Annual Compliance for Producer Company
Annual Compliance for Producer Company
What is 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.
There are certain objectives mentioned in the Act Producer Companies can be incorporated into like Production, harvesting, promote the techniques of mutuality etc.
Features of a Producer Company
Following listed are the features or the basic characteristics of a Producer Company –
- A Producer Company is treated as a Private Limited Company.
- These concerned companies are limited by share capital and moreover the members have the benefit of limited liability.
3.The maximum count of the members in a company can exceed 50.
- A producer company can neither become nor be concerted into a public (or deemed public) limited company.
The conditions need to be fulfilled by Producer Company:
The Following listed are the conditions annexed with the concept of a Producer Company –
- The owner shall give to the person who is engaged in an activity connected or related to primary production.
- The Members need to be a primary producer.
- Producer Company can be termed as “Companies with Limited Liability”. The liability of the members will be limited to a number of unpaid shares.
- Name of the company shall end with the words “Producer Company Limited”
- This company can be treated as Private Limited Company for the purpose of application of law and administration of the company.
- The limit of a maximum number of members is not applicable to these Companies.
Annual compliance with Producer Company:
The Producer Company shall hold Annual General Meeting each financial year. The gap between two AGM shall not be more than fifteen Months.
First AGM shall be held within 90 days of its incorporation where the members shall adopt the articles of Producer Companies and shall appoint the Board of Directors.
The notice of AGM shall contain the following information:
- Agenda of Annual General Meeting
- Previous Annual General Meeting or Extraordinary General Meeting Minute
- The names of candidates for election.
- The audited balance-sheet and profit and loss accounts of the Producer Company and its subsidiary along with the Board of Directors Report.
- A draft resolution for the appointment of auditors
Details required for filling of annual Returns of Producer Company:
The above-audited balance sheet and profit and loss accounts and director’s report of Producer Company and its subsidiary company shall be with respect to following:
- Producer Company’s state of affairs.
- Proposed amount to be carried on Reserve.
- The amount to be paid as limited return on share capital.
- Proposed amount to be disbursed as patronage bonus.
- Any material changes and commitment, if any which has affected the financial position of the Producer Company and its Subsidiary. Above change, if any occurred between the date of annual accounts of the production company and date of the report of the board.
- Matters related to energy conservation, environmental protection, expenditure or earnings in foreign exchanges.
- Any other requirement to be specified by the Board.
Filing of annual Return:
Every producer Company shall file proceeding of annual general meeting along with Director’s Report, the audited Balance sheet and the profit and loss account with Registrar within sixty (60) days of the date of Annual General Meeting.
The above shall be filed with an annual return along with the required fees.
Tabular Formation of the Compliances concerning a Producer Company:
Name of the said company
Name of the producer company shall end with the words Producer Company Limited
Total Number of Directors
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.
Election of the Directors
The process of election of the directors shall be conducted within ninety days of the registration of the concerned Producer Company. Further, 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.
Additional Directors and the Expert Directors
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.
A Private Company
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 companycan neither become nor deemed to become a public limited company.
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.
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 or by not less than 1/3rd of the total Members and must be adopted by special resolution. Copy of the altered Memorandum of Association or Article of Association alongwith the copy of the special resolution passed has to be filed with the Registrar within a period of 30days of adoption.
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 Meetingtogether 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.
Meetings of the Board Quorum.
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.
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.
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.
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.
General Reserve and the other reserve
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
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.