How to established a producer company

Producer company and it's establishment::

We Read about the producer company in our previous blog. You can know here about the establishment of a producer company

How to establish a producer company?

Producer Company can be incorporated/registered/established by a combination of the following producers

• 10 or more producers
• 2 or more producer entities by combining the above

After company registration of the producer company under Article 581c (1), the producer company will remain a body corporate, like a private limited company, and the provisions imposed on it will also be imposed on the producer company.

A producer company can not be considered as a Public Limited Company.

Share capital-

• Shares in the producer company will remain in the form of equity share

Members' shares cannot be traded in the market but can be transferred

Suffrage-

• In producer companies, each member has the right to vote individually on the basis of equal rights.
• Only producer entities have voting rights on the basis of their participation in the producer company.
• When individual members and associations are combined, each member has the right to one vote.

Director-

It is mandatory for every producer company to have –

• Minimum five directors Maximum 15
• A full-time Chief Executive Officer to be appointed by the Board of Directors
• Which will get some special rights related to the operation of the producer company, which may be determined by the board of directors.
• If a director resigns from his post, in this case the director will be elected within 90 days from the date of resignation. The director will execute the director's office for a minimum of 1 year and a maximum of 5 years. Every director shall be eligible for reappointment. The members of the board of directors are elected by the company at its annual general meeting.
• An additional director of an expert director whose number does not exceed one-fifth of the total number of directors of the company may be appointed by the board of directors. The time limit for appointment of specialist director or additional director in the company is as per the time limit mentioned in the company's councillor difference rule.

Annual General Meeting-

• The first general meeting of the producer company should be held within 90 days from the date of incorporation/company registration.
• The time limit can be extended by the Registrar of Companies for Annual General Meeting up to a maximum of 3 months (but not for the first Annual General Meeting).
• Every year at least one Annual General Meeting is required to be organized by the producer company and there cannot be a gap of more than 15 months between two Annual General Meetings.
• It is mandatory to send the notice of the meeting to the members at least 14 days before the conduct of the annual general meeting.
• It is mandatory for every company to send the notice of the proceedings of the Annual General Meeting to the Registrar within 60 days from the date of the meeting along with the Audited Financial Statement, Profit and Loss Account, Director's Report.

Chief Executive Officer-

The Board of Directors in the Producer Company is required to appoint an Executive Officer who is different from the members of the Company.

Internal audits-

The internal audit of its accounts is done by a Chartered Accountant by the Producer Company at the time interval specified in its Article of Association.

Meetings of the Board of Directors and Business No

• It is mandatory for every producer company to have at least one meeting of the board of directors in 3 months and at least four in a year.
• It is mandatory for the Chief Executive Officer to send the notice of the meeting of the Board of Directors to the directors at least 7 days in advance and it is mandatory to record the reason for sending the notice by the Board if the notice is sent in less than 7 days.
• Working Number Quorum is one third of the total number of directors or at least 3 directors.

Reserves

• Each Producer Company maintains a simple reserve/reserve every year
• Where in any year there is not enough money to transfer to the reserves
• The above shortfall is filled by the members of the company integrating the amount in proportion to their participation.

Benefits to members

• Initially, the members of the producer company get only the value of the products and products supplied/provided by them.
• The balance value can be paid at a later date in cash or by any other means or by allotment of equity shares.
• Members of the producer company are eligible to receive bonus shares
• There is a very interesting provision under the Companies Act, which is related to providing bonus savings / dividend in proportion to the protection of the members after the annual account of the company is approved.
• The payment made to the members from the savings of the company which is on the basis of the protection provided to their company and not on the proportion of the shareholder, such payment is called bonus on the proportion of protection of the members.