Section 378B explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 378B lists what a Producer Company may do. Its objects must relate to all or any of eleven matters in sub-section (1), clauses (a) to (k), ranging from marketing and processing Members' produce to insurance and financing. Sub-section (2) adds a practical limit: the company must deal primarily with the produce of its active Members.
A Producer Company's objects must relate to all or any of the matters in section 378B(1)(a) to (k): procurement, marketing and export of Members' primary produce, processing, supplying machinery and consumables mainly to Members, education on mutual assistance principles, technical services, power and land and water resources, insurance, mutuality, welfare measures, ancillary activities and financing. Under section 378B(2) every Producer Company must deal primarily with the produce of its active Members. The memorandum must state main objects from this list. The Bill 2026 does not amend section 378B.
The objects at a glance
| Clause | Object |
|---|---|
| (a) | Production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of primary produce of Members, or import of goods or services for their benefit |
| (b) | Processing, including preserving, drying, distilling, brewing, vinting, canning and packaging of Members' produce |
| (c) | Manufacture, sale or supply of machinery, equipment or consumables mainly to Members |
| (d) | Education on the mutual assistance principles to Members and others |
| (e) | Technical services, consultancy, training, research and development and all other activities promoting Members' interests |
| (f) | Generation, transmission and distribution of power; revitalisation, use and conservation of land and water resources; communications relatable to primary produce |
| (g) | Insurance of producers or their primary produce |
| (h) | Promoting techniques of mutuality and mutual assistance |
| (i) | Welfare measures or facilities for Members as decided by the Board |
| (j) | Any other activity ancillary or incidental to clauses (a) to (i), or which may promote mutuality and mutual assistance among Members |
| (k) | Financing of procurement, processing, marketing or other activities in (a) to (j), including credit facilities or other financial services to Members |
Chapter XXIA was inserted by the Companies (Amendment) Act, 2020, with effect from 11-2-2021, as the footnote in the official text shows. Terms such as "primary produce", "Member" and "active Member" are defined in section 378A; see section 378A definitions.
Section 378B(1): the permitted objects
The objects must "relate to all or any" of the listed matters. So a Producer Company may take up one object or several, but its main objects must come from this list. An objects clause that falls outside all eleven would not fit a Producer Company. Section 378F(c) repeats the point for the memorandum: the main objects must be one or more of the objects in section 378B.
Two features stand out.
The proviso to clause (a). The Producer Company may carry on any activity in clause (a) "either by itself or through other institution". A company that does not have its own warehouse or export arm can act through another institution.
Reach beyond farming. Clause (a) covers import of goods or services for Members' benefit, clause (c) covers machinery and consumables, clause (f) covers power and land and water, clause (g) insurance, and clause (k) credit facilities. A group that wants to run a processing unit, supply seed and equipment to Members, and offer credit to them can place all three within one company.
If you are choosing the objects for a new company, our producer company registration service can help draft an objects clause that stays within the list. Our earlier note on producer company objects and activities covers the same section in a shorter form.
Section 378B(2): deal primarily with active Members' produce
Sub-section (2) says every Producer Company "shall deal primarily with the produce of its active Members for carrying out any of its objects". Two points follow.
- The limit is on whose produce the company deals in. It is not on the kind of activity.
- "Active Member" is defined in section 378A(a) as a Member who fulfils the quantum and period of patronage of the company required by the articles. So the articles decide who counts.
The word is "primarily", not "exclusively". The text does not fix a percentage, so the articles and the company's records should show that most of what it handles comes from active Members.
How the objects fit with the rest of the Chapter
- Memorandum. Section 378F requires the memorandum to state that the main objects are one or more of those in section 378B and, where objects are not confined to one State, the States to whose territories they extend.
- Membership. Section 378D says a person with a business interest in conflict with the company's business cannot become a Member. See section 378D on membership and voting.
- Formation. The group that forms the company must have objects specified in section 378B; see section 378C on formation.
Practical example
A group of fifteen honey producers registers a Producer Company. Its objects clause provides for procurement, grading, packaging and marketing of Members' honey (clauses (a) and (b)), supply of hives and bottles mainly to Members (clause (c)), training on hive management (clause (e)) and a small credit facility for buying hives (clause (k)). All are within the list. If the company begins buying large quantities of honey from non-Members and selling only that, it risks breaching section 378B(2), which expects it to deal primarily with its active Members' produce.
Proposed change
Our search of the Corporate Laws (Amendment) Bill, 2026 found clauses amending other provisions of the Producer Company Chapter, but none amending section 378B. The Bill is pending, not law.
Need help drafting the objects clause?
The objects clause fixes what your Producer Company may do and how it will be tested. If you are planning to register or to amend the objects, our team can help you match the activity plan to section 378B through our producer company registration service.
Key takeaways
- Objects must relate to all or any of the eleven matters in section 378B(1)(a) to (k).
- Activities under clause (a) may be carried on by the company itself or through another institution.
- Section 378B(2): deal primarily with the produce of active Members.
- The memorandum must state main objects from this list (section 378F(c)).
- Chapter XXIA was inserted by the Companies (Amendment) Act, 2020 (w.e.f. 11-2-2021).
Read next
- Section 378A: producer company definitions
- Section 378C: formation of a Producer Company
- Section 378E: benefits to Members of a Producer Company
- Advantages and disadvantages of a Producer Company
Disclaimer: Based on the Companies Act, 2013 as amended up to 1 April 2021 (official consolidated text), read with later developments noted in the article; proposals in the Corporate Laws (Amendment) Bill, 2026 are pending and not law as on 30 September 2026. Verify current notifications and rules before acting.