Socio Research & Reform Foundation

Respected Sir,

I draw your kind attention towards query we have faced regarding FCRA Project Account.As per the new act organization should open a multiple account under main fcra designated bank account to utilise fc money for relevant project and within 15 days organization have to intimate MHA (FCRA devision) for opening a new bank account but we have not received any correspondence regarding this account from MHA. Now query We received Fc fund in our Main FC account and than transfer money to our project account. and from project account we transfer money to our partner who have FCRA registration and they have to show this money in their FC Designated bank account first and than they transfer that amount to their project account but one of our partner received complain from their bank that the amount receive in his account must be from Fc Designated bank account only. So there is any clause regarding this issue to solve the problem.

Regards,

Bhavesh Soni
Sahjeevan
175, Jalaram Society,
B/h. Vishwamangal Appt.
Vijay Nagar,
Bhuj 370 001. Kutch

Recently a case came to light where an NGO who had an e-payment facility on its website was asked to shut down the same. When the matter was taken up with the Banker, it was stated that since the NGO was receiving frequent remittances through this facility, the banker was not comfortable if these payments were complying with FCRA provisions. Therefore to be on safer side they asked the NGO to provide all documentation to confirm if provisions of FCRA as well as Income Tax had been complied with. In the meantime they blocked receipt of funds through e-payment facility.

The above incident shows that NGOs face all kind of prejudices and are not being allowed to use the facilities which bankers have no problems giving it to their business customers.

Have you faced any similar or other problems while dealing with your bankers? Please let us know, if considered appropriate we may contact NGO representative organisations to have meetings with the bankers.

We thank CA Shri Deepak Bansal for bringing this information to the editorial team’s attention.

______________________________________
Socio Research & Reform Foundation
(A Non Government Organisation)
512 A, Deepshikha, 8 Rajendra Place,
New Delhi – 110008
e-mail: socio-research@sma.net.in

In this series on Producer Company, the following post covers status of various Producer companies as being practiced in India. The data has been collated for information of SRRF Dialogue members from search on Internet. Hope the members would find this useful.

Cooperative Features – One Man One Vote

One of the cooperative concept of ‘one man one vote’ has been retained in Producer company. This is unlike any other corporate, where share holding is the basis of voting, however in producer company a member has only one vote
irrespective of his/her shareholding.

One of the important features of Producer companies is that these cannot be taken over by outsiders, since only producers can be the members and voting based on one man one vote principle.

These are hybrid between a private company and a cooperative. There is no limit
of maximum 50 members as in the case of private companies.

Business Status of Producer companies

Despite obvious benefits of Producer company so far around 150 companies have been incorporated[1]. Some illustrations given below:

• One of the first Farmers’ Producer company formed in 2004 belongs to Kerala, called Indian Organic Farmers Producer Company Ltd. It deals in organic products. Only producers with organic certification are eligible to be members. It not only sells the products of oits members, but also advises them on soil and water, scientific production methods, etc.

Presently there are more than 2500 members. Members are from different states in southern India. Though a member can have as many shares as they wish, however each member has only one vote, One share costs Rs 1000/- (shares are not tradable on stock exchange) and entitles a member to sell goods upto Rs 40,000/- through the company. Company declares dividend, which is limited to 20%.

• Indian Farmers’ Movement (INFARM) has promoted two Producer companies,
  Vanilla Indian Producers Company Ltd (VANILCO) and Banana India Producers Company Ltd. Both companies not only serve the interests of its farmer members, but also promote the products. Vanilco which has more than 3000 shareholders procures its members produce, and undertakes marketing of the same.
• Another Kerala based Producer company is involved in multi-faceted activities. ESAF Swasraya Producers Company Ltd has a number of activities, including handicrafts, herbal & agriculture and Food, Dairy & Meat.   
• In MP, under District Poverty Initiatives Programme, 17 different producer’s companies (15 crop based, 1 Milk & 1 Poultry) were promoted, (EV Murray, 2008). Each from different region of the state. These producer companies operate as commodities institution with forward and backward linkages to induce market driven agriculture to help farmers obtain better prices. Since these companies have professional management, they are able to collaborate with different institutions to provide farmers with better seed variety, training and knowledge of better cropping practices.[2]
• Matusuta Producer Company is formed of about 2500 women tasar yarn weavers from Jharkhand, Bihar & Chattisgarh mainly drawn from Pradan promoted SHGs.
• Development Support Centre, Ahemdabad has set up a Producer Company in Dhari, in Amreli district of Gujarat, comprising of over 1000 farmers.

In this series on Producer Company we bring the legal aspect of formation. 

Introduction

The concept of Producer company was introduced in May 2002 by introducing a new Part IXA in the Companies Act. The provisions from S. 581A – 581ZT were based on YK Alagh Committee’s recommendations.

Who can form a Producer company?

• Any 10 or more individuals, each being a producer relating to primary produce can form a Producer company.
• Any 2 or more producer institutions (an institution primarily having only
  ‘producers of primary produce’ as members) 
• Any combination of individuals or producer institutions mentioned above.

For which Primary Produce a Producer company can be formed?

• These activities generally would include agriculture sector (including animal
  husbandry, horticulture, floriculture, pisciculture, viticulture, forestry,
  forest products, re-vegetation, bee-raising).
• Any primary activity which promotes the interests of the farmers.
• Produce of persons engaged in handloom, handicraft and other cottage industries.
• Any product / by product resulting from any of the above activities.
• Any other activity which enhances the production of the above-mentioned
  activities.

What is the Status of a Producer Company?

•  It is a company registered under Companies Act and will have ‘Producer Company Limited’ included in its name.
• Since it is a limited liability company, the liability of members would be
  limited to the shareholding amount. 
• Registrar of Companies Act will be the registration authority.