Producer Co.

Dear Swapnil,

The formation of a producer company is as same as private company except

1)  Any ten or more individuals, each of them being a producer, that is, any person engaged in any activity connected with primary produce, any two or more producer institutions, that is, producer companies or any other institution having only producers or producer companies as its members or a combination of ten or more individuals and producer institutions, can get a producer company incorporated under the Act.

2) In the Case of Producer company there is no requirement of minimum paid-up capital of 1 Lakh and also maximum number of members ca also exceed 50.

3) Every Producer company should have atleast 5 Directors and not more than 15 directors

4) A full time chief executive, by whatever name called, is to be appointed by the board. He shall be an ex-officio director and will not be liable to retire by rotation. He shall be entrusted with substantial powers of management as the board may determine. This provision differs from that applicable to limited companies — a private limited need not have any chief executive while public limited companies, only with paid-up capital exceeding Rs. 5 crores, have to have a managing director.

5) A stipulation that could dismay company secretaries is that only producer companies having an average annual turnover exceeding Rs. 5 crores in each of three consecutive years need have a whole-time secretary. It is not mentioned what would happen to the incumbent, if the turnover falls below this minimum. This is in contrast to the mandate that private and public limited companies having a paid-up capital of Rs. 2 crores or more should have a whole-time secretary.