Section 378R Companies Act 2013 - Powers and Functions of Board
Section 378R of the Companies Act, 2013 sets out the powers and functions of the Board of Directors of a Producer Company. The provision forms part of Chapter XXIA governing Producer Companies and was inserted by the Companies (Amendment) Act, 2020 with effect from 11 February 2021.
What Section 378R provides
Section 378R(1): General authority of the Board
Subject to the Companies Act, 2013 and the articles of the Producer Company, the Board of Directors may exercise the powers and perform the acts and things that the Producer Company itself is authorised to exercise or do.
Section 378R(2): Particular powers and functions
Without limiting the general power above, the Board's functions may include the following:
- determining the dividend payable;
- determining the quantum of withheld price and recommending patronage for approval at the general meeting;
- admitting new Members;
- pursuing and formulating organisational policy and objectives, establishing long-term and annual objectives, and approving corporate strategies and financial plans;
- appointing a Chief Executive and other officers of the Producer Company as specified in its articles;
- exercising superintendence, direction and control over the Chief Executive and other officers appointed by the Board;
- causing proper books of account to be maintained and preparing annual accounts for placement before the annual general meeting together with the auditor's report and replies to qualifications, if any;
- acquiring or disposing of property of the Producer Company in the ordinary course of business;
- investing the funds of the Producer Company in the ordinary course of its business;
- sanctioning a loan or advance connected with the business activities of the Producer Company to a Member who is not a director or a relative of a director; and
- taking other measures or doing other acts required for discharge of the Board's functions or exercise of its powers.
Section 378R(3): Board resolution required
The powers specified in sub-sections (1) and (2) are to be exercised by the Board on behalf of the Producer Company through a resolution passed at a meeting of the Board.
Explanation to Section 378R
A director, or a group of directors that does not constitute the Board, cannot exercise powers that are exercisable by the Board.
Key legal terms
Producer Company
A Producer Company is a body corporate governed by the special framework in Chapter XXIA of the Companies Act, 2013. The chapter contains provisions on membership, management, general meetings, share capital, finance, accounts and related matters concerning Producer Companies.
Board of Directors
For the purpose of Section 378R, the Board is the duly constituted Board of Directors of the Producer Company. The Explanation makes the collective character of the Board's authority important: powers assigned to the Board cannot be exercised merely by one director or by an informal group of directors that does not constitute the Board.
Articles
The Board's authority under Section 378R is expressly subject both to the Companies Act, 2013 and to the articles of the Producer Company. The articles therefore remain relevant when identifying the internal limits, procedures and allocation of authority applicable to the Board.
Practical effect of Section 378R
- The Board has broad managerial authority, but that authority remains subject to the Act and the company's articles.
- Section 378R specifically identifies important financial, membership, policy, management, accounting, property, investment and lending functions.
- Board action under this section requires a resolution passed at a Board meeting.
- The section should be read with nearby Producer Company provisions, including Section 378S on matters to be transacted at a general meeting and Section 378V on Board meetings and quorum.
Related provisions
For a complete understanding of the management of a Producer Company, Section 378R may be read together with Section 378O - Number of directors, Section 378P - Appointment of directors, Section 378Q - Vacation of office by directors, Section 378S - Matters to be transacted at general meeting, Section 378T - Liability of directors and Section 378V - Meetings of Board and quorum.
Official legal resources
For the authoritative statutory text and current corporate-law resources, refer to the Companies Act, 2013 on India Code and the Companies Act, 2013 published by the Ministry of Corporate Affairs. The Producer Company provisions were inserted into the 2013 Act by the Companies (Amendment) Act, 2020.
Legal update: Content reviewed against official Companies Act materials available as of 17 September 2026. Users should verify subsequent amendments, notifications and applicable articles of the Producer Company before relying on the provision for a specific transaction or compliance decision.