Section 378S of Companies Act 2013: Matters to Be Transacted at General Meeting

Section 378S is part of Chapter XXIA of the Companies Act, 2013, which contains the statutory framework for Producer Companies. It identifies specified matters that the Board may exercise on behalf of a Producer Company only through resolutions passed at the annual general meeting of its Members.

In brief: the provision reserves important financial, member-benefit and governance decisions for approval at the annual general meeting rather than leaving those matters to the Board acting alone.

Text and scope of Section 378S

The Board of Directors of a Producer Company is to exercise the following powers on behalf of the company only by means of resolutions passed at the annual general meeting of its Members:

approval of the budget and adoption of the annual accounts of the Producer Company;
approval of patronage bonus;
issue of bonus shares;
declaration of limited return and decision on distribution of patronage;
specification of the conditions and limits of loans that may be given by the Board to any director; and
approval of a transaction of the nature reserved in the articles for approval by the Members.

Accordingly, Section 378S creates a statutory approval requirement for these listed matters. The Board may deal with them on behalf of the Producer Company, but the decision must be embodied in resolutions passed at the annual general meeting.

Meaning of important terms

Producer CompanyA company governed by the special Producer Company provisions contained in Chapter XXIA of the Companies Act, 2013.

MemberSection 378A defines a Member as a person or Producer Institution admitted as a Member who continues to possess the qualifications required for membership.

PatronageUnder Section 378A, patronage broadly refers to use of the services offered by the Producer Company to its Members through participation in its business activities.

Patronage bonusSection 378A describes it as payments out of surplus income to Members in proportion to their respective patronage.

Limited returnSection 378A defines limited return as the maximum dividend that may be specified by the articles.

ArticlesThe articles of association govern the internal management of the Producer Company and may reserve specified transactions for Member approval.

What Section 378S requires in practice

The provision places Member approval at the centre of specified decisions. Approval of the budget and annual accounts, patronage bonus, bonus shares and limited return directly affects the financial position or benefits of Members. The section also requires Member control over the conditions and limits of loans to directors and over transactions that the articles expressly reserve for Member approval.

Section 378S should be read with the surrounding provisions of Chapter XXIA, including Section 378R on powers and functions of the Board and the provisions governing annual general meetings of Producer Companies. The articles of the particular Producer Company should also be checked because clause (f) of Section 378S expressly recognises transactions reserved by the articles for approval by Members.

Legislative background

Chapter XXIA, including Section 378S, was inserted into the Companies Act, 2013 by the Companies (Amendment) Act, 2020 and came into force on 11 February 2021. The chapter places the Producer Company framework directly in the Companies Act, 2013.

Compliance note: Before placing an item before the annual general meeting, the Producer Company should verify the current Act, applicable rules, its memorandum and articles, and any MCA notification or filing requirement relevant to the transaction.

Official legal resources

For the current statutory text and regulatory updates, refer to the Companies Act, 2013 published by the Ministry of Corporate Affairs, the India Code portal, and the Ministry of Corporate Affairs portal.

Updated: 17 September 2026. Readers should verify notifications and amendments applicable to the relevant transaction and date.