Section 378ZM 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 378ZM is the penalty section of Chapter XXIA. It covers three situations: someone who uses the words "Producer Company Limited" without being a registered Producer Company, a director or officer who wilfully withholds information from a Member, and a director or officer who does not hand over records or does not convene general meetings.
Under s.378ZM(1), a person who is not a registered Producer Company and carries on business under a name containing "Producer Company Limited" is punishable with fine up to Rs 10,000 for every day the name is used. Under (2), a director or officer who wilfully fails to furnish information a Member asks for is liable to imprisonment up to six months and a fine of 5% of the previous year's turnover. Under (3), failing to hand over books, documents or property, or failing to convene the AGM or other general meetings, draws a fine up to Rs 1 lakh, plus up to Rs 10,000 a day for a continuing default. The Bill 2026 proposes to replace these with civil penalties; it is pending.
Section 378ZM at a glance
| Sub-section | Who | Default | Consequence (current text) |
|---|---|---|---|
| (1) | Any person, other than a registered Producer Company | Carrying on business under a name containing "Producer Company Limited" | Fine up to Rs 10,000 for every day the name is used |
| (2) | Director or officer of a Producer Company | Wilfully fails to furnish information on the company's affairs required by a Member or a duly authorised person | Imprisonment up to six months and fine equal to 5% of the company's turnover in the preceding financial year |
| (3)(a) | Director or officer | Fails to hand over custody of books of account, documents or property to the company | Fine up to Rs 1 lakh; continuing default: additional fine up to Rs 10,000 for every day |
| (3)(b) | Director or officer | Fails to convene the annual general meeting or other general meetings | Same as (3)(a) |
Misuse of the name: sub-section (1)
Only a company registered under Chapter XXIA may carry on business under a name containing the words "Producer Company Limited". The section applies to "any person, other than a Producer Company registered under this Chapter". The fine accumulates day by day, up to Rs 10,000 for each day the name is used. For the naming requirement itself, see the memorandum rules in sections 378F to 378I. If you are facing a name dispute, our legal dispute resolution team can advise on the steps.
Withholding information from a Member: sub-section (2)
This is the only limb of the section that carries imprisonment. The words are that the director or officer "wilfully fails to furnish any information relating to the affairs of the Producer Company required by a Member or a person duly authorised in this behalf". The consequence is imprisonment up to six months and a fine equivalent to five per cent of the turnover during the preceding financial year. Both are stated together ("and"), so the section does not say the court may impose one or the other.
Two points matter for directors. First, the failure must be wilful. Second, the information must be required by a Member, or by someone authorised by the Member. Members hold rights of inspection, for example of the investment register under section 378ZL, so a director should keep a record of requests and replies.
Records and meetings: sub-section (3)
A director or officer who fails to hand over books of account, documents or property in his custody to the company, or who fails to convene the annual general meeting or other general meetings, is punishable with fine up to one lakh rupees. For a continuing default, there is an additional fine up to ten thousand rupees for every day it continues.
The AGM rules, including the first AGM within ninety days and the fifteen-month gap, are in sections 378Y to 378ZA. Clause (a) applies, for example, when an outgoing director keeps the company's ledgers or cheque books after ceasing to be a director.
Example. A director who lost the election at the AGM keeps the company's account books at his home. The new Board asks for them and he refuses. Section 378ZM(3)(a) makes that failure to hand over custody punishable with fine up to Rs 1 lakh, and up to Rs 10,000 for each day the default continues.
Proposed change (Corporate Laws (Amendment) Bill, 2026)
The Bill is pending and is not law. Clause 88 would amend section 378ZM as follows.
- Sub-section (1): instead of a fine of up to Rs 10,000 a day, a penalty of Rs 1 lakh, with a further Rs 500 for each day after the first during which the failure continues, subject to a maximum of Rs 5 lakh.
- Sub-section (2): instead of imprisonment and a fine linked to turnover, a penalty of Rs 25,000, with a further Rs 200 for each day after the first of continuing failure, subject to a maximum of Rs 5 lakh.
- Sub-section (3): a substituted provision, for the same two defaults (records and meetings), with a penalty of Rs 25,000, plus Rs 200 for each day after the first, subject to a maximum of Rs 1 lakh.
So the Bill would convert the section to fixed, capped penalties and remove imprisonment from sub-section (2). Until the Bill is enacted and brought into force, the text in the table above applies.
Need help with a Producer Company dispute or default?
If a Member has been refused information, records are not being handed over or a meeting is overdue, the position should be fixed quickly and on paper. Our legal dispute resolution service can help you assess the risk and plan the next step.
Key takeaways
- Only a registered Producer Company may use "Producer Company Limited"; misuse is fined per day.
- Wilfully withholding information from a Member can mean imprisonment up to six months and a fine of 5% of turnover.
- Failing to hand over records or to call general meetings carries a fine up to Rs 1 lakh and Rs 10,000 a day for continuing default.
- The Bill 2026 would replace these with capped penalties; it is pending.
Read next
- Sections 378Y to 378ZA: quorum, voting and AGM
- Section 378T: liability of directors
- Sections 378ZN to 378ZP: amalgamation, disputes and strike off
- Producer Company compliance requirements checklist
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.