Companies Act Section 378D — Membership and voting rights of Members of Producer Company
CHAPTER XXI
Commercial / Corporate
Summary
Sub-section (1), clause (a) covers cases where all members are individuals. In that situation, every member gets one vote, regardless of how many shares they hold or how much business they do with the Producer Company.
Sub-section (1), clause (b) covers cases where the membership is made up only of Producer Institutions. Here, voting rights are based on how much business each institution did with the Producer Company in the previous year, as set out in the company's articles. However, during the first year after the Producer Company is registered, voting rights are instead based on how many shares each institution holds.
Sub-section (1), clause (c) covers cases where the membership includes both individuals and Producer Institutions. In this mixed situation, voting rights are calculated as one vote for every member, whether that member is an individual or an institution.
Sub-section (2) states that the articles of any Producer Company can set out the conditions under which a member may keep their membership, and also the manner in which members exercise their voting rights.
Sub-section (3) states that, despite what is said in sub-sections (1) and (2), a Producer Company may limit voting rights to active members only, at any special or general meeting, if its articles allow this.
Sub-section (4) states that no person who has any business interest that conflicts with the business of the Producer Company can become a member of that company.
Sub-section (5) states that if a member later acquires a business interest that conflicts with the business of the Producer Company, that member stops being a member and is removed as a member according to the company's articles.
Official Text
(1)
(a) In a case where the membership consists solely of individual Members, the voting rights shall be based on a single vote for every Member, irrespective of his shareholding or patronage of the Producer Company.
(b) In a case where the membership consists of Producer Institutions only, the voting rights of such Producer Institutions shall be determined on the basis of their participation in the business of the Producer Company in the previous year, as may be specified by articles:
Provided that during the first year of registration of a Producer Company, the voting rights shall be determined on the basis of the shareholding by such Producer Institutions.
(c) In a case where the membership consists of individuals and Producer Institutions, the voting rights shall be computed on the basis of a single vote for every Member.
(2) The articles of any Producer Company may provide for the conditions, subject to which a Member may continue to retain his membership, and the manner in which voting rights shall be exercised by the Members.
(3) Notwithstanding anything contained in sub-section (1) or sub-section (2), any Producer Company may, if so authorised by its articles, restrict the voting rights to active Members, in any special or general meeting.
(4) No person, who has any business interest which is in conflict with business of the Producer Company, shall become a Member of that Company.
(5) A Member, who acquires any business interest which is in conflict with the business of the Producer Company, shall cease to be a Member of that Company and be removed as a Member in accordance with the articles.