Producer Companies under Companies Act 2013

1. Producer Companies under Companies Act 2013 | Companies Act 2013 Producer Companies Under Companies Act 2013- As an agricultural economy, nearly 60 percent of the Indian population depends on agriculture for their livelihood, and the struggle to realize the benefits for this is no less than a daunting task. Challenges for lack of good governance and formalization in the agricultural sector include climate issues, resource mobilization, policy changes, and technological progress, as well as limited assets and a capital base. These urgent issues have led to the development of the producers’ companies brought in by the Ministry of Corporate Affairs, based on the report of a high-strength committee headed by Dr. Ik Elg, through a draft law to amend the Companies Law of 1956 before the inclusion of Part IX. Producer companies A company produced according to the Companies Law, 2013 In general terms, it can be said that producer companies are a means to improve the standard of living of workers in the agricultural sector. These companies are considered to possess good cooperative and corporate dynamism. The 2013 Companies Act does not include any provision regarding producer companies, and with the enactment of the new law, the previous law was repealed. However, according to the provisions of the aforementioned law, Part IX of the Companies Law of 1956 applies to a company that is produced in a manner as if the Companies Law of 1956 was not repealed until after the enactment of a special law for producing companies. The producing company is a company established under the Companies Act of 2013 (formerly the Companies Act 1956) and carries out specific activities as mentioned in Article 581B of the Companies Act 1956, to name a few, Production, harvest, purchase, classification, assembly, handling, marketing, sale, the export of primary products to members, or import of goods for their benefit Processing including preservation, drying, distillation, fermentation, venting, canning and packaging of its members’ products

2. Manufacture, sale, or supply of machinery, equipment or consumables mainly to its members. Promote mutual assistance, financial services, and care measures for producers or their primary products. Formation and registration Article 581C of the Companies Act of 1956 provides for a combination of 10 or more persons from producers, two or more production enterprises, or a combination of both, to form a production company. After being satisfied that all the required documents necessary for registration are complied with, the registrar may issue a certificate within 30 days of receiving these documents. Producing companies are companies that are limited to shares, where the responsibility of members is limited to the number of shares they buy. Basic attributes 1. People involved in an activity linked to or related to primary products can own production companies. 2. Members must be mandatory primary producers. 3. These companies are also called “Limited Liability Companies,” where the members’ liability is limited to the amount, if any, of the unpaid shares. 4. The name of the company ends with the phrase “producing company limited”. 5. For the purpose of law enforcement and management, the company producing the registration is considered as if it were a private company in line with Part IX-A. 6. There is no maximum number of members Contrary to the fact that these companies are hybrids of companies and cooperatives, the producing companies managed to gain momentum before the cooperatives, mainly because the cooperatives are oriented towards social welfare and do not go deeper into commercial lines. Moreover, states encourage them, which also means increasing state interference. It also considers that administration under central legislation is much more liberal than government control.

3. Administration According to this law, the number of managers ranges between five and fifteen managers, meaning that the number of managers can be more than five but less than 15 managers. But it is important to note that in the event of a transitional cooperative being converted into a productive company, these companies may also have more than 15 directors, but this concession is only available for a period of one year from the date of this incorporation. Managers of these producing companies are appointed within 90 days of the incorporation date. Auditing The auditors of the producing companies must cover special reports and submit exceptional reports. Hence, an internal audit by contracted accountants is necessary for internal audit of the records. The law did not make it necessary for restricted organizations, but registered organizations are required to comply with this provision. Settlement of Disputes With regard to the development, management, or business of producer organizations, they should be referred to the Arbitration and Conciliation Act 1996. In this regard, the ruling will be final and cannot be appealed, which is unfair on the basis that a mediation grant can be claimed in the higher courts. Tax benefits Under Article 10 (1) of the Income Tax Law of 1961, income from agriculture is exempt from tax. However, it should be noted that the aforementioned law does not by itself give any special benefits or exemptions to producing companies, but some tax benefits can be availed based on the type of agricultural activity.

4. The conclusion In conclusion, it can be said that this concept of the producer company will ensure not only the follow-up of the required regulations but also a gradual step to improve its members and the agricultural sector. Thomas Jefferson rightly puts, “Agriculture is our wisest pursuit, because, ultimately, it will contribute more to real wealth, good morals and happiness.” For More Information: https://www.letscomply.com/producer- companies-under-companies-act-2013-companies-act-2013/ Contact Us: +91-97-1707-0500 info@letscomply.com https://www.letscomply.com/ SERVICES PROVIDED BY US: Foreign Investment in India| Setting-up of Business in India |Virtual CFO| Virtual General Council| Income Tax | GST Registration & Returns |Trademark registration | Company Registration | LLP Registration |NGO| Company Annual Compliances | Drafting & Vetting of Agreements |Opinion & Advisory on Different Issues| FSSAI Licenses| ESI & EPF | ISO certification |Shop & Establishment Registration |MSME Registration| SEIS/MEIS Services| DGFT| Legal Notices