This article has been written by Ishika rawat , a student studying LLB from Asian law college , Noida. The author is 1st year law student.

INTRODUCTION

The part  9A of the companies act 1956 define the ‘producer company’. To understand how producer company really work , we need to first understand the concept of producer company . Producer means any person engaged in any activity connected with or relatable to any primary produce . So producer company means a body corporate having objects or activities specified in section 581(B) and registered as producer company under this act .

OBJECTS OF PRODUCER COMPANY 

Section 581(B) of the companies act 1956 provide with the various objects of the producer company which are as follows :-

1{A} 

1}Production	2}Harvesting	3}procurement	4}Grading	5}Pooling	6}Handling	7}marketing
8}Selling	9}Export of primary produce of the members or import of goods or service for their benefit .

 

{B} processing include :- 1) preserving 

1. drying 
2. Distilling 
3. Brewing 
4. Vinting 
5. Canning 
6. Packaging 

Of produce of its members .

{C} manufacture , sale or supply of machinery , equipment or consumables mainly to its members .

 

{D} providing education on the mutual assistance principles to its members and others 

 

{E} rendering :- 1] technical services 

1. consultancy services 
2. Training 
3. Research and development
4. All other activities for promotion of the interests of its members 

 

{F} generation , transmission and distribution of power , revitalisation of land and water resources , their use conservation and communication  relatable to primary produce 

 

{G} insurance of producers or their primary produce .

 

{H} promoting techniques of mutuality and mutual assistance 

 

{I} welfare measures or facilities for the benefits of members which is decided by the members .

 

{J} any other activity , ancillary or incidental to any of the activities referred to in clause (a) to (I) or other activity which promote the principles of mutuality and mutual assistance among the members .

Producer company primarily deals with the produce of the active members .

FORMATION 

The formation of producer company is given in the  section 581C of the companies act 1956 :-

1. Any ten or more individuals who can be either :-
2. each and every person is a producer or two or more producer institution 
3. Combination of ten or more individual and producer institution 
4. Have desire of forming the producer company 
5. Objects given in 581B of the companies act 1956 

If the registrar is sufficiently satisfied with all the requirement of registration of the company , then he must within 30 days of the receipts of the document register the memorandum and issue the certificate of incorporation .

A producer company bear the liability of the members to its memorandum in respect of any shares unpaid and would be termed as company limited shares .

The producer company may reimburse all the direct costs of its promoters which are associated with the registration and incorporation of the company .

On registration under sub section (1), the producer company shall become a body corporate as if it is private limited company to which the provision contained in this part apply , without however any limit to the number of members thereof and the producer company shall not under any circumstances , whatsoever become or be deemed to become a public limited company . 

MEMBERSHIP AND VOTING RIGHTS 

 The membership and the voting rights of the member of the producer company are given under section 581D of the companies act 1956 :-

1. A.  In the case of the membership of the single members , the voting rights is based on the single vote .
2. In the case of the membership of the producer institutions only , the voting rights is based on their participation in the business in the previous year .
3. In the case of the membership of the individual and producer institution , the voting rights is based on the single vote . 
4. A. The articles of the producer company help in telling its member about the process of retaining its membership and how voting rights shall be exercised .
5. Except the sub section (7) or sub section (2) , any producer company can restrict the rights of the active member in any special or general meeting .
6. No person shall become member of the producer company , if that person has the interest which are against the interest of the producer company . 
7. If a person is the member of the producer company and has business interest against the producer company , then such person would be ceased to be member and hence removed from his office .

BENEFITS OF THE MEMBERS 

Section 581E of the companies act 1956 provides us with the benefits which the members of the producer company hold such as :-

1. Every member of the producer company will receive only such value of their produce or products pooled and supplied which may be in the form of the cash , kind or by allotment of equity share .
2. Every members on the share capital contributed receive only a limited return :- it allot bonus shares .
3. The surplus if any remaining after making provision for payment of limited return and reserves referred to in section 581ZI may be disbursed as patronage bonus , among 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 , both as may be decided by the member at the general meeting .

MEMORANDUM OF PRODUCER COMPANY 

Section 581F of the companies act 1956 deal with the memorandum of the producer company :-

1. The name “producer company limited” shall be written at the end of the company name .
2. The state in which registered office of the producer company situate .
3. The main objects of the producer company shall be one of the objects specified in section 581B.
4. The names and addresses of the persons who have subscribed to the memorandum .
5. The amount of share capital which producer company is to be registered and division into share of a fixed amount .
6. The name , addresses and occupation of the subscribers being producers who shall act as a first director .
7. The liability of the members is limited .
8. Number of the shares which they hold are written in the opposite of the name subscribers 
9. In case of the objects of the producer company are not confined to one state , the states to whose territories the object extend. 

DONATIONS OR SUBSCRIPTION BY THE PRODUCER COMPANY 

 

1. Section 581ZH of the companies act 1956 covers the ambit of the donations or subscription by the producer company .
2. The producer company shall by special resolution provide to do donations or subscription to any institution or individuals :-
3. Promoting the social and economic welfare of producer members or producers or general public.
4.  Promoting the mutual assistance .

GENERAL AND OTHER RESERVES 

Section 581ZI of the companies act 1956 provides with the general and other reserves of the producer company :-

1} Every producer company shall have general reserves in every financial year along with other reserves .

2} In case of the producer company fails to make the reserves in financial year , then it would be done under the contribution to the reserves shall be shared among the members in proportion to their patronage in the business of that company in that year .

BIBLIOGRAPHY 

1}  The companies act 2013

2}  Company law and practice by Dr. G.K. Kapoor and Dr. Sanjay Dhamija

3} company law by Avtaar Singh

4} The companies act 1956 

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