Section 378ZD Transferability of shares and attendant rights – Companies Act 2013

Section 378ZD of Companies Act 2013 amended by Companies Amendment Act 2020. Provisions for Transferability of shares and attendant rights.

Amended and updated notes on section 378ZD 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 Transferability of shares and attendant rights.

Chapter XXIA PART-V (Section 378ZB to 378ZD) of the Companies Act 2013 (CA 2013) deals with the provisions related to share capital and members rights. Section 378ZD of CA 2013 provides for Transferability of shares and attendant rights.

Recently, we have discussed in detail section 378ZC (Special user rights) of CA 2013. Today, we learn the provisions of section 378ZD 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 378ZD 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 378ZD 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-V)
Chapter NameShare Capital and Members Rights
Section No.378ZD
Section NameTransferability of shares and attendant rights
Monthly Updated EditionCompany Law PDF

Section 378ZD: Transferability of shares and attendant rights

Section 378ZD(1) of Companies Act

Save as otherwise provided in sub-sections (2) to (4), the shares of a Member of a Producer Company shall not be transferable.

Section 378ZD(2) of Companies Act

A Member of a Producer Company may, after obtaining the previous approval of the Board, transfer the whole or part of his shares alongwith any special rights, to an active Member at par value.

Section 378ZD(3) of Companies Act

Every Member shall, within three months of his becoming a Member in the Producer Company, nominate, in the manner specified in articles, a person to whom his shares in the Producer Company shall vest in the event of his death.

Section 378ZD(4) of Companies Act

The nominee shall, on the death of the Member, become entitled to all the rights in the shares of the Producer Company and the Board of that Company shall transfer the shares of the deceased Member to his nominee:

Provided that in a case where such nominee is not a producer, the Board shall direct the surrender of shares together with special rights, if any, to the Producer Company at par value or such other value as may be determined by the Board.

Section 378ZD(5) of Companies Act

Where the Board of a Producer Company is satisfied that—

  • (a) any Member has ceased to be a primary producer; or
  • (b) any Member has failed to retain his qualifications to be a Member as specified in articles, the Board shall direct the surrender of shares together with special rights, if any, to the Producer Company at par value or such other value as may be determined by the Board:

Provided that the Board shall not direct such surrender of shares unless the Member has been served with a written notice and given an opportunity of being heard.


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