Company Law: Functions of Board of Producer Company

A group of individuals comprising of a minimum 10 or more members may form a Producer Company under the Companies Act, 1956. Based on existing company laws, a ‘Producer’ is a person involved in any activity related to any primary produce. The board of director of a company is an authorized body comprising of appointed members, who jointly manage the affairs of a company. The Board enjoys many powers, duties and obligations pertaining to the matters of the company, such as taking decisions in respect of loans, investments and bank transactions.

Company Law: Specific Powers of Board of Directors of Producer Company

Section 581-R (1), of the Companies Act, 1956, provides for the entitlement of the Board of Directors of a Producer Company for exercising few specific powers, such as:

• Determination of payable dividend.
• A new member’s entry.
• Formulation and persuasion of company’s policy, objectives and long-term goals.
• Formulation and approval of corporate plans and strategies.
• Selection of Chief Executive and other officers.
• Acquisition or disposal of assets and property of the Company in regular business transactions.
• Formulation, approval and implication of financial plans.
• To ensure proper maintenance of books of account and preparation of annual accounts to be presented before yearly general meeting along with the report of auditor.
• Taking decisions regarding investments of the company’s funds and capital in regular business transactions.
• Granting loans or advance pertaining to a company’s business activities to a member, who is not a director of the company.