This document discusses the management and administration provisions for producer companies under the Companies Act in India. It outlines requirements for directors such as minimum numbers, appointment terms, and causes for vacating a director position. It also covers provisions for meetings like the frequency of board meetings and matters to be addressed at annual general meetings. Additionally, it summarizes rules for accounts, audits, the powers of the board, and penalties for non-compliance.

1. Producer Company
Management & Administration

2. Introduction
▪ Producer company is corporate structure where group of farmers comes together to act as member of the
company to carry agricultural business on self-help basis with an intention to earn profit and provide help to
each member of its company through democratic management.
▪ These are incorporated to promote cultivation, harvesting, pooling, handling marketing of primary produce
and endeavour for export and import of agriculture produce.
▪ Part IX A of the Companies Act, 1956 states provisions of Producers Companies which is subsisting as in
Companies Act, 2013 till the time government does not enact special law for producer companies.
▪ In this article we will discuss about management and administration of Producer Company.
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3. Overview
Management and administration are very wider term that includes various aspects which are mentioned in bullets
which we will describe in brief.
▪ Provisions related to Directors
▪ Provisions related to Meetings
▪ Provisions related to Finance & Audit
▪ Provisions related to power of board
▪ Miscellaneous Provisions
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4. 4
Provision related to Directors
Minimum 5 Directors
Minimum 15 Directors
Appointment of Directors [Section 581 P ]
• Subscribers to MOA or provision of AOA may designate Directors
until directors are elected as below
• Election within 90 days of incorporation
• Term: Minimum 1 year to Maximum 5 years
• Retiring Director will be eligible for reappointment as per AOA
• Board may appoint: Additional/Expert Director not exceeding 1/5 of
total directors.
• AOA will govern provisions for Expert Director
Vacation by Director [Section 581Q]
The office of the director of a Company shall become vacant if:
• He is convicted by court & sentenced to imprisonment not less than
6 months
• If such director is also director in any other Producer company,
which defaulted in re-payment of loans/advances for 90 days.
• If such director has defaulted in re-payment of loans/advances.
• If company has not completed annual filing for any 3 continuous FY
OR failed to repay deposit for one year or more.
• Default in holding election of directors and AGM/EGM
Liability of Directors [Section 581 T ]
• Liable to make good any loss incurred due to contravention of any
provision of the Act, on which director voted through resolution.
• Company can recover:
• Profit that director made from such contravention
• Amount equal to loss made from such contravention
Committee of Directors [Section 581 U ]
• Board may constitute to delegate its work to committee.
• Committee can decide its number of members with approval of the
Board
• Committee shall work under the control of the Board
• Fees, allowances of committee members will be decided by the
Board
• Minutes of committee meeting will be placed in the Board Meeting

5. 5
Provision related to Meetings
Board Meeting [581 V]
• Frequency: One Meeting in each quarter and at least
4 meetings in a Year
• Notice: To be given to every director in writing 7 days
prior to date of meeting
• Shorter Notice: Allowed and reason thereof to be
recorded in writing
• Fees: As decided by members of the Company at
general meeting
General Meeting [581S]
First AGM: within 90 days of Incorporation
Subsequent AGM: Each year with maximum gap of 15 months
in two AGM
Notice: Not less than 14 days
Quorum: 1/4 of total members
Business:
• Approval of budget and adoption of annual accounts of the
Producer Company;
• Approval of patronage bonus;
• Issue of bonus shares;
• Specify the conditions and limits of loans that may be given
by the Board to any director;
• Approval of any transaction of the nature as is to be
reserved in the articles for approval by the members.

6. 6
Provision related to Accounts and Audit
[Section: 581ZE, ZF, ZI]
Every Company shall have internal audit of its accounts carried out, at such interval and in such manner as may be specified in
articles
Every Producer Company shall keep at its registered office proper books of account with respect to: Income Expenditure, Profit &
Loss. Balance Sheet, accounts for production activity
Every Producer Company shall maintain a general reserve in every financial year, in addition to any reserve maintained by it as
may be specified in articles.
In a case where the Producer Company does not have sufficient funds in any financial year for transfer to maintain the reserves
as may be specified in articles, the contribution to the reserve shall be shared amongst the Members in proportion to their
patronage in the business of that company in that year.

7. 7
Power of Board
[Section: 581R]
Determination of the dividend payable
Admission of new Members
Appointment of a CEO and other officers
Acquisition or disposal of property in ordinary course
of business
Investment of the funds of the Company in ordinary
course of business
Sanction any loan or advance in ordinary course of
business
Pursue and formulate the organisational policy,
objectives
Exercise superintendence and control over CEO and
other officers
Cause proper books of account to be maintained
Prepare annual accounts to be placed before the
AGM

8. 8
Miscellaneous Provisions
• Strike Off of Company [Section 581 ZP]:
If Company fails to commence business within 1 year of its registration or cease to transact business.
If registrar is satisfied after making enquiry that Company is not carrying any object.
Then Registrar can order to strike off such company
Registrar can also remove name of Company on its own if he is satisfied that Company is not maintaining any
of the mutual assistance principles
• Application of provisions relating to private companies [Section 581 ZR]:
All the limitations, restrictions and provisions of this Act, other than those specified in this Part, applicable to a
private company, shall, as far as may be, apply to a Producer Company, as if it is a private limited company
under this Act insofar as they are not in conflict with the provisions of this Part

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Miscellaneous Provisions
• Amalgamation, Merger Or Division [Section 581 ZN]
A Producer Company may, by a resolution passed at its general meeting,
Decide to transfer its assets and liabilities, to any other Producer Company, which agrees to such transfer by a
resolution passed at its general meeting;
Divide itself into two or more new Producer Companies.
• Penalty for Contravention [Section 581 ZM]
If any company/person carries object of Producer Company without registering as Producer: Rs. 10,000 per
day
If any director wilfully does not provide any requisite information to members: Fine of 5% of turnover
Imprisonment of 6 month
If director or Company fails to convene AGM: Fine Rs. 1 Lakh

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