Annual Compliance

A Detail Concept of the Annual Compliance of A Producer Company

Online Legal India LogoBy Online Legal India Published On 17 Nov 2022 Updated On 14 Dec 2022 Category Compliance

In 2002, the Producer Company idea was introduced. The provisions of the Companies Act 1956 govern Producer Companies. Section 465(1) of the Companies Act 2013 states that the provisions of the Companies Act 1956 apply mutatis mutandis to a Producer Company.

Producer Companies are legal entities that must be registered as Producer Companies under the Companies Act of 1956. Section 581B requires the Company to have objectives or activities. Certain purposes listed in the Act Producer Companies can be included, such as production, harvesting, promoting mutuality approaches, and so on.

Features of Producer Company

The attributes or basic features of a Producer Company are as follows:

  • A Producer Company is regarded in the same way as a Private Limited Company.
  • These corporations are restricted by share capital, and their members benefit from limited liability.
  • A company's membership can have a maximum of 50 people.
  • A producer company cannot become a public (or regarded public) limited company, nor can it be combined with one.

Requirements Needed To Be Fulfilled By a Producer Company

 

  • The owner must grant to someone who is involved in a primary production-related activity.
  • Members must be the main producers.
  • Producer Companies are sometimes known as "Companies with Limited Liability." Members' responsibility shall be restricted to the number of unpaid shares.
  • The company's name must finish with the words "Producer Company Limited."
  • For the purposes of applying the legislation and administering the company, this firm can be viewed as a Private Limited Company.
  • These Companies are exempt from the maximum number of members rule.

Annual Compliance of Producer Company on the following grounds

  • Each fiscal year, the Producer Company will convene an Annual General Meeting. The time between two AGMs must not exceed fifteen months.
  • The members shall accept the articles of Producer Companies & appoint the Board of Directors at the first AGM, which shall be conducted within 90 days after its establishment.

The following data must be present in the AGM notice:

  • Annual General Meeting Agenda
  • Previous Minutes of Annual or Extraordinary General Meetings
  • The names of eligible candidates.
  • The company's audited balance sheet and profit and loss statements
  • Report of the Producer Company and its subsidiary, as well as the Board of Directors
  • A proposed resolution to appoint auditors

Details Required to be Filed for the Annual Compliance of a Producer Company

Producer Company & its subsidiary company's above-audited balance statement, profit and loss accounts, and director's report should include the following:

  • The current condition of things at Producer Company.
  • The estimated amount is to be held in reserve.
  • The sum is to be paid as a restricted return on investment.
  • The amount proposed is to be distributed as a patronage bonus.
  • Any substantial changes or commitments that have had an impact on the Producer Company & its Subsidiary's financial status.
  • If any changes happened between the date of the production company's annual accounts and the date of the board report, they are listed above.
  • Energy conservation, environmental preservation, and foreign exchange expenditures or earnings
  • Any other requirements that the Board may impose.

Annual Compliance of a Producer Company

  • Annual Compliance of a Producer Company refers to certain documents that companies must complete with the Registrar of Companies once a year.
  • Annual ROC Compliance is required for all companies, regardless of size.
  • The Balance Sheet, Profit and Loss Account, and other papers must be filed with MCA by the Producer Company.
  • As a result, as a Producer Firm, you must complete the Annual Compliance Forms accurately on a regular basis to guarantee that your company maintains good legal standing. The following are the primary annual compliance requirements for a Producer Company.
  1. Each fiscal year, hold an Annual General Meeting.
  2. Examine the Producer Company's balance sheet and profit and loss statements.
  3. Submit a yearly return.

The Benefits of Complying with Annual Compliance for Producer Companies

 

  • Credibility and transparency: are required for the Producer Company. When a firm is consistent with Annual Compliance, it increases its trust and transparency.  
  • Active Status: Non-filing or failure to comply with the Annual Filing for Producer Company may lead to the Registrar of Companies striking out the Company's name. As a result, Annual Compliance aids in retaining active status.  
  • Assures customers and investors: Annual compliance gives the Producer Company a competitive advantage in the market. This may be used to publicise the firm and reassure investors and consumers about its operations.  
  • Avoiding Penalties: Filing the Annual Compliance on time helps the Producer Company avoid severe penalties.

Filing of Annual Return

Within two months from the last date of the Annual General Meeting, every producing Company must file the proceedings of the Annual General Meeting, along with the Director's Report, the audited Balance Sheet, and the profit and loss account, with the Registrar.

Table of the Annual Compliances of a Producer Company

Name of the concerned company 

 

Section 581F (a) : The name of the concerned company shall end with the suffix Producer Company Limited.

Total Number of the Directors

 

Section 581P : Minimum of five directors & Maximum number of directors: 15 For a period of one year beginning on the date of its establishment as a Producer Company, an inter-state co-operative society created as a Producer Company may have more than 15 directors.

Election of the Directors

 

Section 581P (2) : The procedure of electing directors must be completed within three months of the Producer Company's registration. Furthermore, the Inter-State Co-operative Society formed as a Producer Company can benefit since 365 days have been replaced for the 90-day term offered to other firms.

Additional Directors and Expert Directors

 

Section 581P (6) : Both expert directors and extra directors may be appointed, but the overall number of directors subject to the Article of Association shall not exceed one-fifth of the total number of available directors (articles of association.) Furthermore, such expert directors will not be able to vote in the election of a chairman, but they will be eligible to be elected as a Chairman.

A Private Company

 

Section 581C(5) : The Producer Company will transform into a corporate entity, similar to a private limited company, after gaining registration under Section 581 C (1), to which all of the provisions listed in this Part apply. Furthermore, this corporation cannot become or be construed to become a public limited company.

Share Capital and the transfer of shares of a Producer Company

 

Section 581ZB Section 581ZC Section 581ZD : The Producer Company will only have equity share capital. All active members may have unique privileges if the Articles provide for it. This company's shares will not be transferable. Furthermore, shares with special rights may be transferred to another active member with the Board's agreement. Each member of the producing company must designate someone within three months of becoming a member of the stated Company. Furthermore, upon the death of the member, the candidate nominated shall get all advantages and privileges. If the nominee is not a producer, the Board may demand that the nominee surrender his shares.

Modification of the Memorandum of Association and the Article of Association

 

Section 581H- MoA Section 581I- AoA : The MOA & AOA of the concerned firm can be changed after adopting a Special Resolution, but the changes must not be conflicting with the provisions listed in Section 581B. Moreover, any modifications to the Articles must be suggested by not less than two-thirds of the overall elected directors or by not less than one-third of the total Members and must be approved by special resolution. Within thirty days of adoption, a copy of the amended Memorandum of Association or Articles of Association, as well as a copy of the special resolution voted, must be filed with the Registrar.

Annual General Meeting

 

Section- 581ZA & Section 581 S & Section- 581Y : The first and foremost Annual General Meeting must be held within 90 days of the company's establishment date. The Registrar of Companies may grant an extension of time for having an Annual General Meeting (but not the first annual general meeting) for a term not exceeding three months. The Producer Company is expected to have an Annual General Meeting each year; at most, fifteen months must occur between one Annual General Meeting and the next. The AGM may only be called with at least 14 days' notice. The proceedings of each Annual General Meeting, along with the Directors' Report, the audited Balance Sheet, and the Profit and Loss Account, must be submitted to the appropriate Registrar within 60 days after the AGM. The shareholders will have certain unique rights that may only be exercised at the Annual General Meeting. These rights include budget approval, yearly account adoption, bonus share issuance, patronage bonus approval, and declaration of the limited return Regarding the choice of patronage distribution, Specify the circumstances, terms, and restrictions of any loans that the Board may make to any of the directors; and Approval of any transaction of the type specified in the articles for Member approval. Quorum: - One-quarter of the overall number of members

Meetings of the Board of Quorum

 

Section 581V : The board must assemble at least once every three months, and at least four such sessions must be held each year. The Chief Executive must offer at least seven days' notice for the board meeting. Meetings can also be convened with less notice, but the Board must document the reasons for doing so. Quorum: - One-third of the total number of Directors, subject to a minimum of three. Penalty: If the Chief Executive fails to comply with the regulations about sending the notice, he would face a maximum punishment of Rs 1000.

Chief Executive

 

Section 581W: Every production business must have a full-time Chief Executive, who the Board selects from among people other than the members.

Secretary of the Company

 

Section 581X: Every Producer Company with average annual revenue of more than Rs. 5 crores in each of the last three fiscal years must hire a full-time Company Secretary. Penalty for failing to appoint: Both the Company and each officer who is in default shall be fined Rs. 500/- for each day that the abovementioned default persists.

Internal Audi

 

Section 581ZF: Every Producer Company's accounting must be audited internally. A Chartered Accountant shall perform the same at the intervals and in the manner provided in the articles.

General Reserve and other reserves

 

Section 581ZI : In addition to the Reserves provided in the Articles, every Producer Company is expected to keep a general reserve for each year. If the company does not have sufficient cash in any fiscal year to maintain the reserves as required in the articles, the contribution to the reserve should be split among all Members in proportion to their participation in the company's related operations in that fiscal year.

Conclusion

A Producer Corporation is a company created with the intention of engaging in any activity related to or related to the primary production. A Producer Company, in other words, is a company founded with the primary goal of producing, harvesting, procuring, grading, pooling, handling, marketing, selling, and shipping of primary produce of the members, or importing commodities or services for their advantage.


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