Normal characteristics of Producer Companies:

• Producer Company is always a Pvt Ltd company. The name of the Company shall end with “Producer Company Limited” which shall be stated in the MOA of Producer Company.
• There must be a minimum of Five directors & No need for Minimum Capital requirements in a producer company and the Share Capital of a producer company shall consist of equity shares only.
• Voting rights in Producer Company shall be based on a single vote for every member and it is governed by the Chapter IXA of Companies Act, 1956.
• Each & Every Producer Company shall deal primarily with the produce of its active Members for carrying out any of its objects specified in this section.
• ¼ of the total membership shall constitute the quorum at a General Meeting.
• The Article of Association and Memorandum of association of Producer Company shall be prepared in accordance with the provision U/s 581F and 581G respectively.
• No person, who has any business interest which is in conflict with the business of the Producer Company, shall become a Member of that Company.

SHARE CAPITAL AND ACCOUNTS, AUDIT & OTHER FEATURE OF A PRODUCER COMPANY

SHARE CAPITAL

Producer company share capital consists of only equity shares only. The proportion of equity share capital of a producer company may be in the patronage of that company.

SPECIAL RIGHTS OF ACTIVE MEMBERS OF A PRODUCER COMPANY

• Producers who are active members of a producer company have special rights and the producer company may issue to such producers appropriate instruments according to their special rights.
• The instruments are transferable with the approval of the board by the active members of the producer company.

TRANSFER OF SHARES

1. Members may with the approval of the board of directors transfer the shares and special rights as well at par.
2. Within 3 months of becoming a member of a producer company, the member shall nominate the person who will become the member after his death.
3. Upon death, the nominee shall be a member of the company, and the board transfer the shares and all rights to the nominee.

SURRENDER OF SHARES

1. Any member ceased to retain his qualification as per the article.
2. Member ceased to be a primary producer.

Then the board shall surrender the shares of that member at par value.

No, the surrender of shares shall be done unless written notice is served to the member.

BOOKS OF ACCOUNTS INTERNAL

Every book of accounts shall be maintained at the registered office-

• All sales and purchases of goods
• Instruments of liability executed on behalf of the company
• Assets and liabilities.
• Balance sheet and profit and loss account.

INTERNAL AUDIT OF A PRODUCER COMPANY

Every producer company shall conduct an internal audit as specified by their articles of a producer company by the chartered accountant.

 The auditor shall report the following matter relates to the producer company-

• Amounts of debt due along with the bad debts
• Verification of cash balances.
• Details of assets and liabilities
• The transaction appears contrary to the provisions.
• Loans by the producer company
• Donations and subscriptions gave by the producer company

RESERVES OF A PRODUCER COMPANY

Along with all the reserves specified by the articles of the producer company the general reserves shall be maintained by the producer company in every financial year. If in any year the fund is insufficient to transfer to the reserves which are maintained as per articles then members shall shares that funding proportion to the patronage.

DONATION AND SUBSCRIPTIONS

Bypassing the special resolution the producer company may make donations and subscriptions.

The purpose for giving donation and subscription-

• Social and economic welfare
• Promoting mutual assistance principles.

The aggregate amount of donations and subscriptions shall not exceed 3 percent of the net profit of the producer company in the financial year.

Donations and subscriptions shall be given to individuals or institutions.

No, donations and subscriptions shall be given to any political party or for any political purpose whether directly or indirectly.

BONUS SHARES

Upon the recommendation of the board of directors of the company and bypassing the resolution at the general meeting the bonus shares will be issued to the members by the capitalization of the amount from general reserves of the company in proportion to the shares held by the members of the producer company.

NUMBER OF DIRECTORS

Every producer company has a minimum of 5 directors and a maximum of 15 directors but there is an exception to that is producer company which is an inter-corporate society can have more than 15 directors for the first year from incorporation.

DIRECTOR APPOINTMENT

1. Members who sign the memorandum and articles can be elected as a board of directors until the board of directors is appointed as per the provisions.
2. The election of a director is conducted within 90 days of registration of the producer company and the director of the company shall be elected by members at the AGM.
3. In the case of inter co-operative society registered as a producer company, the election of a director must be done within 365 days of registration of a producer company.
4. Director shall hold the office for at least 1 or a maximum of 5 years.
5. Every director who retires can be re-appointed as per the articles.

VACATION OF OFFICE

• If the director is convicted by a court offence involving moral turpitude and sentenced for which imprisonment for not less than 6 months.
• The producer company in which he is a director has defaulted in payment of loans and advances for a period of continuous 90 days.
• Director has defaulted in payment of loans takes from the producer company.
• The producer company has not filed annual returns and financial statements for a continuous period of 3 years.
• The AGM is not called as per the provisions.

POWERS AND FUNCTION

• Give direction and control over the chief executive and other officers.
• Proper books and accounts should be maintained.
• Annual accounts to be placed before the AGM.
• To do all such acts and function as the company is authorized to do.
• Investment of funds of a producer company.
• Take all such measures as to discharge the functions or as may be necessary.

MATTER OF GENERAL MEETING

1. Budget approval and annual account preparation.
2. Patronage bonus approval
3. The decision to issue od bonus shares
4. Mention conditions and limits for loan
5. Declaration of limited return

MEETING UNDER PRODUCER COMPANY

• At least 4 meetings shall be held every year and a minimum of 1 meeting of the board must be held every 3 months.

QUORUM UNDER PRODUCER COMPANY

• The quorum of the meeting is 1/3 of the total number of directors of the board and is subject to 3 directors.
• And ¼  of the total membership shall be a quorum of the general meeting unless articles specify otherwise.

SECRETARY OF A PRODUCER COMPANY

1. A producer company whose average turnover exceeds 5 crores must have a whole-time company secretary.
2. Company and every officer who is in default in complying with the provision shall be punishable for a fine which can be RS  500 for every day during which the defaults continue.

COMMITTEE OF A PRODUCER COMPANY

• The board may constitute a committee to discharge the function as necessary.
• Committee will work according to the guidance and direction of the board.
• The remuneration, fee of the committee members shall be paid by the board.
• The minutes of the meeting of committee shall be placed before the meeting of board.

PRODUCER COMPANY ANNUAL COMPLIANCES TO BE TAKEN CARE

S. No.	Particular	Section and Rules	Particular of Compliance
1.	Annual Form	Section 73 Rule 16	E-form DPT-3	Return of Deposit: Company is required to file this form every year on or before 30th June in respect of return of Deposit and Particulars not considered as Deposit as on 31st March.
2.	Receipt of DIR- 8	164(2) 143(3)(g)	Form DIR – 8	Non - Disqualification: Every Director of the Producer Company in each FY will file with the Company disclosure of non-disqualification.
3.	Annual Form	Rule 12A	DIR-3 KYC	KYC of Directors: All the Directors of the company shall file this form on or before 30th September every year for all the directors of the Company.
4.	Receipt of MBP-1	184(1)	Form MBP- 1	Interest in other Entities: Every Director of the Company in the First Meeting of the Board of Directors in each FY shall disclose his interest in other entities.
				Change in interest discloser: Every Director is required to submit with the Company a fresh MBP-1, whenever there is a change in his interest from the earlier given MBP-1.
5.	Half Yearly Return	Section 405	MSME-1	Delay in Payment to Ministry of Micro, Small and Medium Enterprises Vendor: Company has to file this return half-yearly in respect of pending payments to the Ministry of Micro, Small, and Medium Enterprises vendors at end of the half-year. October to March – 30th April April to Sep – 30th  October
6.	E- Forms Filing Requirements Annual Form	581ZA	E-form: MGT-7	Annual Return: Every Producer Company will file its Annual Return within 60 days of holding AGM. Annual Return will be for the period 1st April to 31st March.
7.		581ZA	E-form: AOC-4	Financial Statement: Company is required to file its BS along with Statement of Profit and Loss Account, Cash flow statement, Directors’ Report, and Auditors’ Report in this form within Thirty days of holding of AGM.
				Attachment: Notice of AGM, Directors’ Report, Auditors’ Report, Cash Flow Statement, Balance Sheet, Statement of Profit& Loss Account,
8.	Appointment of Auditor	581	E-form ADT-1	Appointment of Auditor: Auditor will be appointed for 5 (Five) years and form ADT-1 will be filed for a 5-year appointment within 15 days of AGM.
9.	Event Based Form	Section 90	BEN-2	Disclosure of Significant Beneficial Owner: Company shall file BEN-2 within 30 days of receipt of BEN-1 from the Shareholder. Note: On a regular basis, the company has to check whether there is any SBO in the company due to a change in its shareholding or due to a change in shareholding of body corporate members.
10.	Directors’ Report	581ZA	Directors’ Report: Directors’ Report shall be prepared by mentioning all the information required for Company U/s  134 read with relevant rules & Other relevant provisions of other Act.
11.	Notice of AGM	581ZA	The Producer Company shall in each year hold an AGM & not more than 15 months shall elapse between the date of one AGM to the next. A general meeting of the Producer Company shall be called by giving not less than 14th days prior notice in writing.
12.	Circulation of Financial Statement &other relevant Dox	581ZA	Circulation of Financial Statement: Company will send to the members of the Company-approved Directors’ Report, Auditors’ Report & Financial Statement, at least 14 clear days before the AGM.
13.	Board Meetings	581V	Board Meetings: Board shall meet at least once in every three months and at least four such meetings shall be convened every year. Quorum:- 1/3rd of the total strength of Directors subject to a minimum – 3
14.	Sending of Notice of AGM	581ZA	Notice of AGM: The notice calling the AGM shall be accompanied by the following documents, namely: – (a) the agenda of the AGM; (b) the minutes of the previous AGM or the extraordinary general meeting. (c) the names of candidates for election, if any, to the office of director including a statement of qualifications in respect of each candidate. (d) the audited balance-sheet and P & L Accounts of the Producer Company and its subsidiary, if any etc
15	Internal Audit	Section 581ZF	Producer Company must have an internal audit of its accounts by a Chartered Accountant.
16	Company Secretary	Section 581X	Producer Company, that is having an average annual turnover exceeding Rs. 5.00 crores in each of the three consecutive financial years shall need to appoint a whole-time Company Secretary. Penalty for not appointing: Both the Company and every officer who is at default, shall be punishable with a fine of Rs. 500/- for every day during which the said default continues.
17	Chief Executive	Section 581W	The producer company must have a full-time Chief Executive, and the same shall be appointed by the BOD among persons other than the members.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Above said 15 (Fifteen) Compliance is compulsory for the producer company on an annual basis. Except as asserted above 15 (Fifteen), there may be event-based compliance requirements for the producer company.

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