Producer Company in India

Article explains How to appoint a director in producer company,  grounds a director shall vacate the office of directorship in company, provisions of board meeting of producer company, important officers required to be appointed in producer company, Applicability of annual general meeting to Producer Company, Matters to be discussed and approved in Annual general meeting,  documents to be served to members in notice of annual general meeting,  members are required to be present in annual general meeting, Forms or annual returns are required to be filed by producer company and Transfer of Shares by member of producer company.

A producer company need to have atleast five (5) directors at all times subject to maximum of fifteen directors (15). But note that after the lapse of one (1) year from incorporation, a producer company can have more that fifteen (15) directors.

1. How to appoint a director in producer company?

Ans: A producer company can appoint and reappoint a director in the Annual General meeting of company and as per Articles of association. Appointment of first directors of the company shall be made within ninety (90) days from registration of company.

A director cannot be appointed for less than one (1) year and more than five (5) year subject to as provisions of Articles of Association.

2. What are various grounds a director shall vacate the office of directorship in company?

Ans: The office of director shall become vacant if any of the below given falls in:-

(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 taken from 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.

3. What are various provisions of board meeting?

Ans: A producer company is also required to hold board meeting as it also has board. They shall be held not less than once in every three months and at least four such meetings shall be held in every year.

4. What are other important officers are required to be appointed in producer company?

Ans: A producer company is under mandatory obligation to appoint Chief Financial Officer, apart from Board of directors. The Chief Executive shall be ex officio director of the Board and such director shall not retire by rotation.

5. Do producer company required to convene annual general meeting?

Ans: Yes, very much. Even producer company is not excepted from the requirement to convene annual general meeting.

The first Annual general meeting should be convened within ninety (90) days from the date of its incorporation and all the subsequent Annual general meeting should be convened in every financial year and not more than period of fifteen (15) months shall exceed between two annual general meeting.

The notice of Annual general meeting should be given atleast fourteen (14) days before annual general meeting in writing and should be convened at registered office of the company or at any other place within city, town or village of registered office state and during business hours.

6. Can producer company convene extra ordinary general meeting?

Ans: Yes, as in fact the provisions for convening an extra ordinary general meeting are governed under section 169 to 186 of the Companies Act, 1956.

7. What are matters which are discussed and approved in Annual general meeting?

Ans: The following matters are required to be transacted at annual general meeting of a producer company:-

(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.

8. What are documents to be served to members in notice of annual general meeting?

Ans: (a) the agenda of the annual general meeting ;

(b) the minutes of the previous annual general meeting or the extraordinary general meeting ;

(c) the names of candidates for election, if any, to the office of director including a statement of qualifications in respect of each candidate;

(d) the audited balance-sheet and profit and loss accounts of the Producer Company and its subsidiary, if any, together with a report of the Board of directors of such Company with respect to – (i) the state of affairs of the Producer Company ; (ii) the amount proposed to be carried to reserve ; (iii) the amount to be paid as limited return on share capital ; (iv) the amount proposed to be disbursed as patronage bonus ; (v) the material changes and commitments, if any, affecting the financial position of the Producer Company and its subsidiary, which have occurred in between the date of the annual accounts of the Producer Company to which the balance sheet relates and the date of the report of the Board ; (vi) any other matter of importance relating to energy conservation, environmental protection, expenditure or earnings in foreign exchanges ; (vii) any other matter which is required to be, or may be, specified by the Board ;

(e) the text of the draft resolution for appointment of auditors ;

(f) the text of any draft resolution proposing amendment to the memorandum or articles to be considered at the general meeting, along with the recommendations of the Board.

9. How many members are required to be present in annual general meeting?

Ans: The minimum number of members required to attend annual general meeting to successfully convene meeting is, one fourth of the total members of the company. This limit can be increased through Articles of association of the company but cannot be reduced under any circumstance.

10. What are forms or annual returns are required to be filed by producer company?

Ans: The proceedings of proceeding of annual general meeting should be filed within sixty (60) days from the date of annual general meeting in that particular financial year.

11. Can a member of producer company, transfer its shares?

Ans: Yes, but it can only be transferred to an active member and not an outsider. And in case of death or any kind of in-ability of any member, shares will be transferred to nominee of that member, who again should be producer.

Disclaimer:– The above article is brief article on regulation of producer company which is still governed under the Companies Act, 1956 as stated under section 465 of the Companies Act, 2013 . The author shall not liable for any direct, indirect, special or incidental damage resulting from, arising out of or in connection with the use of the information. Though all the major provisions are covered in this article.

(The Author is Corporate Consultant and provides varied array of services including Start-ups, Secretarial, Legal, Trademark, taxation, Audit, GST, Book keeping and other ancillary advisory service in Delhi, Chandigarh as well as The National Capital Region (NCR) and can be contacted through email id:- triptishakyacs2017@gmail.com and Contact Number: 91-8178515005)