Objects and Formation of A Producer Company :
Producer company means a body corporate having objects or activities specified in Section 581B and registered as a producer company under the Companies Act, 1956.
Every producer company should deal basically with the produce of its active member for carrying out any of its objects. The objects of the producer company, as per section 581B, may be relating to all or any of the following matters, namely:
(i) production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of primary produce of the members or import of goods or services for their benefit:
Provided that the producer company may at its option carry on any of the activities specified in this clause either by itself or through other institution;
(ii) processing including preserving, drying, distilling, brewing, vinting, canning and packaging of produce of its member;
(iii) manufacture, sale or supply of machinery, equipment or consumables mainly to its members;
(iv) providing education on the mutual assistance principles to its members and others;
(v) rendering technical services, consultancy services, training, research and development and all other activities for the promotion of the interests of its members ;
(vi) generation, transmission and distribution of power, revitalisation of land and water resources, their use, conservation and communication relatable to primary produce;
(vii) insurance of producers or their primary produce;
(viii) promoting techniques of mutuality and mutual assistance;
(ix) welfare measures or facilities for the benefit of members as may be decided by the Board;
(x) any other activity, ancillary or incidental to any of the activities referred to in clauses (i) to
(ix) or other activities which may promote the principles of mutuality and mutual assistance amongst the members in any other manner;
(xi) financing of procurement, processing, marketing or other activities specified in clauses (i) to (x) which include extending of credit facilities or any other financial services to its members.
(a) Formation and Registration: The formalities relating to registration of a producer company are similar as applicable for all companies. However, for registration of a producer company, the requirements of Part-IXA should also be complied with. [Section 581C].
A producer company can be formed by any ten or more individuals, each of them being a producer, or any two or more producer institutions, or a combination of ten or more individuals and producer institutions, desirous of forming a producer company having its objects specified in section 581B and otherwise complying with the requirements and provisions of this Act in respect of registration, may form Producer Company under this Act.
If the Registrar of Companies is satisfied that all the requirements of this Act have been complied with in respect of registration and matters precedent and incidental thereto, he shall, within thirty days of the receipt of the documents required for registration, register the memorandum, the articles and other documents, if any, and issue a certificate of incorporation under this Act.
After incorporation, producer company so formed shall have the liability of its members limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them and be termed as company limited by shares.
It also becomes a body corporate as if it is a private limited company to which the provisions contained in this Part apply, without, however, any limit to the number of members thereof, and the producer company shall not, under any circumstance, whatsoever, become or be deemed to become a public limited company under this Act.
The producer company may reimburse to its promoters all other direct costs associated with the promotion and registration of the company including registration, legal fees, printing of a memorandum and articles and the payment thereof shall be subject to the approval at its first general meeting of the members.
The producer company should also be required to submit (a) memorandum and (b) its articles duly signed by the subscribers to the memorandum, to the Registrar of the State in which the registered office of the company is to situate [Section 581G(1)].
(b) Effect of incorporation of producer company (Section 581K): Every shareholder of the inter-state co-operative society immediately before the date of registration of producer company (hereafter referred to as the transformation date) shall be deemed to be registered on and from that date as a shareholder of the producer company to the extent of the face value of the shares held by such shareholder.
(c) Membership and voting rights of members (Section 581D): A person, who has any business interest which is not in conflict with business of the producer company, shall become a member. On the other hand, a member, who acquires any business interest which is in conflict with the business of the producer company, shall cease to be a member and be removed as a member in accordance with articles of the producer company.
The articles of any producer company may provide for the conditions, subject to which a member may continue to retain his membership, and the manner in which voting rights shall be exercised by the members.
These voting’s rights are:
(i) In a case where the members consist solely of individual members, the voting rights shall be based on a single vote for every member, irrespective of his shareholding or patronage of the producer company.
(ii) In a case where the member consists of producer institutions only, the voting rights of such Producer institutions shall be determined on the basis of their participation in the business of the producer company in the previous year, as may be specified by articles.
Provided that during the first year of registration of a producer company, the voting rights shall be determined on the basis of the shareholding by such Producer institutions.
(iii) In a case where the members consist of individuals and producer institutions, the voting rights shall be computed on the basis of a single vote for every member.
However, a producer company may, if so authorised by its articles, restrict the voting rights to active members, in any special or general meeting.
(d) Benefits to member (Section 581E): The member of the producer company may get benefited in the following ways:
(1) Every member of producer company, subject to provisions made in the articles, shall initially receive only such value for the produce or products pooled and supplied, as the Board of producer company may determine, and the withheld price may be disbursed later in cash or in kind or by allotment of equity shares, in proportion to the produce supplied to the producer company during the financial year to such extent and in such manner and subject to such conditions as may be decided by the Board.
(2) Every member shall, on the share capital contributed, receive only a limited return. However, every such member may be allotted bonus shares in accordance with the provisions contained in ection 581ZJ.
(3) The surplus if any, remaining after making provision for payment of limited return and reserves referred to in section 581ZI, may also be disbursed as patronage bonus, amongst the members, in proportion to their participation in the business of the producer company, either in cash or by way of allotment of equity shares, or both, as may be decided by the members at the general meeting.