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PROVISIONS FOR PRODUCER COMPANY

Corporate Laws / Banking / SEBI / LLP - By: - Mr. M. GOVINDARAJAN - Dated:- 18-11-2015 - Introduction The proviso to Section 465 (1) of the Companies Act, 2013 provides that the provisions of Part IX A of the Companies Act, 1956 shall be applicable mutatis mutandis to a Producer Company in a manner as if the Companies Act, 1956 has not been repealed until a special Act is enacted for Producer Companies. Minimum 10 individuals or two or more producer institutions or combination of 10 or more indi .....

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e private companies. The Producer Company is akin to the private company except to the requirement of number of members. The Producer Company cannot be a public company. After incorporation it will be a body corporate. If a person is having conflict with the business of the company he cannot continue to be a member of the company. Voting rights If the producer company consists of individual members then each member will have a single vote irrespective of the shares held by them. If the company c .....

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he produce supplied to the company during the Financial year ; Bonus shares may be issued to the members; Surplus may be paid in cash or in equity shares proportion to the participation of the members. Memorandum The Memorandum of the Company shall state the name of the Company ending with Producer Company , state in which the main office is registered, main objects, names and addresses of the members subscribed to the memorandum, details of share capital, details of first directors, liability o .....

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n to the change of registered office from one State to another State is to be confirmed by Company Law Board. Option to Inter State Co-operative Societies Any interstate co-operative society may make an application to the Registrar for registration as Producer Company. The application shall accompany with the special resolution of the members and the details of directors and executives and also a list of members. A statement is to be filed declaring that the society is having objects as to that .....

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the newly registered Producer Company. Whatever the concessions and privileges available to the Producer Company shall be extended to the newly formed Producer Company from society. Provisions are there for reconversion of a Producer Company into an Inter State Co-operative Society. Management of Producer Company Every Producer Company shall have minimum five and not more than 15 directors. If any director resigns from his post the election shall be conducted within 90 days from the date of resi .....

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eriod as prescribed in the articles. Vacation of Director post The post of Director may be vacated- if he is convicted by the Court of Law for any offence involving moral turpitude and sentenced imprisonment not less than six months; made a default in repayment of any advances or loan taken from any company or institution or person and such defaults continues for 90 days; made a default in repayment of loan taken from the Producer Company in which he is a Director; the Producer Company in which .....

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accounts; investment of the funds; granting of loan to any member of the company and such other functions as may be authorized by the company. Committee of Directors The Board may constitute such number of committees for the assistance of Board. The Committee can co-opt such number of members as deem fit. The Committee shall function under the superintendence of the Board for such duration and in the manner as prescribed by the Board. The fee for the members shall be payable as decided by the Bo .....

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unishable with fine up to ₹ 1,000/-. The quorum for the Board meeting shall be one third of total strength of Directors subject to a minimum of three. Directors may be paid allowances as decided in General Meeting. Chief Executive Every producer company shall have a full time Chief Executive to be appointed by the Board amongst persons other than the members. He shall be ex officio director of the Board and he is not liable to retire by rotation. The qualifications, experience, tenure, ter .....

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ay during which the default continues. Annual General Meetings The share holders are having exclusive rights to be exercised in the Annual General Meeting such as approval of budget, adoption of annual accounts, issue of bonus shares, Granting of loans and such other functions as may be described in the Articles. The Company has to conduct AGM once in a year. The gap between two AGMS shall not exceed 15 months. The first AGM shall be conducted within 90 days from the date of incorporation. The R .....

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stered office is situate. The quorum for AGM is one fourth of the total membership. The article may prescribe a larger number of members to constitute a forum. Every member shall have one vote and in case of equality of votes the Chairman shall have a casting vote except in the case of election of Chairman. The proceedings of every AGM along with Directors Report, the audited Balance Sheet and Profit & Loss Account shall be filed with the Registrar within 60 days on which the AGM is held alo .....

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rights may be transferred with the approval of the Board to another active member. Every member shall nominate a person within three months on becoming a member of the Company. The nominee shall get all the benefits on the death of the member. If the nominee is not a producer, the Board shall direct the nominee to surrender the shares. If any member ceased to be a producer or failed to retain his qualifications the Board may direct to surrender the shares with special rights, if any to the compa .....

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t Every Producer Company shall have internal audit of its accounts carried out in such intervals and in such manner as may be specified by a Chartered Accountant. Duties of Auditor The auditor shall report on the amounts of debts due with particulars of bad debt, verification of cash balance and securities, details of assets and liabilities, transactions contrary to the provisions of the Act, loan given to Directors and any other matters as may be considered necessary by the auditor. Miscellaneo .....

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proportion to their patronage in the business. Any Producer Company may issue bonus shares on the recommendation of the Board and approval in the General meeting by capitalizing the amount from General Reserve in proportion to the shares held by the members. The Producer Company may, if provided in the Articles, give loans and advances repayable exceeding 3 months but within seven years from the date of disbursement of loans. The members also are given credit facility for a period not exceeding .....

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hall be liable to imprisonment for a term which may extend to six months and with fine equivalent to 5% of the turnover of that company during preceding financial year. If a Director makes a default in handing over the custody of the books of account or he fails to convene annual general meetings or other general meetings he shall be punishable with a fine up to ₹ 1 lakh. In case of continuous default additional fine up to ₹ 10,000/- for every day during which the default continues. .....

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