Sections 378J to 378N 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.
Sections 378J to 378N let an inter-State co-operative society become a Producer Company without winding up. Section 378J sets the application and registration, section 378K deals with shareholders, section 378L with vesting of property, debts and pending cases, section 378M with concessions, and section 378N with directors and employees.
An inter-State co-operative society (objects not confined to one State) can apply to the Registrar under section 378J with a special resolution of not less than two-thirds of its total members. The Registrar, on compliance, certifies registration within thirty days of receiving the application. The society then stands transformed into a Producer Company, its assets, rights and liabilities vest in the company, pending proceedings do not abate, and employees move over on the same terms. The Bill 2026 does not amend these sections.
The five sections at a glance
| Section | Subject | Key point |
|---|---|---|
| 378J | Option to convert | Application with two-thirds special resolution; registration within 30 days |
| 378K | Effect of incorporation | Shareholders continue, to the extent of face value of shares held |
| 378L | Vesting of undertaking | Property, rights and liabilities pass to the company; suits continue |
| 378M | Concessions | Fiscal and other benefits deemed granted to the company |
| 378N | Officers and employees | Directors continue one year; employees move on same terms |
If you are comparing the two structures, read Producer Company or co-operative society first. A group that wants to begin afresh rather than convert should look at section 378C on formation and our producer company registration service.
Section 378J: who can convert and how
Who. Section 378J(1) says, notwithstanding section 378C(1), an inter-State co-operative society with objects not confined to one State may apply to the Registrar for registration as a Producer Company. Sub-section (5) widens this: a co-operative society formed by producers, a federation or union of co-operative societies of producers, or co-operatives of producers, registered under any law in force, which has extended its objects outside the State (directly or through a union or federation of which it is a constituent), and any federation or union that has so extended any of its objects or activities, is eligible.
What must accompany the application (sub-section (2)):
- (a) a copy of the special resolution of not less than two-thirds of the total members for incorporation as a Producer Company;
- (b) a statement showing names, addresses or occupation of the directors and the Chief Executive, if any, and a list of members;
- (c) a statement that the society is engaged in one or more of the objects in section 378B;
- (d) a declaration by two or more directors that the particulars in (a) to (c) are correct.
Name. Under sub-section (3), the words "Producer Company Limited" form part of the name, with any word or expression showing its identity preceding them.
Registration. On compliance with sub-sections (1) to (3), the Registrar shall, within thirty days of receipt of the application, certify under his hand that the society is registered and thereby incorporated as a Producer Company (sub-section (4)).
Transformation. Under sub-section (6), upon registration the society stands transformed into a Producer Company and is thereafter governed by the Chapter to the exclusion of the law by which it was earlier governed. The exception is anything done or omitted before registration. Notwithstanding any other law, no person has any claim against the co-operative institution or the company by reason of the conversion.
Deletion from the old register. Under sub-section (7), the Registrar of Companies shall forthwith inform the Registrar with whom the society was earlier registered, for deletion of the society from that register.
Section 378K: the shareholders
Every shareholder of the society immediately before the date of registration (called the date of transformation) is deemed to be registered from that date as a shareholder of the Producer Company to the extent of the face value of the shares held.
Section 378L: vesting of the undertaking
| Sub-section | Effect from the date of transformation |
|---|---|
| (1) | All movable and immovable properties and assets vest in the Producer Company |
| (2) | All rights, debts, liabilities, interests, privileges and obligations stand transferred to the company |
| (3) | Debts, liabilities, contracts and matters engaged to be done by or for the society are deemed to be those of the company |
| (4) | Sums due to the society are deemed due to the company |
| (5) | Organisations managed by the society are managed by the company for such period, extent and manner as circumstances require |
| (6) | Organisations that were getting financial, managerial or technical assistance may continue to receive it, as the company deems fit |
| (7) | The society's capital forms part of the company's capital |
| (8) | References to the society in any law (other than this Act), contract or instrument are read as references to the company |
| (9) | Pending suits, arbitrations, appeals or other proceedings do not abate and may be continued by or against the company |
Section 378M: concessions continue
From the date of transformation, all fiscal and other concessions, licences, benefits, privileges and exemptions granted to the society in connection with its affairs and business under any law in force are deemed to have been granted to the Producer Company. The section does not list them. Check with the granting authority and keep the documentary trail.
Section 378N: directors and employees
- Directors (sub-section (1)). Notwithstanding section 378-O, all directors of the society before incorporation continue in office for one year from the date of transformation, in accordance with the Act. See sections 378O to 378Q for the number of directors and elections.
- Employees (sub-section (2)). Every officer or employee (except a director, Chairman or Managing Director) serving immediately before the date of transformation and employed in connection with the vested society undertaking becomes an officer or employee of the Producer Company on the same tenure, remuneration, terms and conditions, with the same obligations and rights as to leave, leave travel concession, welfare and medical schemes, insurance, provident fund, other funds, retirement, voluntary retirement, gratuity and other benefits.
- Opting out (sub-section (3)). An officer or employee who opts not to join is deemed to have resigned.
- No compensation (sub-section (4)). Notwithstanding the Industrial Disputes Act, 1947 or any other law, the transfer of services gives no entitlement to compensation, and no such claim is entertained by any court, tribunal or authority.
- Retired staff (sub-section (5)). Employees who retired before the date of transformation get the same benefits from the company.
- Funds (sub-section (6)). Provident fund and gratuity fund trusts and welfare bodies continue to function, and any tax exemption granted to the provident or gratuity fund continues to apply to the company.
- Loss of office (sub-section (7)). No director, Chairman, Managing Director or person entitled to manage the whole or a substantial part of the society's business is entitled to compensation against the society or the company for loss of office or premature termination of a management contract.
A worked example
A federation of milk producers' societies in two States wants to become a Producer Company. Two-thirds of its total members pass the special resolution. It files the application with the four statements and the directors' declaration. The Registrar certifies registration within thirty days of receiving the application. From that date, the federation's bank accounts, land, contracts and pending legal cases belong to the company, its shareholders hold shares up to the face value of their old shares, its existing directors stay on for one year, and its staff continue on the same terms.
Proposed change
The Corporate Laws (Amendment) Bill, 2026 amends section 378P, 378Q, 378Y and other provisions of Chapter XXIA, but our search found no clause amending sections 378J to 378N. The Bill is pending and is not law. Note that the proviso to section 378P(2), which refers to section 378J(4) and section 378N(1), would be affected by the Bill's proposal to omit section 378P(2); see our article on sections 378O to 378Q.
Need help converting a society?
A conversion touches members' resolutions, statements to the Registrar, employee transfer and the treatment of property and pending cases. Our producer company registration team can walk you through the documents and the order of steps.
Key takeaways
- Only an inter-State co-operative society, or a society or federation that has extended its objects outside the State, can use section 378J.
- The application needs a special resolution of at least two-thirds of total members, statements, and a declaration by two or more directors.
- Registration is certified within thirty days of receipt of the application.
- Assets, rights and liabilities vest in the company, and pending suits continue.
- Employees move on the same terms; directors continue for one year.
Read next
- Sections 378F to 378I: memorandum and articles
- Sections 378O to 378Q: directors of a Producer Company
- Producer Company vs co-operative society: key differences
- Producer Company formation guide
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.