FAQS ON PRODUCER COMPANY
A. What is Producer Company?
A producer company can be defined as a legally recognized body of farmers/ agriculturists with the aim to improve the standard of their living, and ensure a good status of their available support, incomes and profitability.
Its main activities consists of production, harvesting, processing, procurement, grading, pooling, handling, marketing, selling, export of primary produce of the members or import of goods or services for their benefit etc.
B. Which are the sections applicable for Producer Company?
Accordingly Chapter XXIA of Section 378A to 378ZU of the Companies Act, 2013 and The Producer Companies Rules, 2021 would applicable for Producer Company.
C. What are the objects of the Producer Company?
1) production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of primary produce of the Members or import of goods or services for their benefit: Provided that the Producer Company may carry on any of the activities specified in this clause either by itself or through other institution;
2) processing including preserving, drying, distilling, brewing, vinting, canning and packaging of produce of its Members;
3) manufacture, sale or supply of machinery, equipment or consumables mainly to its Members;
4) providing education on the mutual assistance principles to its Members and others;
5) rendering technical services, consultancy services, training, research and development and all other activities for the promotion of the interests of its Members;
6) generation, transmission and distribution of power, revitalisation of land and water resources, their use, conservation and communications relatable to primary produce;
7) insurance of producers or their primary produce;
8) promoting techniques of mutuality and mutual assistance;
9) welfare measures or facilities for the benefit of Members as may be decided by the Board;
10) any other activity, ancillary or incidental to any of the activities referred to provisions (1) to (9) or other activities which may promote the principles of mutuality and mutual assistance amongst the Members in any other manner;
11) financing of procurement, processing, marketing or other activities specified in provisions (1) to (10) which include extending of credit facilities or any other financial services to its Members.’’
D. What are the requirements for Incorporation?
Combination of producers can incorporate a producer company:
1. Ten or more producers (individuals); or
2. Two or more producer institutions; or
3. Combination of the above two (10+2).
It cannot become or deemed to become a public limited company.
E. What are the provisions for formation of Producer Company and its registration?
1) Any ten or more individuals, each of them being a producer or any two or more Producer Institutions, or a combination of ten or more individuals and Producer Institutions, desirous of forming a Producer Company having its objects specified in section 378B and otherwise complying with the requirements of this Chapter and the provisions of this Act in respect of registration, may form an incorporated company as a Producer Company under this Act.
2) If the Registrar is satisfied that all the requirements of this Act have been complied with in respect of registration and matters precedent and incidental thereto, he shall, within thirty days of the receipt of the documents required for registration, register the memorandum, the articles and other documents, if any, and issue a certificate of incorporation under this Act.
3) A Producer Company so formed shall have the liability of its Members limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them and be termed a company limited by shares.
4) The Producer Company may reimburse to its promoters all other direct costs associated with the promotion and registration of the company including registration, legal fees, printing of a memorandum and articles and the payment thereof shall be subject to the approval at its first general meeting of the Members.
5) On registration under section 378C (2) of the Companies Act, 2013, the Producer Company shall become a body corporate as if it is a private limited company to which the provisions contained in this Chapter apply, without, however, any limit to the number of Members thereof, and the Producer Company shall not, under any circumstance, whatsoever, become or be deemed to become a public limited company under this Act.
F. Who can become the members of the company?
1. In a producer company, only primary producers or producer organisations can become members.
2. A Producer Company can act only through its members
3. Members create the company
4. Members can also wind up the company
5. Members act through their General Meetings
G. What are the documents required for the incorporation of the Producer Company?
1. Producer Certificate / Farmer Certificate for each subscriber is a mandatory document to incorporate FPC.
2. PAN of all subscribers
3. Voter ID/Driving License/Passport of all subscribers
4. Bank Statement / Phone Bill / Mobile bill not older than 2 months as address proof for all subscribers
5. NOC from the owner of the property.(on plain paper and NOC from the person whose name mentioned on utility bill)
6. Proof of Office address (Conveyance/ Lease deed/ Rent Agreement etc. along with rent receipts);
7. Copy of the utility bill (not older than two months)
8. All the Subscribers should have Digital Signature.
H. How many directors can be appointed?
Every Producer Company shall have at least 5 and not more than 15 directors.
[In case of an inter-State co-operative society incorporated as a Producer Company, such company may have more than fifteen directors for a period of one year from the date of its incorporation as a Producer Company.]
I. Whether appointment of CEO is mandatory or not for the Producer Company?
Yes, Every Producer Company shall have a full time Chief Executive, by whatever name called, to be appointed by the Board from amongst persons other than Members.
J. What are the conditions for the Share Capital?
1. The share capital of a Producer Company shall consist of equity shares only.
2. The shares held by a Member in a Producer Company, shall as far as may be, be in proportion to the patronage of that company.
K. What are the provisions if the member becomes disqualified?
Where the Board of a Producer Company is satisfied that-
a) any Member has ceased to be a primary producer/Farmer; 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
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.
L. How many board meeting should be conducted in a year?
A meeting of the Board shall be held not less than once in every three months and at least four such meetings shall be held in every year.
M. How many prior days’ notice should be given for the board meeting?
1. The Chief Executive shall give notice as aforesaid not less than seven days prior to the date of the meeting of the Board.
2. Notice of every meeting of the Board of Directors shall be given in writing to every director for the time being in India, and at his usual address in India to every other director.
3. If the CEO fails to do so, he shall be liable to a penalty of five thousand rupees.
N. What is the quorum required for conducting the board meeting?
The quorum for a meeting of the Board shall be one-third of the total strength of directors, subject to a minimum of three.
O. What are the provisions for appointment of the secretary in the producer company?
Every Producer Company having an average annual turnover exceeding five crore rupees or such other amount as may be prescribed in each of three consecutive financial years shall have a whole-time secretary.
P. What is the penalty imposed is the producer company fails to appoint the secretary?
The Company and every officer of the Company who is in default, shall be liable to a penalty of one hundred rupees for every day during which the default continues subject to a maximum of rupees one lakh.
In certain case, in any proceedings against a person in respect of a default, no penalty shall be imposed if it is shown that all reasonable efforts to comply with the provisions of Section 378X (1) of Companies Act, 2013 were taken or that the financial position of the Company was such that it was beyond its capacity to engage a whole-time secretary.
Critical points:
1. The Member (s) should be a Farmer / Primary Producer
2. Internal Audit by a Chartered Accountant is mandatory
3. Statutory Auditor and Internal Auditor should be different
4. Producer Company shall appoint one Chief Executive who shall not be a member or a Director of the Company.
5. Producer Company having annual turnover of more than 5 crore shall appoint a whole time Company Secretary
6. Maintaining General Reserve in the Company is mandatory
No comments:
Post a Comment