Producer Company

Know the Provisions for Changing Directors of Producer Company

calendar29 Oct, 2021
timeReading Time: 3 Minutes
Know the Provisions for Changing Directors of Producer Company

The notion of producer Company was introduced in India to enable cooperatives to operate as a corporate establishment under the Ministry of Corporate Affairs. In legal parlance, the producer company refers to a corporate body having an object cited in section 581B & functioning as a Producer Company under the Companies Act, 1956. This write-up reveals the Legal procedure of changing directors of Producer Company.

Pre-Incorporation Checklist for a Producer Company

  • Any ten or more producers can collectively form together to establish a production company. There is no cap on how many members can be part of such a company.
  • Any two or more producer companies can join together to form a single producer company.
  • A minimum capital of Rs 5 lakhs is mandatory to incorporate a producer company.
  • There should be a minimum of five directors & a maximum of 15 in a producer company.
  • The conversion of Producer Company into a public company isn’t possible law-wise, but it can act as a multi-state cooperative society after being transformed via a legit process.

Who can serve the role of Directors of Producer Company?

Every Producer Company shall have a minimum of 5 & not more than 15 directors; provide that in case of inter-State cooperative society functioning as a Producer Company, such entity may have more than 15 directors for the duration of one year from the date of its incorporation as Producer Company.

Conditions under which the Directorship position might be vacated in Producer Company

  • If the concerned Director has been a criminal by the Court of Law for any crime involving moral turpitude & served a jail term of not less than six months;
  • If the concerned Director has a criminal track record of repayment of a loan that continues to sustained equal or more than ninety days;
  • If the concerned Director has made repayment error against the loan availed from the Producer Company while serving the position of Directorship;
  • If the concerned Director has made some default in terms of tax liability or dividend, bonus while serving the directorship position in the previous Producer Company;
  • If the concerned Director has failed to comply with the provisions concerning Annual General Meeting

Duties of Board regarding the appointment and reappointment of Director in the Producer Company

  • Board is liable to appoint a full-time chief executive and vest him/her with the substantial powers of management.
  • If any of the directors vacate his/her position via resignation, the reappointment shall be conducted within 90 days from the resignation date.
  • The Director is obligated to serve his/her duties for a timeline not less than one year and a maximum of 5 years as cited in the articles.
  • Every Director shall stand eligible for reappointment. 
  • The Directors of the company’s board are appointed by the member in the AGM (Annual General Meeting). The board has right to appoint one or more directors not surpassing 1/5th of the total number of directors. Such directors are liable to hold their position as mentioned in the provisions.
  • The number of such directors shall not surpass 1/5th of the total number of directors in a producer company subject to articles of association.
  • As per the Company Act, these officials are not vested with the right that enables them to cast their vote in the election of the Chairman. However, the said Act allows them to serve the position of Chairmanship.

Refer the table below that manifests the essential provisions for Producer Company

i. The members have mandatorily to be primary producers
ii. The company name shall entail the word “Producer Company Limited “at the end.
iii. Such companies rejoice no cap on maximum number of members
iv. On registration, such companies can be converted into a privately-held entity for the purpose of administration of the company & application of law
v. Minimum numbers of 10 members
vi. Share capital of such a company shall comprises of equity shares only
vii. Minimum 5 & not more than 15 directors
viii. Producer Company can perform undertakings as prescribed under the Act.
ix. Only of individuals, then right to vote shall be depend on a single vote of every member.
x. Board will appoint the full time chief executive i.e. CEO


Appointment and Re-appointment of Directors of Producer Company incur plenty of legal implications cited under the Company Act, 2013. Ministry of Corporate Affairs[1] also sets out the requirement of filing a prescribed application on its portal about the completion of formalities regarding directorship. Write to us in case you seek more clarity on the provisions regarding the change of Directors of Producer Company.

Read our article:Definition, Registration, and Types of Producer Companies in India

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