Producer Companies Essay

1387 Words3 Pages

The new concept of producer companies
TILL RECENTLY, the Companies Act, 1956 (the Act), recognized only three types of companies, namely, companies limited by shares (sub-divided into public limited and private limited companies), companies limited by guarantees and unlimited companies. With the coming into force on February 6 of the Companies (Amendment) Act 2002, (1 of 2003), a fourth category, `producer companies,' finds a place in the Act.
For this, a new Part IXA, divided into 12 chapters, has been included in the Act, comprising 46 sections, interestingly numbered as 581A to 581Z and 581ZA to 581ZT. However, the section that defines the various types of companies that can be incorporated under the Act remains unaltered.
The new concept …show more content…

The members have necessarily to be `primary producers,' that is, persons engaged in an activity connected with, or related to, primary produce.
What is primary produce? In terms of the Act it is a produce of farmers arising from agriculture including animal husbandry, horticulture, floriculture, pisciculture, viticulture, forestry, forest products, re-vegetation, bee raising and farming plantation products: produce of persons engaged in handloom, handicraft and other cottage industries: by - products of such products; and products arising out of ancillary industries.
The 46 new sections respectively deal with incorporation of producer companies: their management; general meetings; share capital and members rights; finance, accounts and audit; loan to members and investments; penalties; amalgamation, merger or division; resolution of disputes; and reconversion of producer company to inter-State cooperative society. A few salient features are now briefly …show more content…

The Act has not so far made it compulsory for limited companies to carry out internal audit, although listed companies, by virtue of the clause in the listing agreement relating to corporate governance, are to have a full-scale internal audit system.
Resolution of disputes
Any dispute relating to the formation, management or business of producers companies is to be settled by conciliation or by arbitration under the Arbitration and Conciliation Act, 1996 as if the parties to the dispute have consented in writing to such procedure. The arbitrator's decision shall be final. This seems to be inequitable since usually an arbitration award can be appealed against in high courts.
Inter-State cooperative societies
With objects not confined to one State may make an application to the Registrar for recognition as producer companies. The statute also provides for reconversion of such producer companies to their former status as inter-State cooperative societies subject to the approval of High

More about Producer Companies Essay

Open Document