the memorandum.

These subscribers are the founding Members of the Producer Company and initiate the process of incorporation.
5. Share Capital and Its Division

The memorandum must specify the amount of share capital with which the Producer Company is to be registered.

This capital must be divided into shares of a fixed denomination, which establishes the unit of ownership and liability.
The capital clause reflects the company’s funding structure at the time of incorporation and provides a framework for Member investment.
6. First Directors of the Producer Company

The MoA must state the names, addresses, and occupations of the subscribers (who are producers) who shall act as the first directors of the company.

These directors are appointed in accordance with the provisions of sub-section (2) of Section 378J and are responsible for overseeing the initial governance and operational setup of the company.
7. Limitation of Members' Liability

The liability of the Members is limited to the amount unpaid, if any, on the shares held by them. This clause is important for protecting Members from personal liability beyond their committed investment in the company.

8. Share Subscription Details

The number of shares each subscriber agrees to take up at the time of incorporation. Minimum Requirement: No subscriber shall take less than one share.
This clause evidences the willingness of each subscriber to invest and take part in the company and also complies with the requirement that every Member must own at least one share.

9. Multi-State Operations

If the objects of the Producer Company extend beyond one State, the memorandum must specify:

The names of all such States to whose territories the company’s objects and operations will extend.
This clause is essential for clarifying the geographical scope of the company’s activities and is particularly relevant for larger Producer Companies that serve Members across State boundaries.