Overview of annual compliance for the Producer company
Producer Company Concept was introduced in the year 2002. Producer Company is dealt by the provisions of the Companies Act 1956. The provisions of Section 465(1) of Companies Act 2013. Stated that provisions of Companies Act 1956 shall mutatis mutandis to a Producer Company.
Producer Companies is a body corporate which shall be registered as Producer Company under Companies Act 1956. The Company shall have objectives or activities specified in Section 581B.
Every producer Company shall file proceeding of annual general meeting along with Director’s Report. The audited Balance sheet, the profit, loss account. With Registrar within sixty (60) days of the date of Annual General Meeting.
| S. No | Particulars | Section | Provisions |
| 1 | Name of the said company | Section 581F(a) | Name of the producer company shall end with the words Producer Company Limited |
| 2 | Total Number of Directors | Section 581P | Minimum- 5 Directors Maximum- 15 Directors In the case of an inter-State co-operative society formed as a Producer Company, then such a company may have more than fifteen directors for a period of one year starting from the date of its formation as a Producer Company. |
| 3 | Election of the Directors | Section 581P(2) | The process of election of the directors shall be conducted within ninety days of the registration of the concerned Producer Company. The Inter-State co-operative society incorporated as a Producer Company can avail. Privileges as 365 days had been substituted instead of the period of 90 days as provided to other companies. |
| 4 | Additional Directors and the Expert Directors | Section 581P(6) | Both the Expert directors or an additional director may be appointed but the same shall not exceed 1/5th of the total number of available directors subject to the AOA (articles of association.) Further, such expert directors will not have the right to vote in the process of election of a chairman but are entitled to be elected as a Chairman. |
| 5 | A Private Company | Section 581C(5) | After obtaining registration under the provision of Section 581 C (1), the Producer Company will become a body corporate just like a private limited company to which all the provisions specified in this Part apply. Further, this concerned company can neither become nor deemed to become a public limited company. |
| 6 | Share Capital and the transfer of shares of a Producer Company | Section 581ZB Section 581ZC Section 581ZD | The Producer Company will consist of equity share capital only. All the active members may have the special rights if the same are provided in the Articles. The shares of this company shall not be transferrable. Further, the shares having which are having special rights may be transferred after the approval of the Board to another active member. Every member of the producer company shall nominate a person within a period of three months after becoming a member of the said Company. Furthermore, the nominee appointed shall get all the benefits and privileges on the death of the member. If in case the said nominee is not a producer, then the Board shall direct that nominee to surrender his shares. |
| 7 | Alteration of Memorandum of association (MOA) and Articles of Association (AOA) | Section 581H- MOA Section 581I- AOA | After passing a Special Resolution, the Memorandum and the Articles of Association of the concerned company can be altered, but the alteration of MOA or AOA must not be inconsistent with the provisions mentioned under Section 581B. Further in the case of alteration of Articles. The same has to be proposed by not less than 2/3rd of the total elected directors. By not less than 1/3rd of the total Members & must be adopted by special resolution. Copy of the altered Memorandum of Association or Article of Association along with the copy of the special resolution passed has to be filed with the Registrar within a period of 30days of adoption. |
| 8 | Annual General Meeting (AGM) | Section- 581ZA Section 581 S Section- 581Y | First Annual General Meeting shall be conducted within a period of 90 days starting from the date of incorporation. The Registrar of the companies may permit the extension of the time for holding an Annual General Meeting. (but the same should not be the first annual general meeting) by a period not exceeding three months. The Producer Company is required to Annual General Meeting in each year and not more than fifteen months shall be elapsed between the date of one Annual General Meeting to the next one. The AGM shall be called only by issuing at least 14 days’ notice. The proceedings of every Annual General Meeting together with the Directors’ Report, the audited Balance Sheet and the Profit and Loss Account shall be filed with the concerned Registrar within a period of 60 days of AGM. The shareholders shall have some exclusive rights which are to be exercised in the Annual General Meeting only. These rights include – Approval of the budget, Adoption of the annual accounts, Issue of bonus shares, Approval of the patronage bonus, Declaration of the limited return and the decision on the distribution of patronage, Specify the conditions, terms and limits of the loans that may be given by the Board to any of the director; and Approval of any transaction of the nature as is to be reserved in the articles for approval by the Members. Quorum: – 1/4th of the total number of members. |
| 9 | Meetings of the Board Quorum. | Section 581V | Board is required to meet at least once in every 3 months and at least 4 of such meetings shall be held in every year. The Chief Executive shall give notice for the BM (board meeting) at least seven days prior to the meeting. Meeting can also be called with a shorter notice but the reasons for the shall be recorded by the Board. Quorum: – 1/3rd of the total strength of the Directors subject to a minimum count of 3 Penalty. If in case the Chief Executive fails to comply with the provisions concerning sending notice. Then a maximum fine of Rs 1000 shall be imposed on him. |
| 10 | Chief Executive | Section 581W | Every producer company must have a full time Chief Executive, and the same shall be appointed by the Board among persons other than the members. |
| 11 | Company Secretary | Section 581X | Every 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 fine of Rs. 500/- for everyday during which the said default continues. |
| 12 | Internal Audit | Section 581ZF | Every Producer Company must have internal audit of its accounts. The same shall be carried out in such an interval. And in such a manner as specified by in the articles, by a Chartered Accountant. |
| 13 | General Reserve and the other reserve | Section 581ZI | Every Producer Company. Is required to maintain a general reserve for every year. In addition to the Reserves as may be prescribed in the Articles. If in case the company does not have adequate funds in any of the financial year for maintaining. The reserves as may be prescribed in the articles. Then the contribution to the reserve shall be shared among all. The Members in proportion to their contribution in the concerned business of that company in that financial year |
Penalties
- Any below-mentioned default by Directors of the Producer Companies amount to the penalty:
- handing over the custody of the books of account
- fails to convene annual general meetings or other general meetings
The company may be punishable by the fine Rupee 1 Lakh. If the default is in the nature of continuation than the everyday penalty of rupees 10,000. Is levied till the default continues.
FAQ about annual compliance for a Producer company?
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