Section 465 of the Companies Act, 2013:
All the Sections of Companies Act, 2013 has already been notified till date , except section pertaining to producer Company. The same shall be still govern by chapter IXA of Companies Act, 1956.
The Companies (Amendment) Bill, 2020 passed by Lok Sabha mentions to incorporate a new Chapter XXIA in the Companies Act, 2013 relating to Producer Companies, which was earlier part of the Companies Act, 1956;
Definition of the Producer Company:
“Producer Company” means a body corporate having objects or activities specified in section 581B and registered as Producer Company under the Companies Act, 1956.
Allowed Activities for Producer Companies:
A producer company is basically a body corporate registered as Producer Company under Companies Act, 2013 and shall carry on or relate to any of following activities classified broadly: –
(a) Production, harvesting, processing, procurement, grading, pooling, handling, marketing, selling, export of *primary produce of the Members or import of goods or services for their benefit.
(b) Rendering technical services, consultancy services, training, education, research and development and all other activities for the promotion of the interests of its Members;
(c) Generation, transmission and distribution of power, revitalization of land and water resources, their use, conservation and communications relatable to primary produce;
(d) Promoting mutual assistance, welfare measures, financial services, insurance of producers or their primary produce;
process of incorporation SPICE+
PRE- INCORPORATION:
1. Normal Conditions:
- At Least 10 Producer: Producer who will promote/ incorporate the Company. Promoters may be individual or producer institutes.
- At Least 5 Directors: Directors should be individual only.
- Generally, in most of the cases, Promoters and Directors are the same in Companies.
SPICe+ would have two parts viz.:
A. Part A – Name Approval
B. Part-B- Incorporation of Company
581-O. NUMBER OF DIRECTORS – Companies Act, 1956.
Every Producer Company shall have at least five and not more than fifteen directors :
Provided that in the case of an inter-State co-operative society incorporated as a Producer Company, such company may have more than fifteen directors for a period of one year from the date of its incorporation as a Producer Company.
581P. APPOINTMENT OF DIRECTORS
(1) Save as provided in section 581N, the Members who sign the memorandum and the articles may designate therein the Board of directors (not less than five) who shall govern the affairs of the Producer Company until the directors are elected in accordance with the provisions of this section.
(2) The election of directors shall be conducted within a period of ninety days of the registration of the Producer Company :
Provided that in the case of an inter-State co-operative society which has been registered as a Producer Company under sub-section (4) of section 581J in which at least five directors [including the directors continuing in office under sub-section (1) of section 581N] hold office as such on the date of registration of such company, the provisions of this sub-section shall have effect as if for the words “ninety days”, the words “three hundred and sixty five days” had been substituted.
(3) Every person shall hold office of a director for a period not less than one year but not exceeding five years as may be specified in the articles.
(4) Every director, who retires in accordance with the articles, shall be eligible for re-appointment as a director.
(5) Save as provided in sub-section (2), the directors of the Board shall be elected or appointed by the Members in the annual general meeting.
(6) The Board may co-opt one or more expert directors or an additional director not exceeding one-fifth of the total number of directors or appoint any other person as additional director for such period as the Board may deem fit :
Provided that the expert directors shall not have the right to vote in the election of the Chairman but shall be eligible to be elected as Chairman, if so provided by its articles :
Provided further that the maximum period, for which the expert director or the additional director holds office, shall not exceed such period as may be specified in the articles.
581Q. VACATION OF OFFICE BY DIRECTORS
(1) The office of the director of a Producer Company shall become vacant if-
(a) he is convicted by a Court of any offence involving moral turpitude and sentenced in respect thereof to imprisonment for not less than six months ;
(b) the Producer Company, in which he is a director, has made a default in repayment of any advances or loans take nfrom any company or institution or any other person and such default continues for ninety days ;
(c) he has made a default in repayment of any advances or loans taken from the Producer Company in which he is a director ;
(d) the Producer Company, in which he is a director –
(i) has not filed the annual accounts and annual return for any continuous three financial years commencing on or after the 1st day of April, 2002 ; or
(ii) has failed to, repay its deposit or withheld price or patronage bonus or interest thereon on due date, or pay dividend and such failure continues for one year or more ;
(e) default is made in holding election for the office of director, in the Producer Company in which he is a director, in accordance with the provisions of this Act and articles ;
(f) the annual general meeting or extraordinary general meeting of the Producer Company, in which he is a director, is not called in accordance with the provisions of this Act except due to natural calamity or such other reason.
(2) The provisions of sub-section (1) shall, as far as may be, apply to the director of a Producer institution which is a member of a Producer Company.
581R. POWERS AND FUNCTIONS OF BOARD
(1) Subject to the provisions of this Act and articles, the Board of directors of a Producer Company shall exercise all such powers and to do all such acts and things, as that company is authorised so to do.
(2) In particular and without prejudice to the generality of the foregoing powers, such powers may include all or any of the following matters, namely: –
(a) determination of the dividend payable ;
(b) determination of the quantum of withheld price and recommend patronage to be approved at general meeting ; (c) admission of new Members ;
(d) pursue and formulate the organisational policy, objectives, establish specific long-term and annual objectives, and approve corporate strategies and financial plans ;
(e) appointment of a Chief Executive and such other officers of the Producer Company, as may be specified in the articles ;
(f) exercise superintendence, direction and control over Chief Executive and other officers appointed by it ;
(g) cause proper books of account to be maintained ; prepare annual accounts to be placed before the annual general meeting with the auditor’s report and the replies on qualifications, if any, made by the auditors ; (h) acquisition or disposal of property of the Producer Company in its ordinary course of business ;
(i) investment of the funds of the Producer Company in the ordinary course of its business ;
(j) sanction any loan or advance, in connection with the business activities of the Producer Company to any Member, not being a director or his relative ;
(k) take such other measures or do such other acts as may be required in the discharge of its functions or exercise of its powers.
(3) All the powers specified in sub-sections (1) and (2) shall be exercised by the Board, by means of resolution passed at its meeting on behalf of the Producer Company.
Explanation. – For the removal of doubts, it is hereby declared that a director or a group of directors, who do not constitute the Board, shall not exercise any of the powers exercisable by it.
581S. MATTERS TO BE TRANSACTED AT GENERAL MEETING
(1) The Board of directors of a Producer Company shall exercise the following powers on behalf of that company, and it shall do so only by means of resolutions passed at the annual general meeting of its Members, namely : –
(a) approval of budget and adoption of annual accounts of the Producer Company ;
(b) approval of patronage bonus ;
(c) issue of bonus shares ;
(d) declaration of limited return and decision on the distribution of patronage ;
(e) specify the conditions and limits of loans that may be given by the Board to any director ; and
(f) approval of any transaction of the nature as is to be reserved in the articles for approval by the Members.
581T. LIABILITY OF DIRECTORS
(1) When the directors vote for a resolution, or approve by any other means, anything done in contravention of the provisions of this Act or any other law for the time being in force or articles, they shall be jointly and severally liable to make good any loss or damage suffered by the Producer Company.
(2) Without prejudice to the provisions contained in sub-section (1), the Producer Company shall have the right to recover from its director –
(a) where such director has made any profit as a result of the contravention specified in sub-section (1), an amount equal to the profit so made ;
(b) where the Producer Company incurred a loss or damage as a result of the contravention specified in subsection (1), an amount equal to that loss or damage ;
(3) The liability imposed under this section shall be in addition to and not in derogation of a liability imposed on a director under this Act or any other law for the time being in force.
Steps for incorporation of Company through SPICe+:
> SPICe+ Login
First Login to MCA portal
Then click on MCA services – SPICe+
Click on new application in case of New company Registration
On click of existing application the user can view application numbers along with proposed/approved name.
> Spice+ Part A :
On click of new application, SPICe+ Part A gets enabled which contains fields relating to name reservation.
User fills the details of Type, class, category, sub-category and proposed name of the company and click on auto check button, auto check performs first level automatic scrutiny of the proposed name against the name rules.
> Once Part-A is completed , user can click on:
Submit for Name Reservation or,
Proceed for Incorporation or,
Cancel
If opted for proceed for incorporation, Part-b of the web form gets enabled which will have different sections.
> SPICe+ Part B:
Each section of Part B contains ‘Save and continue button.
Check form validations will happen on each of the section.
Enter the basic details related to the company to be incorporated i.e. Registered or Correspondence Address.
Subscribers and directors details.
Details related to capital.
9/8/2020 Incorporation of Company through SPICe+ Form https://taxguru.in/company-law/incorporation-company-spice-plus-form.html 3/6 Enter the basic details for the issuance of Permanent Account Number (PAN) and Tax Deduction Account (TAN).
Upload mandatory attachments in the web form.
Confirm on the relevant declarations and click on the pre-scrutiny.
Once pre-scrutiny is successful click on submit button.
Once web form is submitted successfully, user will get a confirmation message.
User can then download Spice+ Part-B pdf from the dashboard for affixing DSCS.
Also all the relevant linked forms get enabled and available for the user to fill and submit based on the fields/parameters entered by the user in Part-B.
> AGILE –PRO:
AGILE stands for Application for Goods and Services identification numbers, employees state insurance corporation registration plus Employees provident fund organization registration. The old AGILE form (INC-35) is now replaced with the AGILE –PRO web form.
> AGILE PRO needs to be filed as linked with Spice+ for:
Registration with GSTIN.
Registration with ESIC.
Registration with EPFO.
Professional Tax Registration.
Bank account number.
> eMoA and eAoA form:
Electronic Memorandum of Association (eMoA) which is a charter of the company can be filed as a linked form to Spice+.
Electronic Articles of Association (eAoA) which provide all the regulations related to internal affairs of the company can be filed as a linked form to SPICe+.
> URC-1 INC-9 PDF generation:
In case of Part-I companies, it is mandatory to file URC-1 form containing details of existing entity.
Based on the details of subscribers and directors entered in Part B, INC-9 declaration form shall be auto populated and available in dashboard for the user to download and affix DSCs.
> Spice + Upload :
After affixing DSCs in Spice+ Part B pdf and all other linked forms, user needs to click on upload forms option.
Upload SPICe+ Part-B pdf and all relevant linked forms.
On successful upload of forms, unique service request number (SRN) gets generated and displayed to the applicant.
In case where the forms need resubmission for any errors being flagged upon processing, the SPICe+ form has to be resubmitted in the same manner.
> ATTACHMENTS required:
For SPICe+ :
Memorandum of Association.
Articles of Association.
Declaration by the first directors and subscribers (Affidavit not required) Proof of office address.
Copy of utility bills.
Copy of certificate of Incorporation of foreign body corporate (if any).
A resolution passed by Promoter Company.
The interest of first directors in other entities.
Consent of Nominee (INC-3).
Proof of identity as well as the residential address of subscribers.
Proof of identity as well as the residential address of the nominee.
Proof of identity and address of applicant I, II, III.
Resolution of unregistered companies in case of Chapter XXI (Part 1) Companies.
Declaration in Form no. INC-14.
Declaration in Form no. INC-15.
Optional attachments (if any)
For AGILE –PRO:
Proof of principle place of business.
Proof of appointment of Authorised Signatory for GSTIN (either of the documents Letter of Authorization /Copy of Resolution passed by BOD/Managing Committee and acceptance Letter).
Proof of identity of Authorised Signatory for the opening of a bank account.
Proof of address of Authorised Signatory for the opening of a bank account.
Specimen Signature of Authorised Signatory for EPFO.
Explanations:-
Signing of Memorandum and Articles.
The Memorandum and Articles of Association of the company shall be signed in the following manner, namely:-
(1) The memorandum and articles of association of the company shall be signed by each subscriber to the memorandum, who shall add his name, address, description and occupation, if any, in the presence of at least one witness who shall attest the signature and shall likewise sign and add his name, address, description and occupation, if any and the witness shall state that “I witness to subscriber/subscriber(s), who has/have subscribed and signed in my presence (date and place to be given); further I have verified his or their Identity Details (ID) for their identification and satisfied myself of his/her/their identification particulars as filled in”
(2) Where a subscriber to the memorandum is illiterate, he shall affix his thumb impression or mark which shall be described as such by the person, writing for him, who shall place the name of the subscriber against or below the mark and authenticate it by his own signature and he shall also write against the name of the subscriber, the number of shares taken by him.
Important Provisions Relating To Producer Company:
| i | The members have necessarily to be primary producers |
| ii. | Name of the company shall end with the words “Producer Company Limited”. |
| iii. | The limit of maximum number of members is not applicable to these Companies |
| iv. | On registration, the producer company shall become as if it is a Private Limited Company for the purpose of application of law and administration of the company |
| v. | Minimum No. of 10 member (individual). |
| vi. | Share capital of a Producer Company shall consist of equity shares only |
| vii. | Minimum 5 and not more than 15 directors |
| viii. | Producer Company can carry only activity prescribed under the Act. |
| ix. | Only of individuals, then voting rights shall be based on a single vote for every member. |
| x. | A full time chief executive should (CEO) be appointed by the board. |
Disclaimer:The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice. I assume no responsibility for the consequences of use of such
Author- CS Shweta Maheshwari and can be contacted at Shweta.maheshwari26@gmail.com
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