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The concept of producer company has been introduced to organize the agriculture-related actives in India. In this article, we will discuss the producer company compliances.
The concept of Producer Company was introduced in the year 2002. The provision of Companies Act 1956 deals with Producer Company. The provisions of Section 465(1) of Companies Act 2013 provides that provisions of Companies Act 1956 shall mutatis mutandis to a Producer Company.
Producer Companies is a body corporate registered as Producer Company under Companies Act 1956 having objectives or activities specified in Section 581B.
There are following Producer Company Compliances-
Name of the every producer Company shall end with the word ‘Producer Company Limited’.
Every Producer Company shall have a minimum number of five (5) Directors on the Board. The Company can appoint a maximum number of Fifteen (15) Directors on the Board.
Any inter-State co-operative society incorporated as Producer Company may have more than 15 directors for the period of 1 year from the date of its incorporation as a Producer Company.
The election of directors shall be conducted within a period of ninety (90) days of the registration of the Producer Company.
Any Inter-State co-operative society incorporated as Producer Company may elect within 365 days.
Expert directors or an additional director shall not exceed 1/5th of the total number of directors subject to articles of association of the Company.
Expert directors can be elected as a chairman but will not have any right to vote in the election of a chairman.
The Producer Company can have only Equity Share. The Articles may provide special rights to the Active Members of the Company. The Shares are non-transferable. The Board may grant approval to the active member to transfer their share to another active member. In the event of Death, the shares shall be transferred automatically to the nominee appointed by the Member. The Member shall nominate the person within 3 months of becoming a member of the Company. If the nominee is not a producer, the Board may direct nominee to surrender the shares.
Any alteration under MOA and AOA of the Company shall be in accordance with the provisions of Section 581B by passing a Special Resolution.
In case of alteration in Article of Association, the resolution shall be approved by at least 2/3rd of the elected directors or 1/3rd of the members.
The copy of altered MOA and AOA shall be filed with ROC within 30 days of alteration.
First AGM of the Company shall be held within 90 days from the date of incorporation. The Registrar may grant an extension for a period not exceeding 3 months. The extension is not eligible for a first annual general meeting.
The Producer Company shall in each year hold an Annual General Meeting and not more than 15 months shall elapse between the dates of two Annual General Meeting. The fourteen days prior notice shall be issued to call AGM. The Directors Report, the audited balance sheet and profit and loss account shall be filed with ROC within 60 days of the date of AGM.
The quorum of AGM is 1/4th of the total number of members.
The board shall hold four meeting in every year with the gap of not more than three months between two meetings. The notice shall be given in advance at least 7 days before the Meeting by the Chief Executive. Shorter Notice can be called by stating the reason for the Meeting.
The quorum 1/3rd of total Directors and minimum 3 Directors.
Penalty: If the Chief Executive fails to comply with the provisions of sending notice, he shall be punishable by a maximum fine of Rs. 1,000/-.
The Company should appoint one full-time appointed Chief Executive other than members.
Every Producer Company, having an average annual turnover exceeding Rs. 5.00 crores in each of three consecutive financial years shall have a whole time Company Secretary.
Penalty: Company and every officer who is in default, shall be punishable with fine a maximum fine of Rs. 500/- for every day during which the default continues.
Every Producer Company shall maintain a general reserve in every year in addition to the Reserves as may be specified in the Articles.
Sufficient funds are not available for transfer to maintain the specified reserve as mentioned in the article that such contribution shall be made by the members in proportion to their patronage in the business of that company in that year.
Also, read: Annual Compliance of Producer Company