Section 378E Benefits to Members – Companies Act 2013

Section 378E of Companies Act 2013 amended by the Companies Amendment Act 2020 and Company Rules made there under. Benefits to Members.

Amended and updated notes on section 378E of the Companies Act 2013 as amended by the Companies (Amendment) Act, 2020 and Company Rules made there under. Detail discussion on provisions and rules related to Benefits to Members.

Chapter XXIA PART-II (Sections 378B to 378N) of the Companies Act 2013 (CA 2013) deals with the provisions related to incorporation of producer companies and other matters. Section 378E of CA 2013 provides for Benefits to Members.

Recently, we have discussed in detail section 378D (Membership and voting rights of Members of Producer Company) of CA 2013. Today, we learn the provisions of section 378E of the Companies Act 2013.

In exercise of the powers conferred by sub-section (2) of section 1 of the Companies (Amendment) Act, 2020 (29 of 2020), the Central Government appoints the 11th February, 2021 as the date on which the provisions of section 52 of the Companies (Amendment) Act, 2020 shall come into force.

Accordingly, the provisions of section 378E are effective from 11th February, 2021. You may refer Notification No. S.O. 644(E) dated 11-02-2021. In this article, you will learn detail of the provisions of section 378E the Companies Act 2013.

Name of ActThe Companies Act 2013
Enacted byParliament of India
Administered byMinistry of Corporate Affairs (MCA)
Number of Chapters29
Number of Sections484 (470-43+57)
Number of Schedules7
You are reading:
Chapter No.XXIA (PART-II)
Chapter NameIncorporation of Producer Companies and other matters
Section No.378E
Section NameBenefits to Members
Monthly Updated EditionCompany Law PDF

Section 378E: Benefits to Members

Section 378E(1) of Companies Act

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.

Section 378E(2) of Companies Act

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.

Section 378E(3) of Companies Act

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.


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