INCORPORATED

UNDER THE COMPANIES ACT, 1956

(1 OF 1956)
COMPANY LIMITED BY SHARES

ARTICLES OF ASSOCIATION
OF
KARN BHUMI KRISHAK PRODUCER COMPANY LIMITED
1. PRELIMINARY:
The regulations, contained in Table "F" in the first schedule to the Companies Act, 2013 shall not
apply to this producer company except so far as expressly incorporated herein below or made
applicable by the said act.
2. DEFINATIONS:
In the Articles and the Memorandum of association of the company, unless the context otherwise
requires, words or expressions shall have the meanings as provided below:-
i. ‘The Act’ or ‘The Companies Act’ means the Companies Act, 2013 and its statutory
modifications from time to time and all rules made there under.
ii. ‘The Company’ or ‘this Company’ when used with reference to this company mean ‘KARN
BHUMI KRISHAK PRODUCER COMPANY LIMITED’
iii. ‘Articles of Association’ means these articles, which may be amended by the Company with
approval by a General Meeting and filed with the Registrar of Companies.
iv. ‘Active Member’ means a person who fulfils the quantum and period of patronage of the
Company as laid down by the Board.
v. ‘The Seal’ shall mean the Common Seal of the company approved by the Board of Directors
from time to time.
vi. ‘Member’ means any person/group (registered/unregistered) admitted as a member of the
Company under the provisions of these articles.
vii. ‘Person’ shall include any Association, Corporation, Company as well as individual.
viii. ‘Chairman’ means a member of the Board who has been elected as Chairman by the Board
of directors under the provisions of these Articles.
ix. ‘Board of Directors’ or ‘Board’, in relation to company, means the collective Body of the
directors of the company as defined in section 2(10) of the Companies Act, 2013.
x. ‘Commodity’ includes all agricultural, horticultural, medicinal, spices, forestry, dairy
produces their allied products, raw or processed.
xi. ‘General Meeting’ includes annual and extraordinary or special general meeting.
xii. ‘Chief Executive or Chief Executive Officer (CEO)/Managing Director’ means an individual,
who is a full time paid employee or deputed by the promoting organization, has been
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 appointed/approved by the Board as chief executive/Managing Director for the overall
management of the affairs of the Company.
xiii. ‘Mutual Assistance Principles’ means the principles set out in these Articles.
xiv. ‘Patronage’ means the use of services offered by the Company to its members by
participation in its business activities\ by supply of primary produce and other products to
the Company.
xv. ‘Patronage Bonus’ means payment made to selected members of the Company from out of
the resultant surplus income which is proportionate to their contribution/participation in
the promotion of business of the company.
xvi. ‘Period of Patronage’: for the purpose of provisions of these articles, the period of
Patronage shall be one year.
xvii. ‘ABG/FGs/PGs/KCs/LGs/UGs/SHG’ means activity based Groups/Farmers Groups,
Producers Groups, Kisan Clubs/Learning Groups/Users Groups and Self Help Groups
respectively formed at community level for their upliftment by any NGOs or others directly
or under any rural development projects supported by any government or non-government
funding organization.
xviii. ‘Withheld Price’ means part of the price due and payable for various crop produces and
inputs, supplied by any Member to the Producer Company; and withheld by the Producer
Company for payment on a subsequent date.
xix. ‘Auditors’ shall mean and includes those persons appointed as such for the time being by
the company.
xx. ‘Ordinary Resolution’ or ‘Special Resolution’ and ‘Resolution requiring Special Notice’
respectively by the Act shall have the meaning assigned thereto.
xxi. ‘The Office’ means the Registered Office for time being of the company.
xxii. ‘The Registrar’ means a Registrar of Companies, an Additional Registrar, a Joint Registrar, a
Deputy Registrar or an Assistant Registrar, having the duty of registering companies and
discharging various functions under this Act and as defined under section 2(75) of the
Companies Act, 2013.
xxiii. ‘Proxy’ means and includes proxy as definition given in section 105 of the Companies Act,
2013.
xxiv. ‘Ex-Officio Director’ means the Director appointment by some person by virtue of a power
contained in these articles or in agreement between to the company and the appointer.
xxv. ‘Promoting NGO/Project’ means promoting agency may be government or non-government
organization promoting this producer company for the interest of the farmers/producers
only.
xxvi. ‘Financial Year’ means the period in respect of which any profit and loss accounts of the
Company laid before it in Annual General Meeting is made up.
xxvii. ‘Month’ means a calendar month.
xxviii. ‘Mutual Assistance Principles’ means the principles set out in sub section (2) of section
581G of the act.
xxix. ‘Previous year’ means financial year immediately preceding the Current Year.
xxx. ‘Limited Return’ means the maximum dividend, as laid down in the Articles.
xxxi. ‘Producer Institution’ means a Producer Company or any other Institution having only
producer or producers or Producer Companies as its member whether incorporated or not
having any of the objects referred to in section 581B and which agrees to make use of the
services of Producer Company or Producer Companies as provided in its articles.
xxxii. ‘Register’ means Register of Members of the Company pursuant to the provisions of the
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 Act.
xxxiii. ‘Special right’ means any right relating to supply of additional produce by the active
members or any other right relating to his produce which may be conferred upon him by the
Board.
xxxiv. ‘Secretary’ means an individual appointment as such under the provisions of the Act.
xxxv. Words importing the singular shall include the plural and the words importing the plural
shall include the singular.
xxxvi. Words importing the masculine gender include the feminine gender and vice versa.
xxxvii. Unless the context otherwise requires words or expressions contained in these Articles shall
be the same meaning as in the Act, or any statutory modification thereof in force at the date
at which these Articles become binding on the Company.
3. MUTUAL ASSISTANCE PRINCIPLES
The company shall adopt the following mutual assistance principles, namely:-
(a) The membership shall be voluntary and shall be available to all eligible members who can
participate and avail the facilities or services of the Producer Company, or to persons
engaged in providing any organizational, technical or financial assistance, and who are
willing to accept the duties of membership;
(b) Each member shall save as otherwise provided in the Part -IX A of the Companies Act, 1956
(Reference Section 465(1) of Companies Act, 2013) have only a single vote irrespective of
the shareholding.
(c) The Producer Company shall be administered be a Board consisting of persons elected or
appointed as directors in the manner consistent with the provision of the Part IX A of the
Companies Act, 1956 (Reference Section 465(1) of Companies Act, 2013) and the Board
shall be accountable to the members.
(d) Save as provided in the part IX A of the Companies Act, 1956, (Reference Section 465(1) of
Companies Act, 2013) there shall be limited return on share Capital.
(e) The surplus arising out of the operations of the Producer Company shall be distributed in
an equitable manner by:-
(i) Providing for the development of the business of the Company.
(ii) Providing for common facilities and
(iii) Distributing amongst the members, as may be admissible in proportion to their
respective participation in the business.
(f) Provision shall be made for the education of members, employers and others on the
principles of mutuality and techniques of mutual assistance.
(g) The Company shall actively co-operate with other Producer Companies (and other
organization following similar principles) at local national or international level so as to
best serve the interest of their members and communities it purposes to serve.
4. THE COMPANY TO BE A PRIVATE LIMITED COMPANY
The Company shall become a body corporate as if it is a Private Limited Company to which the
provisions contained in part IX A of the Act will apply, without, however, any limit to the number of
members thereof and the producer company shall not, under any circumstances, whatsoever,
become or to be deemed to become a Public Limited Company under this Act.
a. The Company is a Private Company by virtue of provision of section 581C (5) of the Part IX – A of
the Companies Act, 1956 (REFERENCE SECTION 465 (1) OF COMPANIES ACT, 2013) and
according to which there shall not be any limit to the number of members.
b. The right to transfer shares of the company is restricted in the manner and to the extent
hereinafter provided.
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 c. No invitation shall be issued to the public to subscribe for any share or debenture of the
Producer Company.
d. No deposits shall be accepted from the public by the Company except from the members,
directors or their relatives.
5. MEMBERSHIPS AND VOTING RIGHTS OF MEMBERS OF PRODUCER COMPANY:
5.1 The Producer Company shall consist of members of FGs/PGs/KCs/UGs/LGs/SHGs or any type
of producer’s groups/individual producers whether incorporated or not and to any producer
person sincerely engaged in providing any organizational, technical or financial assistance to
producers groups.
5.2 A Producer Institution who fulfils eligibility conditions under the provisions of these Articles
may apply for membership in the prescribed form to the Board of the Producer Company
undertaking to carry out the responsibilities of membership in writing.
5.3 Where admission is refused by the board, the decision with the reasons for refusal shall be
communicated to the concerned person by registered post within fifteen days of the date of
the decision, or within thirty days from the date of application for membership, whichever is
earlier.
5.4 Qualifications for Obtaining Membership:
5.4.1 A member of any Producer Groups/Farmers Groups/Learning Group/Kisan Club/Self
Help Groups/Water User Group or any non-member/individual belongs to the above
category of producer or farmers and desirous to becoming a member shall subscribe
at least one share to the Producer Company.
5.4.2 Member who didn’t declared as defaulter in repayment of any advance or loans or
services taken from the Producers Company or similar institutions and don’t have the
possibility to repeat such act again and same guaranteed by the any member of the
Producer Company, if already exist in the same area.
5.4.3 He / She did not convicted by the Board / Committee formed by the board / any court
in producer company matter and his/her membership seized.
5.4.4 No person who has any business interest which is in conflicts with business of the
producer company shall become a member of that company.
5.4.5 A member who acquires any business interest which is in conflicts with the business of
the producer company shall cease to be a member of the company and be removed as
a member by the CEO itself without any delay when came to his/her notice. However
a prior/post facto permission of the BOD/AGM shall be taken in just coming meeting.
5.5 Qualification of Active Member
5.5.1 “Active Member” a member/members who will actively participate in
activities/business/services offered by the company like crop production,
procurement, purchase or sales of agriculture inputs and supply of produces, organize
certified crop production, procurement, crop supervision or inspection or taking any
other responsibility given by the BODs for the interest of the Producer Company shall
be considered as active member of the company and same should be declared by the
Board of the Directors.
5.5.2 A member who is willing and participating in all company’s affairs, meetings and
programmes and not to absent in any meeting or programmes (like Production,
Procurement and sells, if qualifies the criteria of that activity and invited) so far
without prior information or any beyond control or unavoidable reason, shall be
considered as an active member of the company.

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 5.6 Information to Member
The Members may obtain information relating to the general business of the Company.
5.7 Price to be paid to the Member
5.7.1 The members shall be paid price for the products supplied as per the guidelines
framed by the Board.
5.7.2 The Company may pay a differential price to its Members for the procurement of
products based on prevailing price in that area and any other criteria as may be
decided from time to time. The Company may pay a lower price to its non-members.
5.7.3 Every Member may initially receive part of the price payable and due as may be
decided from time to time and the balance withheld price may be disbursed later in
cash or in kind or by allotment of equity shares in proportion to the products supplied
to the Company subject to such conditions as my be decided by the Board.
5.8 Voting Rights of Member
5.8.1 In a case where the membership consists solely of individual producers, the voting
rights shall be based on a single vote for every Member.
5.8.2 In a case where the membership consists of producer institutions only, the voting
rights shall be determined on the basis of patronage i.e. their participation in the
business of the Company in the previous year.

Provided the during first year of registration of the Company, the voting sights shall
be determined on the basis of the shareholding by such producer institutions.
5.8.3 In a case where the membership consists of both individual Producers and Producer
Institutions, the voting right shall be computed on the basis of a single vote for every
member.
6. CAPITAL
a. The Authorized Share Capital of the Company is such that stated in clause V of the
Memorandum of Association of the company or altered thereat, from time to time. The
Company has the power from time to time to increase or reduce its capital. Any of the said
shares and new shares hereafter to be created may, from time to time, be divided. The shares
may have or confer such preferential or other special rights and privileges may be issued under
such restrictions and conditions whether in regard to dividend, voting, return of capital or
otherwise as shall have been assigned thereto by or under provisions of the Articles of
Association but so that the special rights or privileges belonging to holders of any share issued
with preferred or other rights shall not be varied or abrogated or effected except with such
sanction as is provided for hereinafter.
b. The shares shall be under the control of the Board of Directors who may allot or otherwise
dispose of the same to such institutions on such terms as the Board of Directors think fit and to
give any persons any shares whether at par or at premium and for such consideration as the
Board of Directors think fit.
c. Subject to these presents and the provisions of the Act, the shares of the Company whenever
issued shall be under the control and the disposal of Board of Directors who may allot, issue or
otherwise dispose of the same or any of them to such institutions or on such terms and
conditions and at such times and at par or premium or discount as they may, from time to time,
think fit and proper, may also allot and issue shares in capital of the Company in payment or
part payment for any property sold or transferred to or for service rendered to the Company in
or about the conduct of its business and the shares which may be so allotted may be issued as
fully paid up shares and if so issued deemed to be fully paid up shares.
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7. BENEFITS TO MEMBERS
a. Every Member shall initially receive only such value for the produce or products pooled and
supplied as the Board of Producer Company may determine and the withheld price may be
disbursed later in cash or in kind or by allotment of equity shares, in proportion to the produce
supplied to the producer Company during the financial year to such extent and in such manner
and subject to such conditions as may be decided by the Board.
b. Every Member shall on the share capital contributed, receive only a limited return, which shall
be the maximum of 100% on the capital contributed by the member, provided that every such
Member may be allotted bonus shares in accordance with the provision contained in section
581ZJ of the Act.
c. The surplus, if any, remaining after making provision for payment of limited return and reserves
referred to in section 581ZJ, may be disbursed as patronage bonus, amongst the Members, in
proportion to their participation in the business of the producers company, either in cash or by
way of allotment of equity shares or both, as may be decided by the Members at the general
meeting.
d. The Producer Company may, by special resolution, not inconsistent with section 581B alter its
objects specified in its memorandum.
e. Any amendment of the articles shall be proposed by not less than two-third of the elected
directors or by not less than one third of the Members of the Producer Company and adopted
by the Members by a special resolution.
8. PROVISIONS FOR SPECIAL USER RIGHTS
a. The Board of the Producer Company may from time to time, based on measurable criteria, issue
special user rights valid for a specific duration to the active members, to promote the business
interests of the Producer Company. Such user rights shall be issued in the form of appropriate
instruments.
b. interests of the Producer Company. Such user rights shall be issued in the form of appropriate
instruments.
9. TRANSFER OF SHARES
a. Subject to the provisions of Section 108 of the Companies Act, 1956, A member of the Producer
Company may, after holding the shares for a period of at least one year, may transfer the whole
or part of his shares along with any special rights, must notify to the Board of Directors of the
number of shares and the value the Board of Directors must offer to the other active members,
the shares offered at the fair value and if the offer is accepted, the shares shall be transferred to
the acceptors. In case of any dispute, regarding the fair value of the share it shall be decided and
fixed by the experts appointed by the board for this purpose, whose decision shall be final.
b. The Board of Directors may refuse to register any transfer of shares (1) where the Company has
a lien on the share, or (2) where the share is not a fully paid up share, subject to Section 111 of
the Act.
10. SURRENDER OF SHARES
a. If any member has ceased to be a producer institution, or has failed to retain qualifications to
continue as a member as specified, the Board shall serve with a written notice to the concerned
member/s and provide an opportunity of being heard in the next Board meeting.
b. If the Board is satisfied it may direct the member for surrender of shares together with special
rights, if any to the Producer Company, at par value or the Board may determine such other
value.
11. BOARD OF DIRECTORS
a. Board of Directors of the Producer Company shall consist of not more than 15 members as
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 follows:-
(i) Minimum 5 members elected from amongst the members.
(ii) There may be up to 3 co-opted directors drawn from amongst experts with relevant
experience and proven competence in the main business dealt by the Producer Company
and / or nominated by financing institution(s).
(iii) Chief Executive Officer shall be the ex-officio director of the board.
(iv) The Board of the Company shall have at least five and not more than fifteen Directors. The
Board may co-opt one or more Expert Directors not exceeding one-fifth of the total
number of Directors for such period as Board may deem fit.
(v) The subscribers who have signed the Memorandum and the Articles of Association have
designated Five Directors as a First Directors, Who shall govern the affairs of the Company
until the directors are elected as under:-
1. MANJU DEVI
2. PRITI KUMARI
3. KAUSHALYA DEVI
4. KANCHAN DEVI
5. URMILA DEVI
b. The conduct of elections of directors to the board of the Producer Company shall be the
responsibility of the incumbent board of the Producer Company, in the manner specified in
these articles of association and election rules at least 10 days before the term of office of the
outgoing directors comes to an end. The outgoing directors shall cease just after the expiry of
the term and new directors shall take over from the very next day.
c. Election of directors shall normally take place at the annual general meeting. The election rules
shall be formulated by the Board and approved by the general meeting.
d. The first election of the Board after its incorporation shall take place within the period of 90
days of the registration of the company. The candidates for contesting the election shall have to
fulfill all the qualifications required for obtaining the membership except in case of the first
election of the Board after its incorporation.
e. Where a board fails to conduct elections before the expiry of the term of the directors or where
there are no directors remaining on the board, the chief executive of the Company shall call an
extra ordinary general meeting, within twenty days after the expiry of the term of the directors
for the purpose. If the Board is not constituted in the meeting, a three member ad-hoc board
shall be appointed from among members for the specific purpose of conducting elections and to
perform all functions of the articles of association.
f. The term of the ad-hoc board so appointed shall not exceed three months and the ad-hoc board
shall cease to function as soon as a regular board is elected in accordance with the articles of
association.
g. The term of the elected board shall be 3 years from the date of assumption of office, except for
the first Board. After the third year of incorporation, at the end of every two-year after the
constitution of the Board, one third of the elected board members shall retire and be eligible for
reappointment. For the first such retirement, the directors who shall retire shall be determined
by draw of lots. Provided, however, that no member can be a member of the Board for a
consecutive period of more than nine years.
h. Every year after the constitution of the Board, in the first Board meeting, the Board shall elect
the Chairman of the Producer Company for a period of two years.
i. The Chairman shall preside over the meeting of the board. In case of his absence, the directors
present shall elect one of the elected directors as the Chairman of the meeting.
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 j. The Board may meet as often as it may consider necessary for transaction of the business.
However, it shall meet at least once in every three months.
k. The Board meeting shall be called generally with seven days’ notice, but in case of exigencies it
can be called at a shorter notice.
l. The presence of at least three Directors or one third of its total strength, whichever is higher,
shall form the quorum for the Board’s meeting.
m. Each member of the Board shall have one vote.
n. Decisions at the meeting of Board shall be arrived at by majority votes of the directors present.
In case of a tie the Chairman of the meeting shall have a casting vote in addition to his usual
vote except in case of election of the Chairman. Tie in case of election of chairman, the matter
shall be decided by draw of lots.
o. An elected member of the Board who absents from three consecutive meetings of the Board
without obtaining the leave of absence shall cease to be a member of the Board.
p. No member shall be present at discussion or vote on any matter in which he has personal
interest.
q. Vacation of office by the directors:-
The office of the director of a Producer Company shall become vacant if, the Producer Company,
in which he is a director:-
(i) has failed to, repay its deposit or withheld price or patronage bonus or interest thereon on
due date, or pay dividend and such failure continues for one year or more.
(ii) has defaulted in holding elections for the office of directors, in the Producer Company in
which he is a director, in accordance with the provisions of this Act and articles.
(iii) has failed to convene the annual general meeting or extraordinary general meeting of the
Producer Company in which he is a director, in accordance with the provisions of this Act
except due to natural calamities or such other reason.
12. POWERS AND FUNCTIONS OF THE BOARD OF DIRECTORS
Without prejudice to the generality of the foregoing, such power and functions of the Board of
Directors shall include:-
a. To admit members;
b. To formulate a corporate mission; to establish specific long-term annual objectives to be
achieved, consistent with the mission and the goals; to formulate and approve corporate
strategies;
c. To approve corporate strategies and financial plans;
d. To make periodic appraisal of operations of the Producer Company in relation to its mission and
objectives;
e. To formulate, approve and periodically review corporate policies related to major functional
activities of the Producer Company;
f. To appoint Chief Executive Officer as per the provisions of Articles.
g. To finalize the proposed annual budget, and supplementary budget, if any, for approval at the
General Meeting;
h. To cause –
(i) Proper books of accounts to be maintained by the Producer Company, including in
computerized form as permitted by the Companies’ Act.
(ii) The annual accounts to be prepared for the financial year.
(iii) The annual accounts to be duly audited by a qualified chartered accountant appointed for
that purpose by the General Meeting, and the duly audited accounts to be placed before
the general Meeting at the annual general meeting.
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 i. To ensure the calling of annual and other meetings of the general Meeting including the delivery
of formal notice; the agenda of the meeting; the names of candidates for election to the Board
and a statement of their qualifications; the text of any amendment proposed to the
Memorandum of Association and/or articles of association and the rationale for such
amendment; and the audited statement of accounts with comments on the auditor’s
qualification or adverse remarks; and the proposed annual or supplementary budget to be
considered by the General Meeting.
j. To ensure that elections are conducted as provided in the articles of association.
k. To determine the quantum of withheld price to be disbursed at the end of any year.
l. To acquire or dispose property in the ordinary course of business.
m. To raise funds as provided in these articles.
n. To cause adequate security, insurance of the assets of the producer Company.
o. If required, the Board may constitute Committee/s each for specific duration in framing policies
or seeking suggestions in any matter that Board may deem fit under section 581U of the Act.
The advisory committee shall cease to exist after finalizing its suggestions and recommendations
in the matter for the Board.
p. The committee/s may be formed of the following members:-
(i) up to two members of the board.
(ii) experts in concerned field from outside as decided by the Board.
(iii) the Chief Executive Officer of the Producer Company as member secretary.
(iv) Institute conduct, defend, compound or abandon any legal proceedings by or against the
Producer Company or its officer or otherwise concerning the affairs of the Producer
Company and also allow time for payment or settlement of any debt due and settle any
claims and/or demands by or against the Producer Company any arbitration or otherwise.
q. Delegate to the Chief Executive Officer any of its powers under these articles of association of
the Producer Company.
r. To ensure compliances, terms and conditions of agreement with the financing institution for
loan and grant as mutually agreed upon.
s. The Directors shall exercise their powers regarding the affairs of the Producer Company only at
meetings of the Board.
13. BORROWING POWERS
Subject to Section 58A and 292 of the Act, and Regulations made there under and directions issued
by the RBI the Board of Directors shall have the power, from time to time and at their discretion to
borrow, raise or to secure the payment of any sum of money for the purpose of the Company in
such manner and upon terms and conditions in all respects as they think fit and in particular by the
issue of debentures or bonds of the Company or by mortgage charged upon all or any of the
properties of the Company both present and future including its uncalled capital for the time being.
14. CHIEF EXECUTIVE OFFICER
a. The Producer Company shall have a full time Chief Executive Officer who shall function as chief
executive and shall be appointed by the Board from amongst persons other than Members.
b. The Chief Executive Officer shall be ex officio director of the Board having voting rights equal to
any other Director, but he shall not vote in the election of the Directors or Chairman or on any
matter in which he is an interested party. He shall not retire by rotation.
c. Same as otherwise provided in these articles, the qualifications, experience and the terms and
conditions of service of the Chief Executive Officer shall be such as may be determined by the
Board.
d. The Chief Executive Officer shall be entrusted with substantial powers of management as the
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 Board may determine.
e. Without prejudice to the generality of sub-section (4) the Chief Executive Officer may exercise
the powers and discharge the functions namely:-
(i) do administrative acts of a routine nature including managing the day-to-day affairs of the
Producer Company.
(ii) operate bank accounts or authorize any person, subject to the general or special approval
of the Board in this behalf, to operate the bank account.
(iii) make arrangements for safe custody of cash and other assets of the Producer Company.
(iv) sign such documents as may be authorized by the Board, for and on behalf of the
company.
(v) maintain proper books of account, prepare annual accounts and audit thereof; place the
audited accounts before the Board and in the annual general meeting of the Members.
(vi) furnish Members with periodic information to appraise them of the operation and
functions to the Producer Company.
(vii) make appointments to posts in accordance with the powers delegated to him by the
Board.
(viii) assist the Board in the formulation of goals, objectives, strategies, plans and policies.
(ix) advise the Board with respect to legal and regulatory matters concerning the proposed
and ongoing activities and take necessary action in respect thereof.
(x) exercise the powers as may be necessary in the ordinary course of business.
(xi) discharge such other functions, and exercise such other powers, as may be delegated by
the Board.
(xii) decide as per approved Board’s policies, procedures and limits, purchase price and sale
price of various products, purchase of materials, sale price of processed items, purchase of
packaging materials, and all other items pertaining to the business and activities of the
Union subject to budgetary provisions.
(xiii) arrange to purchase machinery; equipment, and such capital items as are required for the
Business of the Producer Company as per policies and procedures set for the purpose and
subject to approved budgetary provisions.
(xiv) decide the charges on services rendered by the Producer Company.
(xv) arrange for adequate security against embezzlement, stealing, and misappropriation and
for damage by employees handling cash, goods and securities.
(xvi) arrange for insurance against loss of property and take up agency for insurance work.
(xvii) shall make all the necessary arrangement for conduct of the business of the Producer
Company.
(xviii) shall carry out negotiations with the Government and other organizations.
(xix) shall arrange to keep in custody all documents, promissory notes, bonds, etc.
(xx) subject to the provisions of the articles of association, the Chief Executive Officer shall
have full authority to carry out the business of the Producer Company.
(xxi) in absence of the Chief Executive Officer, a senior officer authorized by him shall discharge
the work of the Chief Executive Officer.
(xxii) the Chief Executive Officer shall manage the affairs of the Producer Company under the
general superintendence, direction and control of the Board and be accountable for the
performance of the Producer Company.
15. APPOINTMENT OF THE COMPANY SECRETARY
a. If the average annual turnover exceeds five crore rupees in each of three consecutive financial
years, the Producer Company shall have a whole-time secretary.
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 b. No individual shall be appointed as whole time secretary unless he possesses membership of the
Institute of Company Secretaries of India constituted under the Company Secretaries Act, 1980.
16. APPROPRIATION OF NET PROFIT
The Producer Company shall maintain a general reserve fund in which 10% of the Net profit or Rs.
One lakh, whichever is less, shall be transferred to the general reserves:-
a. There shall be a limited return up to 3% per annum, or as may be specified by the Board and
approved by the General Body from time to time, on fully paid share capital.
b. The surplus arising out of the operations of the Producer Company shall be distributed in an
equitable manner by-
(i) 5% for development of the business of the Producer Company on year to year basis.
(ii) 1% for common services.
c. distributing amongst the Members of the excess, as may be admissible in proportion to their
respective participation in the business.
d. 1% for the education of Members, employees and others, on the principles of mutuality and
techniques of mutual assistance.
17. MATTERS TO BE TRANSACTED AT THE GENERAL MEETING
a. The Board of directors of The Company shall exercise the following powers on behalf of the
Producer Company and it shall do so only by means of resolution passed at the annual general
meeting of its Members, namely.
b. Approval of budget and adoption of annual accounts of the Producer Company.
c. Approval of patronage bonus.
d. Issue of bonus shares.
e. Declaration of limited return and decision on the distribution of patronage.
f. Specify the conditions and limits of loans that may be given by the Board to any director and.
g. Approval of any transaction of the nature as is to be reserved in the articles for approval by the
Members.
18. LIABILITY OF DIRECTORS
a. When the directors vote for a resolution, or approve by any other means, anything done in
contravention of the provision of this Act or any other law for the time being in the force or
articles, they shall be jointly and severally liable to make good any loss or damage suffered by
the company.
b. Without prejudice to the provision contained in above article, the company shall have the rights
to recover from its directors:-
(i) Where such director has made any profit as a result of the contravention specified in above
article, an amount equal to the profit so made.
(ii) Where the Producer Company incurred a loss or damage as a result of the contravention
specified in above Article, an amount equal to that loss or damage.
19. DIRECTORS AND OTHERS’ RIGHT TO INDEMNITY
a. Subject to the provisions of section 201 of the Act, every director and officer of the company
shall be indemnified by the company and it shall be the duty of the Directors to pay out of funds
of the Company all costs, losses and expenses (including travelling expenses) which any such
director, officer or employee may incur or become liable to by any reason of any contract, or
deed entered into by him as such Director, Officer or servant or in any way in the discharge of
his duties.
b. subject to aforesaid every Director, Chief Executive Officer, Manager, Secretary, or other officers
or employees of the company shall be indemnified against any liability incurred by him/them in
defending any proceedings whether civil or criminal in which judgment is given in his favour or
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 in which he is acquitted or in connection with any application under section 613 of the Act in
which relief is given to him by the Court.
20. GENERAL MEETING
a. The general meeting shall consist of the following:-
(i) Any person competent/authorized to represent and act on behalf of the producer
institution.
(ii) All members of the Board of the producer Company.
(iii) The Chairman of the Producer Company shall preside over the general meeting. In case of
his absence, the members present and entitled to vote shall elect one of them as Chairman
for the meeting.
b. The first general meeting shall be held within 90 days from the date of its incorporation and
have the same powers as are given to the annual general meeting
21. ANNUAL GENERAL MEETING
a. The Annual General meeting shall be called once in every year. However, not more than 15
months shall elapse between the date of one general meeting and that of the next.
b. The annual general meeting of the Producer Company shall be called by the Board with not less
than fourteen days’ notice, which shall specify the date, time, venue and the agenda. The notice
of the annual general meeting shall be sent to each member along with the following
documents.
(i) The agenda of the meeting;
(ii) Minutes of the previous annual general meeting or extra ordinary general meeting,
whichever occurred later;
(iii) Names of candidates for election, if any, to the Board of Directors including a copy of a
statement of qualifications in respect of each candidate;
(iv) Audited balance sheet and profit and loss accounts of the Producer Company and its
subsidiary if any, together with a report of the Board of Directors with respect to:
(I) he state of the Producer Company’s affair,
(II) the amounts proposed to be carried to reserves,
(III) the amount to be paid as return on share capital,
(IV) material changes and commitments, if any, affecting the financial position of the
Producer Company and its subsidiary, if any, which have occurred in between the
date of the annual accounts of the Producer Company to which the balance sheet
relates and the date of the report of the Board and
(V) the text of the draft resolution for appointment of the auditors,
(VI) any other matter of importance relating to energy conservation and environmental
protection, foreign exchange earnings or outgo, etc
(VII) The text of any resolution or proposed amendment to the Memorandum of
Association or articles of association to be considered at the annual general meeting
along with the recommendations of the Board with respect to each,
(VIII) Any other matter that is required to be, or may be, specified by the board.
c. The proceedings of every annual general meeting along with Directors Report, the audited
balance sheet and the profit and loss account of the Producer Company and its subsidiary, if any
shall be filed with the Registrar within Sixty days from the date on which the annual general
meeting is held, with an annual return along with the filing fees as applicable to a private limited
Producer Company.
d. The notice of annual general meeting and extra-ordinary general meeting shall be placed on the
notice board of the Producer Company and will also be given to the members of the Board and
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 all the members and other entitled persons.
e. Attendance of one third of the total number of active members shall form a quorum for the
general meeting.

If there is no quorum within half an hour from the time of meeting, the meeting shall stand
dissolved if it was called upon requisition. But in other cases the meeting is automatically
adjourned to reassemble on the same day in next week. And if at the reassembled meeting also
quorum is not present within half an hour, as many members as are actually present shall
constitute the quorum
f. Functions of the General Meeting:
The annual general meeting shall, among other things, deal with the following:
(i) Confirm the proceedings of the previous General Meeting.
(ii) Declare the names of Board of Directors elected as per the election rules.
(iii) Approve the excess expenditure over the sanctioned budget.
(iv) Receive from the Board the Annual report together with profit and loss:
(I) account and balance sheet as on 31st March of preceding financial year of
(II) the Producer Company and sanction the appropriation of profits.
(v) Approve the budget and program of activities of the Producer Company for the next year
as recommended by the Board.
(vi) The limit of the outside borrowings subject to the conditions specified in the Articles.
(vii) Consider and adopt the audit memorandum and audit rectification report.
(viii) Fix the allowances to be paid to the members of the Board and the members attending
the Board meeting and other meetings.
(ix) Appoint auditors and fix their remunerations.
(x) Amendment of the Articles as and when necessary.
(xi) To take note of admission of new member during the year.
(xii) Approve the expenditure incurred on any of the elected members of the Board.
(xiii) Remove member(s) of the Board by simple majority of the active members present and
voting at the General Meeting in accordance with provisions of section 284 of the Act.
(xiv) Consider any other business brought forward by or with the consent of the Chairman.
With the permission of 2/3rd of the members present at the General Meeting any member may
bring forward any matter not specified in the notice of the meeting provided that he may not
propose an amendment in the Articles and removal of a director of the Board of the Producer
Company.
22. EXTRA ORDINARY GENERAL MEETING
a. An Extra Ordinary general meeting may be called at any time:
(i) by a majority of the Board or
(ii) by the Chairman/Chief Executive Officer within one month of requisition in writing from not
less than 1/3rd of the active members of the Producer Company;
An extra ordinary meeting of the Producer Company shall be called by the Board with not less than
fourteen days’ notice, which shall specify the date, time, venue and the agenda.
23. FUNDS
a. Funds may be raised by:
(i) Shares from new members;
(ii) Additional shares in proportion to the business transacted with the Producers Company
from time to time on the terms and conditions as decided by the Board of the Producers
Company and communicated to the members;
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 (iii) Deposits and/or Debentures from members;
(iv) Loans from any financial institution;
(v) Grants, aids and subsidies;
(vi) Donations
b. The Producers Company may accept funds from any development agency or any other financing
institution in the form of loans or grants or in any other forms except equity capital, as per the
terms and conditions prescribed by such institutions as may be mutually agreed upon.
24. FINANCE, ACCOUNT AND AUDIT
a. The Company shall keep at its registered office proper books of accounts with respect to:
(i) All sums of money received and expend by the Company and the matters in respect of
which the receipts and expenditure take place;
(ii) All sales and purchase of goods by the Company;
(iii) The instruments of liability executed by or on behalf of the Company;
(iv) The assets and liabilities of the Company;
(v) In case of the Company engaged in production, processing and manufacturing the
particulars relating to utilization of materials or labour or other items or costs.
b. The balance sheet and profit and loss account of the Company shall be prepared as far as may
be in accordance with the provision contained in section 211 of the Act.
c. The Company shall have internal audit of its accounts carried out, on half yearly intervals, by a
chartered accountants as defined in clause (b) of sub-section (1) of section 2 of the institute of
Chartered Accountants Act, 1949.
d. Without prejudice to the provision contained in section 227, the auditor shall report on the
following additional matters relating to the Company namely:
(i) The amount of debts due along with particulars of bad debts if any;
(ii) The verification of cash balance and securities;
(iii) The details of assets and liabilities;
(iv) All transaction which appear to be contrary to the provision of this part;
(v) The loan given by the Producer Company to the directors;
(vi) The donations or subscriptions given by the Producer Company;
(vii) Any other matters as may be considered necessary by the auditor.
25. DONATIONS, GENERAL AND OTHER RESERVES
a. The company may, by special resolution, make donation or subscription to any institution or
individual for the purposes of:-
(i) Promoting the social and economic welfare of producer Members or producers general
public : or
(ii) Promoting the mutual assistance principles.
b. The aggregate amount of all such donation and subscriptions in any financial year shall not
exceed three percent of the net profit of the Producer Company in the financial year
immediately preceding the financial year in which donation or subscription was made.
c. The company shall not make directly or indirectly to any political party or for any political
purpose to any person any contribution or subscription or make available any facilities including
personal or material.
d. The Company may, upon recommendation of the Board and passing of resolution in the general
meeting, issue bonus shares by capitalization of amount from general reserves referred to in
article 69 in proportion to the shares held by the members on the date of the issue of such
shares.
26. LOANS TO MEMBERS AND INVESTMENTS
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 a. The Board may provide financial assistance to the Members of the Producer Company by way
of:-
(i) Credit facility, to any Member, in connection with the business of the Producer Company,
for a period not exceeding six months;
(ii) Loans and advances, against security specified in articles to any Member, repayable within
a period exceeding three months but not exceeding seven years from the date of
disbursement of such loan or advances;
Provided that such financial assistance shall be limited to the maximum of 10% of the value of
produce supplied by the member during previous financial year.
b. Any loan or advance to any director or his relative shall be granted only after the approval by
the Members in general meeting.
c. The general reserves to the Company shall be invested to secure the highest return available
from approved securities, fixed deposits, units, bonds issued by the government or cooperative
or scheduled bank or in such other mode as may be prescribed.
d. The Company may, for promotion of its objective acquire the shares of another Producer
Company.
e. The Company may subscribe to the shares capital or, or enter into any agreement or other
arrangement, whether by way of formation of its subsidiary company, joint venture or in any
other manner with anybody corporate, for the purpose of promoting the objects of the
Producer Company by special resolution in this behalf.
f. The Company, either by itself or together with its subsidiaries, may invest, by way of
subscription, purchase or otherwise, shares in any other company, other than the producer
Company specified under articles 75, or subscription of capital under article 76, for an amount
not exceeding thirty percent of the aggregate of its paid up capital and free reserves.
g. The Company may, by special resolution passed in its general meeting and with prior approval of
the Central Government, invest in excess of the limits specified in Article 77.
h. All investment by the Producer Company may be made it such investments are consistent with
the objects of the Company.
i. The Board of the Company may, with the previous approval of Members by a special resolution,
dispose of any of its investments referred to in articles.
27. RIGHTS OF MEMBERS TO OBTAIN INFORMATION
a. At every annual general meeting the Board shall lay before the Producer Company a Balance
Sheets and Profit and loss account made up in accordance with the provision of section 210 of
the Act and such Balance Sheet and Profit and Loss Account shall comply with the requirements
of section 210, 211, 212, 215 and 216 and or Schedule VI of the act so far as they are applicable
to the Company.
b. There shall be attached to every balance sheet laid before the Producer Company a report by
the Board complying with section 217 of the Act.
28. AMALGAMATION, MERGER OR DIVISION
a. The Producer Company may, by a resolution passed at its general meeting:-
(i) Decide to transfer its assets and liabilities, in whole or in part, to any other Producer
Company, which agrees to such transfer by a resolution passed at its general meeting, for
any of the object specified in section 581B of the Act.
(ii) Divide itself into two or more new Producer Companies.
b. Every resolution of the Producer Company under this article shall be passed at its general
meeting by a majority of total Members, with right of vote not less than two-thirds of its
members present and voting and such resolution shall contain all particulars of the transfer of
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 assets and liabilities, or division, amalgamation or merger as the case may be.
c. Before passing a resolution under this section, the Producer Company shall give notice thereof
in writing together with a copy of the proposed resolution to the Members and creditors who
may give their consent.
d. Notwithstanding anything contained in articles or in any contract to the contrary, any Member
or any creditor not consenting to the resolution shall, during the period of one month of the
date of service of the notice on him, have the option:-
(i) To transfer his shares with the approval of the Board to any active Member hereby
ceasing to continue as a Member of the company or
(ii) In the case of a creditor, to withdraw his deposit or loan or advance, as the case may be.
e. Any Member or creditor, who does not exercise his option with in the period specified in article
84, shall be deemed to have considered to the resolution.
f. A resolution passed by the Company under Article 81 shall not take effect until the expiry of one
month or until the assent there to of all the Members and creditors has been obtained,
whichever is earlier.
29. RESOLUTION OF DISPUTES
a. Where any disputes relating to the formation, management or business of the company arises:-
(i) Amongst Members, former Members or persons claiming to be members or nominees of
deceased members: or.
(ii) Between a Member, former Member or a person claiming to be a Members or nominee of
deceased Member and the Company, its board of Directors, office-bearer or liquidator,
past or present: or
(iii) Between the Company or its Board, and any director, office-bearer or any former director,
or the nominee heir or legal representative or any deceased director of the Company.
Such disputes shall be settled by conciliation or by arbitration as provide under the Arbitration
and Conciliation Act 1996 (26 of 1996) as if the parties to the dispute have consented in writing
for determination of such disputes by conciliation or by arbitration and the provisions of the said
act shall apply accordingly.
Explanation: For the purpose of this section, a dispute shall include:-
(i) A claim for any debt or other amount due;
(ii) A claim by surety against the principal debtors where the Company has recovered from
the surety amount in respect of any debtor or other amount due to it from the principle
debtor whether such debt or amount due be admitted or not.
(iii) A claim by Company against a Member for failure to supply produce as required of him.
(iv) A claim by a Member against the Company for not taking goods supplied by him.
b. If any question arises whether the dispute relates to formation, management or business of the
company the question shall be referred to the arbitrator, whose decision there on shall be final.
30. WINDING UP
a. If the Company shall be wound up and the assets available for distribution among the members
as such shall be insufficient to repay the whole or the paid up Capital, such assets shall be
distributed so that, as nearly as may be the losses shall be borne by the member in proportion
to the capital paid up at the Commencement of the winding up, on the Shares held by them
respectively at that time.
b. If in winding up, the assets available for distribution among the members shall be more than
sufficient to repay the whole of the paid up capital such assets shall be distributed amongst the
Members in proportion to the Capital paid up at the commencement of the winding up on the
shares held by them respectively, but the provision of this Article are to be without prejudice to
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 the right of the holders of Shares issued upon special terms and conditions.

31. MISCELLANEOUS
a. In addition to the sum as provided in the provision of these articles of association all subsidies,
entrance fees, receipts on account of forfeited shares and fines other than those collected from
the employees shall be carried to the Reserve Fund.
b. Any other income other than normal trading income, excess provisions and reserves, donations
other than those for specific purposes etc. can be carried to a General Reserve Fund and shall be
utilized with the permission of the Board from time to time.
c. The accounting year of the Producer Company shall be from 1st April to 31st March. The books
of accounts and other records shall be maintained as prescribed.
d. The Producer Company shall not alter the conditions contained in its memorandum except in
the cases, by the mode and to the extent for which express provision is made in the Act.
e. The Producer Company may, by special resolution, not inconsistent with section 581B, alter its
objects specified in its memorandum.
A copy of the amended memorandum, together with a copy of the special resolution duly
certified by two directors, shall be filed with the Registrar within thirty days from the date of
adoption of any resolution.
f. Any amendment of the articles shall be proposed by not less than two-thirds of the elected
directors or by not less than one-third of the Members of the Producer Company, and adopted
by the Members by a special resolution. A copy of the amended articles together with the copy
of the special resolution, both duly certified by two directors, shall be filed with the Registrar
within thirty days from the date of its adoption.

32. THE SEAL

The Board of Directors shall select a common seal for the Company and provide by resolution for the
safe custody and affixing thereof. Unless otherwise determined, the Director may use and affix the
seal of the company to any document and the Director in accordance with these articles signs every
document to which the seal is so affixed.

33. SECRECY CLAUSE

Subject to the provisions of the Act, no member shall be entitled to visit or inspect works of the
Company without the permission of the Director or Chief Executive Officer or of the officer
authorized by the Director to grant such permission or to require inspection of any books of
accounts or documents of the Company or any discovery of any information or any detail of the
Company’s business or trading or any other matter which is or may be in the nature of a trade
secret, mystery of trade or secrete processor which may relate to the conduct of business of the
Company and which in the opinion of the Chief Executive Officer or the Directors will not be
expedient in the collective interest of the members of the Company to communicate to the public or
any member.

34. GENERAL ELECTION RULES:

These are the general election guideline for the producer company however it can be modified in
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AGM or EOGM with 2/3 majority if required so far within the premises of Company Amendment Law
2002/under Part IX A of Company Act 1956.

These rule shall guide the election procedure of the producer company which are as under:-

34.1 The election of the directors shall be conducted within a period of ninety days of the
registration of the producer company by within the existed shareholders/members.
34.2 The conduct of elections of directors to the board of the Producer Company shall be the
responsibility of the incumbent board of the Producer Company, in the manner specified in
these articles of association and election rules at least 10 days before the term of office of
the outgoing directors comes to an end. The outgoing directors shall cease just the expiry of
the term and new directors shall take over from the very next day.
34.3 Every active member can cast vote for election of Board of the Directors/Chairman however
newly admitted members cannot contest in the election of chairman/Board of director,
minimum of one year.
34.4 Every active member who has spent one year in the company, can contest the election of
the Board of Director/Chairman however he/she needs support from minimum five active
members as introducer and supporter.
34.5 Member who have earned better patronage bonus shall be given preference for contest the
election of Board of the Directors.
34.6 BOD shall declare the date of election which shall need prior approval of GB also.
34.7 CEO shall work as chief election officer for the company after declaration of the date from
BOD.
34.8 He / She shall be execute the election process, scrutinize the forms and solely responsible
for free & fare election.
34.9 He / She can also higher services of government /private reputed person in case of need
arise of execution of the process.
34.10 He / She shall complete all formalities of election like preparation, printing and supply of
election form to the members, venue and time and date of the election. CEO can make
demand for independent observer for election in case of possibility of any dispute.
34.11 BOD can also advise for independent observer by more than 2/3 of majority and it shall be
mandatory for CEO to make such arrangement.
34.12 Election can be done either direct voting system or by rising of hand however BOD can
advise for the same by 2/3 majority for the same.
34.13 In case of any dispute amongst Board of the directors regarding the election method
discretionary power shall be with CEO for finalizing the election process.
34.14 CEO shall ensure participation and casting of vote by each eligible voters in election
independently.
34.15 CEO shall not cast his vote for election of either BOD or Chairman however he/she can cast
his vote when the voting take place during the business meetings or other same
circumstances.
34.16 Election of directors shall normally take place at the annual general meeting. The election
rules shall be formulated by the Board and approved by the General Meeting.
34.17 The first election of the Board after its incorporation shall take place within one year but
after ten months of its incorporation. The candidates for contesting the election shall have
to fulfill all the qualifications required for obtaining the membership except in case of the
first election of the Board after its incorporation.
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34.18 Every person shall hold office of director not less than one year (except in cases where
resigned due to either personal reason or legal issues or desired by Board of director due to
extra ordinary circumstances within the one year) but not exceeding five years as may be
specified in the articles.
34.19 Where a board fails to conduct elections before the expiry of the term of the directors or
where there are no directors remaining on the board, the chief executive of the Company
shall call an extra ordinary general meeting, within twenty days after the expiry of the term
of the directors for the purpose. If the Board is not constituted in the meeting, a three-
member ad-hoc board shall be appointed from among members for the specific purpose of
conducting elections and to perform all function of the articles of association.
34.20 The term of the ad-hoc board so appointed shall not exceed three months and the ad-hoc
board shall cease to function as soon as a regular board is elected in accordance with the
articles of association.
34.21 The term of the elected board shall be three years from the date of assumption of office,
including the first Board.
34.22 After the third year of incorporation, at the end of every three year after the constitution of
the Board, one third of the elected board members shall retire and be eligible for
reappointment.
34.23 For the first such retirement, the directors who shall retire shall be determined by draw of
lots.
34.24 Provided, however, that no member can be a member of the Board for a consecutive period
of more than ten years except the person, who provided very visible & substantial support
to the company (shall be assessed by the BOD and dully approved in AGM as a special
approval and should be substantiated with very visible contribution in growth and
development of the company) for making good business profit in his tenure.
34.25 For ensuring the whole process transparent and bias less, only CEO is authorized to do the
documentation and prepare the agenda of the meeting and included such extra ordinary
cases in form to of AGM for final approval.
34.26 However after every three year, it should be approved by General Body by more than two
third of majority (By direct voting) in case of their reelection or extension of tenure.

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