LaveenMehra

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Certificate course IN CO-OPERATIVE SECTOR
PRODUCERS COMPANY
CA. Ramesh S. Prabhu 13/12/2015, Committee for
co-op npo sector OF ICAI .
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A Producer Company

1. 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

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Section 465 of the Companies Act, 2013
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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

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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

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Primary Produce

• Produce of farmers, arising from agriculture
  (including animal 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 by-products 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

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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 (102).

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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

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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.

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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.

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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.

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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.

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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

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Dispute Resolution

• Disputes are settled by conciliation or
  arbitration under the Arbitration and
  Conciliation Act, 1996

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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

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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.

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Co-op Enterprises Co-op Stakeholders
Let us be Partner in Nation Building
CA.Ramesh S. Prabhu, FCA, CISA(USA)
O9820106766/ rsprabhu13_at_gmail.com
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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
• EMAILrsprabhu13_at_gmail.com
• Chairman
• Maharashtra Societies Welfare Association, member
  of Task Force for NPOS Co-ops 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.