Companies Act Section 378H

Companies Act, Section 378H: Amendment of Memorandum of Association of a Producer Company

The Memorandum of Association (MoA) of a Producer Company outlines its fundamental objectives, operational scope, and the conditions under which it is incorporated. Section 378H of the Companies Act, 2013 governs how such a memorandum may be amended after registration, establishing strict procedural and substantive controls to protect the company’s foundational structure while allowing necessary flexibility for growth or strategic realignment.

Below is an elaborated explanation of the provisions under Section 378H, providing clarity on the process, limitations, and requirements for amending the memorandum of a Producer Company.

1. Restrictions on Alteration of Memorandum

A Producer Company is not permitted to alter the provisions of its Memorandum of Association freely or arbitrarily. The power to make any change to the memorandum is restricted to specific instances, and only in the manner and to the extent explicitly provided for under the Companies Act, 2013.

In other words, unless the Act expressly authorizes a particular type of alteration (such as change of name, registered office, object clause, or share capital), no amendment to the conditions in the memorandum is legally permissible. This ensures that changes to the company’s fundamental structure and operations are carefully regulated and in line with legal safeguards.

2. Alteration of Objects Clause by Special Resolution

A Producer Company is allowed to alter its objects clause that is, the section of the memorandum that defines the primary activities or purposes for which the company is formed only by passing a special resolution.

However, such alteration must not be inconsistent with Section 378B, which outlines the permissible objects for which a Producer Company can be established. These include, among others, production, harvesting, procurement, processing, marketing, and services related to the produce of its Members. Therefore, the alteration of objects must:

Be approved by a special resolution (i.e., passed by at least three-fourths of the Members present and voting at a general meeting), and continue to fall within the scope of the lawful activities prescribed under Section 378B.
3. Filing of Amended Memorandum with the Registrar

Once a special resolution is passed to amend the memorandum (for example, altering the object clause), the following procedural steps must be strictly followed:

A copy of the amended memorandum, reflecting the approved changes, must be prepared and certified.
A certified copy of the special resolution, authenticated by two directors of the Producer Company, must also be obtained.
Both documents (the amended memorandum and certified resolution) must be filed with the Registrar of Companies (RoC) within thirty days from the date on which the special resolution is adopted.
Special Provision for Change of Registered Office Across Jurisdictions:

In situations where the registered office of a Producer Company is being transferred from the jurisdiction of one Registrar to another, an additional requirement is imposed:

Certified copies of the special resolution (again certified by two directors) must be filed with both Registrars the one under whose jurisdiction the office is currently located and the one into whose jurisdiction it is being moved. Each Registrar shall record the change.
The existing Registrar (from whose jurisdiction the company is being moved) must promptly transfer all company-related documents to the new Registrar to facilitate the seamless transition of jurisdictional control.
This provision ensures that the official records of the Producer Company remain consistent, updated, and centralized with the appropriate Registrar.

4. Requirement of Central Government Approval for Inter-State Shift 

When a Producer Company intends to shift its registered office from one State to another, an additional level of regulatory scrutiny is involved. In such cases:

The alteration shall not take effect unless approved by the Central Government. The company must file an application in the prescribed form and manner, seeking such approval.
This requirement acts as a safeguard to prevent misuse or arbitrary relocation of a Producer Company’s registered office across states, which could otherwise affect the interests of its Members, creditors, and other stakeholders. The intervention of the Central Government ensures that such a significant change is evaluated for its legal, economic, and administrative implications.