CERTIFICATE COURSE
IN CO-OPERATIVE SECTOR
CA. RAMESH S. PRABHU
13/12/2015,
COMMITTEE FOR CO-OP &NPO SECTOR OF ICAI .
A Producer Company
A producer company is a hybrid between a private limited
company and a cooperative society.
2. It combines the goodness of a cooperative enterprise and
the vibrancy and efficiency of a company.
3. It accommodates the unique elements of cooperative
business with a regulatory framework similar to that of a
private limited company
1.
2
Section 465 of the Companies Act,
2013
1
2
3
• The Companies Act, 1956 and the Registration of
Companies (Sikkim) Act,1961 (hereafter in this section
referred to as the repealed enactments) shall stand
repealed
• The provisions of Part IX A of the Companies Act,
1956 shall be applicable mutatis mutandis to a
Producer Company in a manner as if the Companies
Act, 1956 has not been repealed until a special Act is
enacted for Producer Companies ( 1st Proviso to
Section 465(1))
Concept of Producer Company Introduced
• Introduced in 2002 by incorporating a new Part IXA (section
581A to 581ZT) into the Companies Act,1956
• Based on recommendations given by expert committee led
by economist,Y. K. Alagh
4
Meaning of Producer Company
A producer company is basically a body corporate registered as Producer Company under
Companies Act, 1956 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;
5
Primary Produce
• Produce of farmers, arising from agriculture (including animal
•
•
•
•
6
husbandry, horticulture, floriculture, pisciculture, viticulture, forestry,
forest products, re-vegetation, bee raising and farming plantation
products), or from any other primary activity or service which
promotes the interest of the farmers or consumers ; or
Produce of persons engaged in handloom, handicraft and other cottage
industries ;
Any product resulting from any of the above activities, including byproducts of such products ;
Any product resulting from an ancillary activity that would assist or
promote any of the aforesaid activities or anything ancillary thereto
Any activity which is intended to increase the production of anything
referred to above to improve the quality thereof
Incorporation
Any one of the following combination of producers can
incorporate a producer company:
• 10 or more producers (individuals); or
• 2 or more producer institutions; or
• Combination of the above two (10+2).
7
Registration of Producer Company
• Only persons engaged in an activity connected with, or
related to, primary produce can participate in the ownership
• The members have necessarily to be primary producers.
• Termed as “Companies with Limited Liability” and the
liability of the members will be limited to the amount, if any,
unpaid on the shares.
• Name of the company shall end with the words "Producer
Company Limited“
8
On Registration of a Producer Company
 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
 However it shall comply with the specific provisions of Part
IXA
 The maximum number of members is not applicable to these
companies.
9
Share Capital
 Share capital of a Producer Company shall consist of equity
shares only
 Members' equity cannot be publicly traded but only
transferred
 Voting
 Individuals - single vote for every member
 Institution - basis of their participation
 Combination - single vote for every member.
10
Management
 Every producer company is to have
 At least 5 and not more than 15 directors.
 A full time chief executive should be appointed by the board
and
 Shall be entrusted with substantial powers of management as
the board may determine.
11
Reserves
 Every producer company has to maintain a general
reserve in every financial year
 Where there is no sufficient funds in any year for such
transfer,
 The shortfall has to be made up by members' contribution in
proportion to their patronage in the business.
12
Members’ Benefit
• Eligible to receive bonus shares
• Receive only such value for the produce or products pooled
and supplied as the directors may determine
• Provision is for the distribution of patronage bonus (akin to
dividend) after the annual accounts are approved
• Patronage bonus means payment out of surplus income to
members in proportion to their respective patronage
13
Dispute Resolution
 Disputes are settled by conciliation or arbitration under the
Arbitration and Conciliation Act, 1996
14
Audit
 Producer Companies shall carry out an internal audit of its
accounts, at regular intervals in accordance with its articles
of association and such an audit shall be carried on by a
Chartered Accountant.
 The auditor shall make an annual audit report to the
members of the company on the accounts examined by him
15
Examples of Producer Companies in
India
 Karnavati Producer Company Limited in Madhya Pradesh
 Vanilla India Producer Company Ltd (VANILCO) has been
promoted by Kerala based Indian Farmers Movement
(Infarm)
 The Indian Organic Farmer Producer Company Limited is an
Aluva company of farmers producing organic products.
16
Co-op Enterprises & Co-op Stakeholders
Let us be Partner in Nation Building
CA.Ramesh S. Prabhu, FCA, CISA(USA)
O9820106766/ rsprabhu13@gmail.com
What is all this empowering us to do? Innovate, Get
involved & Solve social problems for financial
inclusion and better India through Co-ops!
Thank you for Getting
involved in the discussion!
CA RAMESH PRABHU ,
– 09820106766
EMAIL:rsprabhu13@gmail.com
CHAIRMAN
MAHARASHTRA SOCIETIES WELFARE ASSOCIATION, MEMBER OF TASK FORCE FOR NPOS & COOPS OF MAHARASHTRA, CONVENER TO PREPARE GUIDANCE NOTE ON AUDIT OF DISTRICT AND STATE
CO-OP BANKS –PUBLISHED BY PDC OF ICAI, CO-OPTED MEMBER OF CO-OP COMMITTEE
(MAHARASHTRA) OF WIRC OF ICAI.