Finance, Accounts and Audit :
(a) Books of accounts (Section 581ZE): Every producer company has to maintain books of account registered office with respect to—
(a) all sums of money received and expended by the producer company and the matters in respect of which the receipts and expenditure take place;
(b) all sales and purchase of goods by the producer company;
(c) the instruments of liability executed by or on behalf of the producer company;
(d) the assets and liabilities of the producer company;
(e) in case of a producer company engaged in production, processing and manufacturing, the particulars relating to utilisation of materials or labour or other items of costs.
The balance sheet and profit and loss account of the producer company shall be prepared, as far as may be, in accordance with the provisions contained in section 211 of the Companies Act, 1956.
(b) Internal audit (Section 581ZF): Every producer company shall have internal audit of its accounts carried out, at such interval and in such manner as may be specified in articles, by a chartered accountant as defined in clause (b) of sub-section (1) of Section 2 of the Institute of Chartered Accountants Act, 1949 (38 of 1949).
(c) Duties of auditor under this Part (Section 581ZG): Without prejudice to the provisions contained in section 227, the auditor shall report on the following additional matters relating to the producer company, namely:—
(a) the amount of debts due along with particulars of bad debts if any;
(b) the verification of cash balance and securities;
(c) the details of assets and liabilities;
(d) all transactions which appear to be contrary to the provisions of this Part;
(e) the loans given by the producer company to the directors;
(f) the donations or subscriptions given by the producer company;
(g) any other matter as may be considered necessary by the auditor.
(d) Donations or subscription by producer company (Section 581ZH): A producer company may, by special resolution, make donation or subscription to any institution or individual for the purposes of—
(a) promoting the social and economic welfare of producer member or producers or general public; or
(b) promoting the mutual assistance principles:
Provided that the aggregate amount of all such donation and subscription in any financial year shall not exceed three per cent of the net profit of the producer company in the financial year immediately preceding the financial year in which the donation or subscription was made.
Further, no producer company shall make directly or indirectly to any political part y or for any political purpose to any person any contribution or subscription or make available any facilities including personnel or material.
(e) General and other reserves (Section 581ZI): Every producer company shall maintain a general reserve in every financial year, in addition to any reserve maintained by it as may be specified in articles.
In a case where the producer company does not have sufficient funds in any financial year for transfer to maintain the reserves as may be specified in articles, the contribution to the reserve shall be shared amongst the member in proportion to their patronage in the business of that company in that year.
(f) Issue of bonus shares (Section 581ZJ): Any producer company may, upon recommendation of the Board and passing of resolution in the general meeting, issue bonus shares by capitalisation of amounts from general reserves referred to in Section 581ZI in proportion to the shares held by the member on the date of the issue of such shares.
(g) Loan, etc., to member (Section 581ZK): The Board may, subject to the provisions made in articles, provide financial assistance to the members of the producer company by way of—
(i) credit facility, to any member, in connection with the business of the Producer Company, for a period not exceeding six months;
(ii) loans and advances, against security specified in articles to any member, repayable within a period exceeding three months but not exceeding seven years from the date of disbursement of such loan or advances.
However, any loan or advance to any director or his relative shall be granted only after the approval by the members in general meeting.
(h) Investment in other companies, formation of subsidiaries, etc. (Section 581ZL) : The producer company has to follow the following provisions under this section.
(1) The general reserves of any producer company shall be invested to secure the highest returns available from approved securities, fixed deposits, units, bonds issued by the Government or co-operative or scheduled bank or in such other mode as may be prescribed.
(2) Any producer company may, for promotion of its objectives acquire the shares of another producer company.
(3) Any producer company may subscribe to the share capital of, or enter into any agreement or other arrangement, whether by way of formation of its subsidiary company, joint venture or in any other manner with any body corporate, for the purpose of promoting the objects of the producer company by special resolution in this behalf.
(4) Any producer company, either by itself or together with its subsidiaries, may inv est, by way of subscription, purchase or otherwise, shares in any other company, other than a producer company, specified under sub-section (2), or subscription of capital under subsection
(3), for an amount not exceeding thirty per cent of the aggregate of its paid-up capital and free reserves:
Provided that a producer company may, by special resolution passed in its general meeting and with prior approval of the Central Government, invest in excess of the limits specified in this section.
(5) All investments by a producer company may be made if such investment are consistent with the objects of the producer company.
(6) The Board of a producer company may, with the previous approval of members by a special resolution, dispose of any of its investments referred to in sub-sections (3) and (4).
(7) Every producer company shall maintain a register containing particulars of all the investments, showing the names of the companies in which shares have been acquired, number and value of shares; the date of acquisition; and the manner and price at which any of the shares have been subsequently disposed of.
(8) The register referred to in sub-section (7) shall be kept at the registered office of the producer company and the same shall be open to inspection by any member who may take extracts there from.