Question 1

Is Vihara Foundation an FPO or does it trade agricultural produce?

Accepted Answer

No. Vihara Foundation is an irrevocable Public Charitable Trust registered under the Indian Trusts Act, 1882 (Doc no. VJN-4-00371-2024-25, Sub-Registrar Vijayanagara, Bengaluru). We are not an FPO or FPC and do not engage in commercial buying, selling, or trading of agricultural commodities. Instead, we work as an educational and advisory trust helping Farmer Producer Companies maintain accurate books, complete ROC filings on time, and handle corporate tax and grant compliance.

Question 2

What is the corporate tax strategy for FPCs in 2026: is Section 80PA still available?

Accepted Answer

Section 80PA had a statutory sunset clause and was available only for assessment years up to AY 2024-25 (FY 2023-24). Parliament did not extend it in the Finance Act. In 2026, FPCs should focus on three levers: (1) Section 115BAA: file Form 10-IC to lock in the concessional 22% corporate tax rate (25.17% all-inclusive). (2) Section 37: distribute surplus to farmer members as patronage bonus or price difference, which is deductible as a business expense before computing net profit. (3) Section 10(1): clearly segregate pure agricultural income (exempt) from processing or trading income. For FPCs with prior-year 80PA claims (AY 2019 to 2024), Vihara provides scrutiny assessment defense against CPC Section 143(1) and 143(3) notices.

Question 3

What are the mandatory ROC annual filings for a Producer Company?

Accepted Answer

Every Producer Company must file Form AOC-4 (Financial Statements, Balance Sheet, P&L, and Auditor's Report) within 30 days of holding its AGM, and Form MGT-7 / MGT-7A (Annual Return detailing shareholding and directorships) within 60 days of the AGM. In addition, auditor appointments require Form ADT-1. Missing these deadlines incurs daily additional MCA penalties.

Question 4

What are the eligibility criteria for the SFAC Matching Equity Grant?

Accepted Answer

Under the Small Farmers' Agribusiness Consortium (SFAC) scheme, eligible FPCs can receive a matching equity grant of up to ₹15 Lakhs. Criteria include: a minimum of 50 individual primary producer shareholders, a functional Board of Directors (with at least one woman director), paid-up capital invested by members, and an audited balance sheet. Vihara Foundation assists boards with documentation and resolution drafting.

Question 5

When must an FPC conduct its Annual General Meeting (AGM)?

Accepted Answer

Under Section 378ZA of the Companies Act, an FPC must hold its AGM within 6 months from the close of the financial year (on or before 30 September). A minimum of 14 clear days' written notice must be dispatched to all member shareholders with the audited financial statements, directors' report, and auditor appointment resolutions.

Question 6

Does an FPO need GST registration if it only sells raw agricultural produce?

Accepted Answer

If an FPO exclusively supplies 100% wholly exempt goods (unbranded raw grains, fresh fruits, vegetables, pulses), GST registration may not be mandatory solely for sales. However, if the FPO crosses statutory thresholds, sells branded/packaged products, supplies inputs (fertilizers/seeds), or receives services subject to Reverse Charge Mechanism (RCM, such as transport agency services), GST registration is mandatory.

Question 7

When is E-Invoicing mandatory for a Farmer Producer Company?

Accepted Answer

E-Invoicing under GST applies to Farmer Producer Companies whose aggregate turnover exceeds ₹5 Crore in any preceding financial year. Such FPCs must generate an Invoice Reference Number (IRN) and signed QR code for all B2B and export invoices through the government portal.

Question 8

What is the Agriculture Infrastructure Fund (AIF) scheme benefit for FPCs?

Accepted Answer

The AIF scheme provides medium-to-long term debt financing for post-harvest infrastructure (cold storage, sorting/grading units, drying yards, primary processing facilities) with a 3% per annum interest subvention for loans up to ₹2 Crore and credit guarantee coverage under CGTMSE. We assist FPCs in preparing bankable Detailed Project Reports (DPRs).

Question 9

What are the rules regarding Board of Directors composition under Section 378N?

Accepted Answer

Under Section 378N of Chapter XXIA of the Companies Act 2013, every Producer Company must have a minimum of 5 directors and a maximum of 15 directors. All producer directors must hold valid DINs, undergo annual KYC (DIR-3 KYC), and represent active producer members. Expert or co-opted directors may not exceed one-fifth of the total board strength.

Question 10

Can a Producer Company distribute patronage bonus and dividends?

Accepted Answer

Yes. Under Section 378E and 378ZJ, every member has a single vote regardless of shareholding, but surplus distribution is based on patronage (the volume of produce marketed through the FPC). The company may distribute limited return on share capital (as specified in Articles), issue bonus shares from reserves, and allocate mandatory general reserves (minimum 15% of annual net surplus).

Question 11

How can our FPO Board of Directors and CEO participate in Vihara Foundation's working clinics?

Accepted Answer

We conduct regular live working clinics (such as our FPC Compliance Series covering share allotment, AGM conduct, ROC filings, and e-invoicing). You can register online directly through our /register page or get in touch through our contact form to schedule customized board orientation sessions.

Question 12

Who can become a member of an FPC, and how is an active member different?

Accepted Answer

Under Section 378C of the Companies Act 2013, only primary agricultural producers (individual farmers, milk producers, artisans) or producer institutions can be members. An 'active member' is one who fulfills the minimum patronage threshold specified in the company's Articles of Association (e.g. procuring minimum produce or buying inputs through the FPC). Members who do not patronize the FPC retain equity but forfeit voting rights and can be surrendered or bought back under Section 378ZB.

Question 13

What should an FPC do when share certificates or member records are incomplete or unnumbered?

Accepted Answer

Share certificates issued without distinctive numbers and folio references are legally defective under MCA regulations. The board must pass a formal rectification resolution, create a Master Distinctive Number Register (Form MGT-1), issue renumbered certificates with the common seal and two director signatures, and ratify the register in the upcoming AGM. Vihara Foundation provides a turnkey Excel MGT-1 reconstruction toolkit.

Question 14

What happens to shares when a member dies, and can a non-farmer nominee inherit them?

Accepted Answer

Under Section 378ZD of Chapter XXIA of the Companies Act 2013, if the validly nominated heir is an active primary producer, the Board directs transmission of shares to them upon verifying death and producer status. However, under the proviso to Section 378ZD(4), if the nominee is a non-producer (e.g. working in an urban IT firm or non-agricultural employment), they CANNOT retain the shares. The Board must direct compulsory surrender of the shares and any special rights to the company at par value (or another value determined by the Board), and disburse the monetary equivalent to the legal heir.

Question 15

Can an FPC member sell shares at a premium or to an outside non-member investor?

Accepted Answer

No. Under Section 378ZD(1) and (2), shares of a Farmer Producer Company are not freely transferable. A voluntary transfer is valid only if: (1) previous approval of the Board of Directors is obtained, (2) the recipient is already an active member fulfilling the patronage criteria in the Articles, and (3) the transfer is executed strictly at par value (face value). Transferring at a premium or discount violates the statute and triggers qualifications in the statutory audit report under Section 378ZG.

Question 16

When must an FPC member submit their nomination, and does verbal nomination count?

Accepted Answer

Under Section 378ZD(3), every member must nominate an individual in the manner specified in the Articles within three months of becoming a member. A verbal statement or casual mention to the CEO is legally invalid. The company must obtain written nomination forms during member onboarding, record them in the Register of Members, and update distinctive share folios.

Question 17

What records is a farmer shareholder legally entitled to inspect?

Accepted Answer

Under the Companies Act, any registered member has the statutory right to inspect: (1) The Register of Members (Form MGT-1), (2) Minutes of Annual General Meetings (AGM), (3) Audited annual balance sheets and profit & loss accounts, and (4) The company's Memorandum and Articles of Association. Members do NOT have an automatic statutory right to inspect daily internal Board of Directors meeting minutes or confidential commercial buyer agreements.

Question 18

Who coordinates meetings and statutory compliance when there is no CEO appointed?

Accepted Answer

Under Section 378W of the Companies Act 2013, appointing a full-time Chief Executive is statutory for Producer Companies. However, if the post is temporarily vacant, the Board of Directors must pass a resolution designating an executive director or the Chairman to act as officer-in-default to issue meeting notices, sign banking mandates, and coordinate filings with the statutory auditor and ROC.

Question 19

How should disagreements between board directors be legally handled?

Accepted Answer

All board decisions must be decided by majority vote (one director, one vote). In the event of a tie, the Chairman has a casting vote if permitted by the Articles of Association. If ideological deadlocks arise regarding business direction or CE removal, the matter should be referred to an Extraordinary General Meeting (EGM) of farmer members, where the fundamental cooperative principle of 'one member, one vote' resolves the impasse.

Question 20

How should grants from SFAC or NABARD be accounted for under AS 12?

Accepted Answer

Under Accounting Standard (AS) 12 'Accounting for Government Grants', capital grants such as the SFAC Matching Equity Grant must NOT be booked into the Profit & Loss statement as trading revenue. Doing so improperly inflates taxable net profit. Instead, they must be credited directly to 'Capital Subsidy / Capital Reserve' on the liabilities side of the balance sheet. Vihara Foundation assists FPCs in preparing audit-ready 14-head Utilization Certificate (UC) schedules.

Question 21

What should an FPC do immediately after receiving a statutory notice from ROC or Income Tax?

Accepted Answer

Do not panic or ignore the notice. (1) Note the exact statutory deadline for response (usually 15 to 30 days). (2) Identify the DIN/PAN and the specific financial year cited. (3) Never submit a casual written explanation without matching ledger evidence. (4) Reconcile the books with the portal filing. For prior-year Section 80PA scrutiny or ROC late-filing notices, Vihara Foundation prepares certified submission dossiers backed by statutory CA/CS certificates.

Question 22

How do Vihara Foundation and YieldWise work together?

Accepted Answer

Vihara Foundation is a registered public charitable trust providing legal frameworks, statutory advisory, and board education. YieldWise is our technology partner providing digital member registries, statutory register software, and accounting workflows for FPCs.

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