Companies Act Section 378J

Companies Act, Section 378J: Option for Inter-State Co-operative Societies to Convert into Producer Companies

This section of the Companies Act, 2013 provides a structured legal pathway for inter-State co-operative societies especially those involved in agricultural and allied activities to transform into Producer Companies. The aim is to enable such co-operative institutions to adopt a more corporate and professionally managed structure, without compromising their mutual assistance principles, and to ensure better access to markets, finance, and governance tools.

This transformation is particularly important for co-operatives that operate beyond the boundaries of a single State, allowing them to align with a unified national framework under the Companies Act.

1. Eligibility for Registration as a Producer Company

This provision overrides the general eligibility criteria under sub-section (1) of section 378C, and specifically allows:

Any inter-State co-operative society, whose objects and activities are not confined to a single State, to make a voluntary application to the Registrar of Companies for registration as a Producer Company, as per the provisions of this Chapter.
This ensures that such co-operatives, which serve producers across multiple States, are not restricted from transitioning into Producer Companies merely due to their broad geographic span.

2. Application Requirements and Supporting Documentation

An inter-State co-operative society seeking registration as a Producer Company must submit a formal application to the Registrar of Companies, accompanied by several key documents to establish its credentials and intent. These include:

(a) Special Resolution of Members: A certified copy of the special resolution passed by at least two-thirds of the total Members of the co-operative society.
This resolution must clearly authorize the society’s incorporation as a Producer Company under the Companies Act.
(b) Statement of Key Details: A comprehensive statement must be submitted, containing:

Names, addresses, and occupations of the existing directors and the Chief Executive (or equivalent, regardless of title) of the society. A list of all Members of the inter-state co-operative society.
(c) Statement of Activities: A formal declaration that the society is engaged in one or more of the producer-related activities specified in Section 378B, such as production, harvesting, procurement, grading, pooling, marketing, or exporting of primary produce.
(d) Declaration of Accuracy: A signed declaration by at least two directors, confirming that the information provided under clauses (a) to (c) is true and correct. These requirements ensure due diligence and the authenticity of the application.

3. Naming of the Transformed Entity

Upon registration as a Producer Company, the new name of the entity must include the phrase “Producer Company Limited”.

This suffix must follow any name or expression chosen by the applicant to reflect the company’s identity.
The inclusion of "Producer Company Limited" clearly indicates the entity’s new legal status and regulatory framework.
4. Registrar’s Role and Timeline for Registration

Once the Registrar receives a complete application along with all the necessary supporting documents:

The Registrar is mandated to verify compliance with all the requirements specified in sub-sections (1) to (3).
If satisfied, the Registrar must issue a certificate of registration under his official signature within thirty (30) days from the date of receiving the application.
Upon registration, the co-operative society is deemed incorporated as a Producer Company under this Chapter. This fixed timeline promotes procedural efficiency and predictability.

5. Inclusion of Federations and Unions of Co-operative Societies 

The scope of this provision extends beyond individual co-operative societies to include:

Co-operative societies formed by producers, Federations or unions of co-operative societies comprising producers, Co-operatives or federations registered under any other law but with objects or activities extended beyond the State, either directly or through federated structures.
All such entities are eligible to apply for conversion into Producer Companies, provided they meet the basic conditions laid out in sub-section (1).

This ensures broad inclusion and uniformity, especially for large federated networks that operate at regional or national levels.

6. Legal Effect of Registration as a Producer Company

The inter-State co-operative society automatically transforms into a Producer Company. From that point onward, the entity shall be governed solely by the provisions of this Chapter (Producer Companies), and not by the co-operative laws under which it was previously registered.
All acts or omissions made prior to registration remain valid, and no claim can be made against the company merely on the basis of its transformation from a co-operative society.
This provision provides legal continuity and protection, ensuring that the conversion does not invalidate existing rights or liabilities.
7. Notification to the Previous Registrar

Once the registration process is complete, the Registrar of Companies who issued the certificate must:

Inform the Registrar of Co-operative Societies, with whom the co-operative was previously registered. The purpose of this communication is to ensure that the co-operative society is removed from the previous register, thereby eliminating any dual regulatory overlap.
This step ensures regulatory clarity and avoids duplication, confirming that the entity now functions exclusively as a Producer Company.