Section 378M Companies Act 2013 - Concessions to Producer Company

Section 378M of the Companies Act, 2013 protects the continuity of specified statutory and governmental advantages when an inter-State co-operative society is transformed into a Producer Company. The provision operates from the date of transformation.

Section 378M - Concession, etc., to be deemed to have been granted to Producer Company

With effect from the date of transformation, all fiscal and other concessions, licences, benefits, privileges and exemptions granted to the inter-State co-operative society in connection with its affairs and business under any law for the time being in force are deemed to have been granted to the Producer Company.

Legislative note: Section 378M was inserted by section 52 of the Companies (Amendment) Act, 2020 and came into force on 11 February 2021.

Meaning and effect of Section 378M

The section creates a statutory continuity mechanism. When an eligible inter-State co-operative society transforms into a Producer Company under the Producer Company provisions of the Companies Act, 2013, the transformation does not by itself require the transformed entity to start afresh in relation to the concessions and approvals covered by Section 378M.

The provision applies to fiscal and other concessions, licences, benefits, privileges and exemptions that had already been granted to the inter-State co-operative society in connection with its affairs and business under a law in force. From the date of transformation, those benefits are treated by law as having been granted to the Producer Company.

Important terms in the provision

Date of transformation

For the Producer Company framework, the date of transformation is the date on which the inter-State co-operative society is registered as a Producer Company. Section 378K uses this expression in describing the effect of incorporation following transformation.

Producer Company

Section 378A contains the definitions applicable to the Producer Company chapter. A Producer Company is a body corporate having the prescribed Producer Company objects or activities and registered as a Producer Company under the Companies Act, 2013.

Inter-State co-operative society

Section 378A also defines an inter-State co-operative society for the purposes of the Producer Company provisions. This concept is relevant because Sections 378J to 378N deal with the legal consequences of transformation of such a society into a Producer Company.

What continues after transformation?

  • Fiscal concessions: tax-related or financial concessions covered by the applicable law and already granted to the society.
  • Licences: licences granted in connection with the affairs and business of the inter-State co-operative society.
  • Benefits and privileges: statutory or legally granted advantages connected with the society's business.
  • Exemptions: exemptions granted under a law for the time being in force, subject to the scope and conditions of the applicable law.

Practical point: Section 378M provides deemed continuity on transformation. The precise scope, duration and conditions of any particular concession, licence, benefit, privilege or exemption should still be checked under the law, order, notification or licence under which it was originally granted.

Relationship with Sections 378J, 378K and 378L

Section 378M forms part of a group of provisions dealing with transformation of an inter-State co-operative society into a Producer Company. Section 378J provides the option for transformation, Section 378K addresses the effect of incorporation on shareholders, and Section 378L provides for vesting and transfer of property, assets, rights, liabilities, interests, privileges and obligations. Section 378M specifically preserves the concessions, licences, benefits, privileges and exemptions covered by its text.

Official legal resources

Related Producer Company provisions

For the complete statutory context, also read Section 378J on transformation into a Producer Company, Section 378K on the effect of incorporation, Section 378L on vesting of the undertaking and Section 378N concerning officers and employees.