An Inter-State Co-operative Society was incorporated on 1st June, 2019, as a producer company. The producer company proposes to have 18 directors on its Board of directors. Further, a member of the company wants to trans

According to section 465 of the Companies Act, 2013 the provisions of the part IXA of the Companies Act, 1956 shall be applicable mutatis mutandis to a producer company in a manner as if the Companies Act, 1956 has not been repealed, until a Special Act, is enacted for producer companies. The membership of producer companies is only open to persons who are primary producers of specified goods and related services. Section 581 B of the Companies Act, 1956 specifically states that every producer company shall deal primarily with the produce of its active members for carrying out the objectives specified under section 581 B of the Companies Act, 1956. According to section 581 O of the Companies Act, 1956, every producer company shall have minimum five directors but not more than 15 directors. However, an inter-state co-operative society registered as a producer company may have more than fifteen directors for a period not exceeding one year. Thus, the inter-state Co-operative Society registered as a producer company cannot have more than 15 directors beyond a one year transition period. Secondly, a member of a producer company can transfer his shares only to an active member of the producer company but after obtaining prior approval of the Board of Directors. Therefore, the transfer to a non-member is invalid.