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Insertion of new Chapter XXIA
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....irectly or through an institution of which it is a constituent; (d) "limited return" means the maximum dividend as may be specified by the articles; (e) "Member" means a person or Producer Institution (whether incorporated or not) admitted as a Member of a Producer Company and who retains the qualifications necessary for continuance as such; (f) "mutual assistance principles" means the principles set out in sub-section (2) of section 378G; (g) "officer" includes any director or Chief Executive or Secretary or any person in accordance with whose directions or instructions part or whole of the business of the Producer Company is carried on; (h) "patronage" means the use of services offered by the Producer Company to its Members by participation in its business activities; (i) "patronage bonus" means payments made by a Producer Company out of its surplus income to the Members in proportion to their respective patronage; (j) "primary produce" means - (i) produce of farmers, arising from agriculture (including animal husbandry, horticulture, floriculture, pisciculture, viticulture, forestry, forest products, re-vege....
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....cation on the mutual assistance principles to its Members and others; (e) rendering technical services, consultancy services, training, research and development and all other activities for the promotion of the interests of its Members; (f) generation, transmission and distribution of power, revitalisation of land and water resources, their use, conservation and communications relatable to primary produce; (g) insurance of producers or their primary produce; (h) promoting techniques of mutuality and mutual assistance; (i) welfare measures or facilities for the benefit of Members as may be decided by the Board; (j) any other activity, ancillary or incidental to any of the activities referred to in clauses (a) to (i) or other activities which may promote the principles of mutuality and mutual assistance amongst the Members in any other manner; (k) financing of procurement, processing, marketing or other activities specified in clauses (a) to (j) which include extending of credit facilities or any other financial services to its Members.''. (2) Every Producer Company shall deal primarily with the produce of its active M....
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....cer Company in the previous year, as may be specified by articles: Provided that during the first year of registration of a Producer Company, the voting rights shall be determined on the basis of the shareholding by such Producer Institutions. (c) In a case where the membership consists of individuals and Producer Institutions, the voting rights shall be computed on the basis of a single vote for every Member. (2) The articles of any Producer Company may provide for the conditions, subject to which a Member may continue to retain his membership, and the manner in which voting rights shall be exercised by the Members. (3) Notwithstanding anything contained in sub-section (1) or sub-section (2), any Producer Company may, if so authorised by its articles, restrict the voting rights to active Members, in any special or general meeting. (4) No person, who has any business interest which is in conflict with business of the Producer Company, shall become a Member of that Company. (5) A Member, who acquires any business interest which is in conflict with the business of the Producer Company, shall cease to be a Member of that Company and be removed as a Member in accordan....
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.... There shall be presented, for registration to the Registrar of the State to which the registered office of the Producer Company is, stated by the memorandum of association, to be situate- (a) memorandum of the Producer Company; (b) its articles duly signed by the subscribers to the memorandum. (2) The articles shall contain the following mutual assistance principles, namely:- (a) the membership shall be voluntary and available, to all eligible persons who, can participate or avail of the facilities or services of the Producer Company, and are willing to accept the duties of membership; (b) each Member shall, save as otherwise provided in this Chapter, have only a single vote irrespective of the shareholding; (c) the Producer Company shall be administered by a Board consisting of persons elected or appointed as directors in the manner consistent with the provisions of this Chapter and the Board shall be accountable to the Members; (d) particulars on limited return on share capital; (e) the surplus arising out of the operations of the Producer Company shall be distributed in an equitable manner by- (i) provid....
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....s shares out of general reserves as set out in section 378ZJ; (i) the basis and manner of allotment of equity shares of the Producer Company in lieu of the whole or part of the sale proceeds of produce or products supplied by the Members; (j) the amount of reserves, sources from which funds may be raised, limitation on raising of funds, restriction on the use of such funds and the extent of debt that may be contracted and the conditions thereof; (k) the credit, loans or advances which may be granted to a Member and the conditions for the grant of the same; (l) the right of any Member to obtain information relating to general business of the company; (m) the basis and manner of distribution and disposal of funds available after meeting liabilities in the event of dissolution or liquidation of the Producer Company; (n) the authorisation for division, amalgamation, merger, creation of subsidiaries and the entering into joint ventures and other matters connected therewith; (o) laying of the memorandum and articles of the Producer Company before a special general meeting to be held within ninety days of its registratio....
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....pecial resolution, of not less than two-thirds of total members of inter-State co-operative society, for its incorporation as a Producer Company under this Act; (b) a statement showing- (i) names and addresses or the occupation of the directors and the Chief Executive, if any, by whatever name called, of such co-operative; and (ii) list of members of such inter-State co-operative society; (c) a statement indicating that the inter-State co-operative society is engaged in any one or more of the objects specified in section 378B; (d) a declaration by two or more directors of the inter-State co-operative society certifying that particulars given in clauses (a) to (c) are correct. (3) When an inter-State co-operative society is registered as a Producer Company, the words "Producer Company Limited" shall form part of its name with any word or expression to show its identity preceding it. (4) On compliance with the requirements of sub-sections (1) to (3), the Registrar shall, within a period of thirty days of the receipt of application, certify under his hand that the inter-State co-operative society applying for registration is registere....
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.... liabilities, interests, privileges and obligations of, the Producer Company. (3) Without prejudice to the provisions contained in sub-section (2), all debts, liabilities and obligations incurred, all contracts entered into and all matters and things engaged to be done by, with or for, the society as on the date of transformation for or in connection with their purposes, shall be deemed to have been incurred, entered into, or engaged to be done by, with or for, the Producer Company. (4) All sums of money due to the inter-State co-operative society immediately before the date of transformation, shall be deemed to be due to the Producer Company. (5) Every organisation, which was being managed immediately before the date of transformation by the inter-State co-operative society shall be managed by the Producer Company for such period, to such extent and in such manner as the circumstances may require. (6) Every organisation which was getting financial, managerial or technical assistance from the inter-State co-operative society, immediately before the date of transformation, may continue to be given financial, managerial or technical assistance, as the case may be, by the ....
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....ion with the inter-State co-operative society which has vested in the Producer Company by virtue of this Act, become, as from the date of transformation, an officer or, as the case may be, other employee of the Producer Company and shall hold his office or service therein by the same tenure, at the same remuneration, upon the same terms and conditions, with the same obligations and with the same rights and privileges as to leave, leave travel concession, welfare scheme, medical benefit scheme, insurance, provident fund, other funds, retirement, voluntary retirement, gratuity and other benefits as he would have held under the erstwhile inter-State co-operative society if its undertaking had not vested in the Producer Company and shall continue to do so as an officer or, as the case may be, other employee of the Producer Company. (3) Where an officer or other employee of the inter-State co-operative society opts under sub-section (2) not to be in employment or service of the Producer Company, such officer or other employee shall be deemed to have resigned. (4) Notwithstanding anything contained in the Industrial Disputes Act, 1947 (14 of 1947) or in any other law for the time b....
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....ce with the provisions of this section. (2) The election of directors shall be conducted within a period of ninety days of the registration of the Producer Company: Provided that in the case of an inter-State co-operative society which has been registered as a Producer Company under sub-section (4) of section 378J in which at least five directors [including the directors continuing in office under sub-section (1) of section 378N] hold office as such on the date of registration of such company, the provisions of this sub-section shall have effect as if for the words "ninety days", the words "three hundred and sixty-five days" had been substituted. (3) Every person shall hold office of a director for a period not less than one year but not exceeding five years as may be specified in the articles. (4) Every director, who retires in accordance with the articles, shall be eligible for re-appointment as a director. (5) Save as otherwise provided in sub-section (2), the directors of the Board shall be elected or appointed by the Members in the annual general meeting. (6) The Board may co-opt one or more expert directors or an additional director not exceeding one-fifth o....
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....such powers may include all or any of the following matters, namely:- (a) determination of the dividend payable; (b) determination of the quantum of withheld price and recommend patronage to be approved at general meeting; (c) admission of new Members; (d) pursue and formulate the organisational policy, objectives, establish specific long-term and annual objectives, and approve corporate strategies and financial plans; (e) appointment of a Chief Executive and such other officers of the Producer Company, as may be specified in the articles; (f) exercise superintendence, direction and control over Chief Executive and other officers appointed by it; (g) cause proper books of account to be maintained; prepare annual accounts to be placed before the annual general meeting with the report of the auditor and the replies on qualifications, if any, made by the auditors; (h) acquisition or disposal of property of the Producer Company in its ordinary course of business; (i) investment of the funds of the Producer Company in the ordinary course of its business; (j) sanction any loan or advance, in connect....
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....ectors. 378U. (1) The Board may constitute such number of committees as it may deem fit for the purpose of assisting the Board in the efficient discharge of its functions: Provided that the Board shall not delegate any of its powers or assign the powers of the Chief Executive, to any committee. (2) A committee constituted under sub-section (1) may, with the approval of the Board, co-opt such number of persons as it deems fit as members of the committee: Provided that the Chief Executive appointed under section 378W or a director of the Producer Company shall be a member of such committee. (3) Every such committee shall function under the general superintendence, direction and control of the Board, for such duration, and in such manner as the Board may direct. (4) The fee and allowances to be paid to the members of the committee shall be such as may be determined by the Board. (5) The minutes of each meeting of the committee shall be placed before the Board at its next meeting. Meetings of Board and quorum. 378V. (1) A meeting of the Board shall be held not less than once in every three months and at least four such meetings shall be held in every year. ....
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....hem of the operation and functions of the Producer Company; (g) make appointments to posts in accordance with the powers delegated to him by the Board; (h) assist the Board in the formulation of goals, objectives, strategies, plans and policies; (i) advise the Board with respect to legal and regulatory matters concerning the proposed and ongoing activities and take necessary action in respect thereof; (j) exercise the powers as may be necessary in the ordinary course of business; (k) discharge such other functions, and exercise such other powers, as may be delegated by the Board. (6) The Chief Executive shall manage the affairs of the Producer Company under the general superintendence, direction and control of the Board and be accountable for the performance of the Producer Company. Secretary of Producer Company. 378X. (1) Every Producer Company having an average annual turnover exceeding five crore rupees or such other amount as may be prescribed in each of three consecutive financial years shall have a whole-time secretary. (2) No individual shall be appointed as whole-time secretary unless he possesses membership of the In....
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.... the office of director including a statement of qualifications in respect of each candidate; (d) the audited balance-sheet and profit and loss accounts of the Producer Company and its subsidiary, if any, together with a report of the Board of Directors of such Company with respect to- (i) the state of affairs of the Producer Company; (ii) the amount proposed to be carried to reserve; (iii) the amount to be paid as limited return on share capital; (iv) the amount proposed to be disbursed as patronage bonus; (v) the material changes and commitments, if any, affecting the financial position of the Producer Company and its subsidiary, which have occurred in between the date of the annual accounts of the Producer Company to which the balance-sheet relates and the date of the report of the Board; (vi) any other matter of importance relating to energy conservation, environmental protection, expenditure or earnings in foreign exchanges; (vii) any other matter which is required to be, or may be, specified by the Board; (e) the text of the draft resolution for appointment of auditors; (f) the tex....
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.... Members may, if so provided in the articles, have special rights and the Producer Company may issue appropriate instruments to them in respect of such special rights. (2) The instruments of the Producer Company issued under sub-section (1) shall, after obtaining approval of the Board in that behalf, be transferable to any other active Member of that Producer Company. Explanation.-For the purposes of this section, the expression "special right" means any right relating to supply of additional produce by the active Member or any other right relating to his produce which may be conferred upon him by the Board. Transferability of shares and attendant rights. 378ZD. (1) Save as otherwise provided in sub-sections (2) to (4), the shares of a Member of a Producer Company shall not be transferable. (2) A Member of a Producer Company may, after obtaining the previous approval of the Board, transfer the whole or part of his shares alongwith any special rights, to an active Member at par value. (3) Every Member shall, within three months of his becoming a Member in the Producer Company, nominate, in the manner specified in articles, a person to whom his shares in the Produce....
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....to the provisions contained in section 143, the auditor shall report on the following additional matters relating to the Producer Company, namely:- (a) the amount of debts due alongwith particulars of bad debts, if any; (b) the verification of cash balance and securities; (c) the details of assets and liabilities; (d) all transactions which appear to be contrary to the provisions of this Chapter; (e) the loans given by the Producer Company to the directors; (f) the donations or subscriptions given by the Producer Company; (g) any other matter as may be considered necessary by the auditor. Donation or subscription by Producer Company. 378ZH. A Producer Company may, by special resolution, make donation or subscription to any institution or individual for the purposes of- (a) promoting the social and economic welfare of Producer Members or producers or general public; or (b) promoting the mutual assistance principles: Provided that the aggregate amount of all such donations and subscriptions in any financial year shall not exceed three per cent. of the net profit of the Producer Company in ....
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..... (3) Any Producer Company may subscribe to the share capital of, or enter into any agreement or other arrangement, whether by way of formation of its subsidiary company, joint venture or in any other manner with any body corporate, for the purpose of promoting the objects of the Producer Company by special resolution in this behalf. (4) Any Producer Company, either by itself or together with its subsidiaries, may invest, by way of subscription, purchase or otherwise, shares in any other company, other than a Producer Company, specified under sub-section (2), or subscription of capital under sub-section (3), for an amount not exceeding thirty per cent. of the aggregate of its paid-up capital and free reserves: Provided that a Producer Company may, by special resolution passed in its general meeting and with prior approval of the Central Government, invest in excess of the limits specified in this section. (5) All investments by a Producer Company may be made if such investments are consistent with the objects of the Producer Company. (6) The Board of a Producer Company may, with the previous approval of Members by a special resolution, dispose of any of its investmen....
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....ucer Companies. (2) Any two or more Producer Companies may, by a resolution passed at any general or special meetings of its Members, decide to- (a) amalgamate and form a new Producer Company; or (b) merge one Producer Company (hereafter in this Chapter referred to as "merging company") with another Producer Company (hereafter in this Chapter referred to as "merged company"). (3) Every resolution of a Producer Company under this section shall be passed at its general meeting by a majority of total Members, with right of vote not less than two-thirds of its Members present and voting and such resolution shall contain all particulars of the transfer of assets and liabilities, or division, amalgamation, or merger, as the case may be. (4) Before passing a resolution under this section, the Producer Company shall give notice thereof in writing together with a copy of the proposed resolution to all the Members and creditors who may give their consent. (5) Notwithstanding anything contained in articles or in any contract to the contrary, any Member, or any creditor not consenting to the resolution shall, during the period of one month of the date of service o....
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....lotment or appropriation by the merged company of any shares, debentures, policies, or other like interests in the merged company; (i) the continuation by or against the merged company of any legal proceedings pending by or against any Producer Company; (j) the dissolution, without winding up, of any Producer Company; (k) the provision to be made for the Members or creditors who make dissent; (l) the taxes, if any, to be paid by the Producer Company; (m) such incidental, consequential and supplemental matters as are necessary to secure that the division, amalgamation or merger shall be fully and effectively carried out. (9) When a resolution passed by a Producer Company under this section takes effect, the resolution shall be a sufficient conveyance to vest the assets and liabilities in the transferee. (10) The Producer Company shall make arrangements for meeting in full or otherwise satisfying all claims of the Members and the creditors who exercise the option, within the period specified in sub-section (4), not to continue as the Member or creditor, as the case may be. (11) Where the whole of the assets and liabilities of a Pr....
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....y dispute relating to the formation, management or business of a Producer Company arises- (a) amongst Members, former Members or persons claiming to be Members or nominees of deceased Members; or (b) between a Member, former Member or a person claiming to be a Member, or nominee of deceased Member and the Producer Company, its Board of Directors, office-bearers, or liquidator, past or present; or (c) between the Producer Company or its Board, and any director, office-bearer or any former director, or the nominee, heir or legal representative of any deceased director of the Producer Company, such dispute shall be settled by conciliation or by arbitration as provided under the Arbitration and Conciliation Act, 1996 (26 of 1996) as if the parties to the dispute have consented in writing for determination of such disputes by conciliation or by arbitration and the provisions of the said Act shall apply accordingly. Explanation.-For the purposes of this section, a dispute shall include- (a) a claim for any debt or other amount due; (b) a claim by surety against the principal debtor, where the Producer Company has recovered from the suret....
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....ons of this Chapter shall apply to the Producer Company. Application of provisions relating to private companies. 378ZR. All the limitations, restrictions and provisions of this Act, other than those specified in this Chapter, 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 in so far as they are not in conflict with the provisions of this Chapter. PART XII RE-CONVERSION OF PRODUCER COMPANY TO INTER-STATE CO-OPERATIVE SOCIETY Re-conversion of Producer Company to inter-State co-operative society. 378ZS. (1) Any Producer Company, being an erstwhile inter-State co-operative society, formed and registered under this Chapter, may make an application- (a) after passing a resolution in the general meeting by not less than two-thirds of its Members present and voting; or (b) on request by its creditors representing three-fourths value of its total creditors, to the Tribunal for its re-conversion to the inter-State co-operative society. (2) The Tribunal shall, on the application made under sub-section (1), direct holding meeting of its Members or such cr....