Company Law: Membership Rights of a Producer Company

As per section 581-A (l), of the Companies Act, 1956, a company is known as a Producer Company, if it is registered under the Companies Act, 1956, as a Producer Company.

Further the Act, provides that a corporation is referred as Producer Company only, if it has the objects as provided under the section 581-B (1), of the Act.

Objects specified under the Act shall relate to matters, such as:

• Production, harvesting, procurement, grading, pooling, marketing, selling and exporting of the goods and services produced by the company.
• Processing of products, which shall include preservation, drying, distillation, packing of primary produce.
• Promotion of techniques and imparting education on mutual support principles to the members of the company.
• Insuring producers of the primary products of the company.
• To take steps for welfare of members on approval of the Board.

Company Law: Share Capital and Member’s Rights

Here are some interesting terms related to share capital and rights of the members of a Producer Company:

Share Capital

The share capital of a Producer Company comprises of only equity shares. The shares owned by a member of a Producer Company shall be in ratio of the patronage of the investment of the company.

Special User Rights

Special Rights of a member of a Producer Company are the rights pertaining to additional produce by an active member or any similar right pertaining to his produce, which has been bestow to him by the Board.

However, only the producers, who are also active members of the company, shall be entitled to special rights, that too as per the provisions of the Articles. The company shall provide suitable instruments to them pertaining to such special rights.