Section 378D of CA 2013 : Section 378D: Membership And Voting Rights Of Members Of Producer Company

Explanation using Example

Imagine a cooperative of farmers, "GreenGrow Producer Company", which is registered under the Companies Act, 2013. The company is formed by individual farmers and some large agricultural institutions (Producer Institutions) that work together to market their produce.

According to Section 378D(1)(a), if GreenGrow consisted only of individual farmers as members, each farmer would have one vote in company decisions, regardless of how much each farmer has invested or how much they use the company's services.

However, if GreenGrow consisted solely of agricultural institutions, as per Section 378D(1)(b), the voting rights would depend on how much business each institution did with GreenGrow the previous year. For example, if Institution A sold more produce through GreenGrow than Institution B, Institution A would have more voting power.

In a mixed situation where GreenGrow has both individual farmers and institutions as members, as per Section 378D(1)(c), every member would still get one vote, aligning with the principle of equality among members.

The company's bylaws, as mentioned in Section 378D(2), might state that a member must sell a certain amount of produce through the company each year to keep their membership and voting rights.

If the bylaws allow it, as stated in Section 378D(3), GreenGrow might decide that only members who are actively involved in the company (active Members) can vote at certain meetings, thereby encouraging active participation.

Lastly, Section 378D(4) and (5) ensure that members do not have conflicting interests with GreenGrow. For instance, if a member starts a side business that directly competes with GreenGrow, they would have to give up their membership to avoid a conflict of interest.