Companies Act Section 378E — Benefits to Members
CHAPTER XXI
Commercial / Corporate
Summary
Sub-section (1) states that, as long as the company's articles allow it, each Member will initially get only the value for their pooled produce or products that the Board of the Producer Company decides on. The remaining withheld amount can be paid out later, either in cash, in kind, or by giving equity shares, based on how much produce the Member supplied during that financial year. The Board decides the extent, manner, and conditions for this later payment.
Sub-section (2) says that every Member will receive only a limited return on the share capital they have contributed. However, a Member may be given bonus shares as allowed under section 378ZJ.
Sub-section (3) explains that any surplus left after setting aside money for the limited return and the reserves mentioned in section 378ZI can be given out as a patronage bonus among Members. This bonus is distributed in proportion to each Member's participation in the Producer Company's business, and it can be paid in cash, by allotting equity shares, or both, as decided by the Members at a general meeting.
Official Text
(1) Subject to the provisions made in articles, every Member shall initially receive only such value for the produce or products pooled and supplied as the Board of Producer Company may determine, and the withheld price may be disbursed later in cash or in kind or by allotment of equity shares, in proportion to the produce supplied to the Producer Company during the financial year to such extent and in such manner and subject to such conditions as may be decided by the Board.
(2) Every Member shall, on the share capital contributed, receive only a limited return:
Provided that every such Member may be allotted bonus shares in accordance with the provisions contained in section 378ZJ.
(3) The surplus if any, remaining after making provision for payment of limited return and reserves referred to in section 378ZI, may be disbursed as patronage bonus, amongst the Members, in proportion to their participation in the business of the Producer Company, either in cash or by way of allotment of equity shares, or both, as may be decided by the Members at the general meeting.