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Producer Companies Rules, 2021

Producer Companies Rules, 2021

Recently, on 11th February 2021, the Ministry of Corporate Affairs announced the Producer Companies Rules, 2021. It should be noted here that with the introduction of the new rules, the Producer Companies (General Reserve) Rules, 2003 are replaced. The newly introduced Producer Companies Rules, 2021 are briefly explained in the current article.

Applicability of the rules-

The Producer Companies Rules, 2021 will apply to all the persons engaged in any of the activities in connection with or relatable to any of the following produce-

  • Produce of farmers arising from agriculture, animal husbandry, floriculture, horticulture, viticulture, pisciculture, forest products, forestry, re-vegetation, farming plantation products and bee raising. It also includes production of farmers arising from any other primary activity/ service which promotes the interest of the farmers/ consumers.
  • Produce of persons engaged in handicraft, handlooms and other cottage industries.
  • Others-
    • Products resulting from the above activities,
    • Products resulting from all the ancillary activities,
    • By-products of the above products,
    • All the activities intended for the increase of any of the above produce.

Procedure for the alteration of the registered office from one state to another-

As per provisions of rule 4 of the Produce Company Rules, 2021, when there is a change in the registered office and the change results in a change of state. The producer company needs to follow the below procedure-

  1. The producer company should intimate the change of the situation of the registered office in Form No. INC 22.
  2. The producer company should file an application for alteration of memorandum of association in the following manner-
    • Filing of an application in Form No. INC 23.
    • Additional documents to be submitted with Form No. INC 23-
      1. The copy of Memorandum of Association (with all the proposed alterations),
      2. A copy of the minutes of the relevant general meeting,
    • A copy of Power of Attorney or the Board Resolution or the executed vakalatnama,
    • List of creditors and debenture holders covering following details-
      • Name and address of all the creditors and debenture holders; and
      • Nature and corresponding amount due to the creditors and debenture holders relating to debts; claims or liabilities.
    • A duly authenticated copy of the published advertisement and corresponding notices issued.
    • A copy of objection, if any, received and corresponding responses in the matter.
    • Acknowledged copy of service of application copy (along with all the annexures) to the Registrar as well as the Chief Secretary of the State Government/ Union territory where the registered office is presently situated.
      1. Certified copy of Central Government’s order approving the alteration of the memorandum should be filed in Form No. INC 28.

Investment from and out of the general reserves-

As per rule 5 of the Producer Companies Rules, 2021, investment is possible in any one or combination of the following, out of the general reserves of the producer company-

  1. Invest in fixed deposits; securities; units and bonds issued by any of the followings-
    1. Central Government;
    2. State Government;
    3. Co-operative societies; or
    4. Scheduled bank.
  2. Invest in any of the following banks-
    1. Co-operative bank;
    2. State co-operative bank;
    3. Co-operative land development bank;
    4. Central co-operative bank; or
    5. Any other scheduled bank.
  3. Invest in any of the securities as specified under section 20 of the Indian Trust Act, 1882.
  4. Invest in the shares or securities of any of the followings-
    1. Inter-state co-operative society; or
    2. Any other co-operative society.
  5. Invest in either shares or securities or any assets of the public financial institutions as specified under section 2(72) of the Companies Act, 2013.