Companies Ordinance 2016: SECP introduces concept of Agricultural Promotion Company

In order to facilitate agriculture sector in the country, the Securities and Exchange Commission of Pakistan (SECP) has introduced the concept of Agricultural Promotion Company in the recently promulgated Companies Ordinance 2016 to provide impetus and support to the rural economy and induce increase in agricultural produce in the country.
Sources told Business Recorder on Monday that the concept of agricultural promotion company has been introduced to increase agricultural produce and its management through facilitation of warehousing of agriculture produce, issuance of credible warehouse receipts for agricultural commodity, stock and audit verification etc. Such companies may be established either in the form of Producer Company or a Collateral Management Company for facilitating the agricultural sector.
The SECP has also asked every company acquiring agricultural produce directly or through its agents from the farmers to make the payment to them against supply of such produce promptly and not later than ninety days from the date of acquisition.
According to the newly promulgated Companies Ordinance 2016, any person, having its principle line of business related to produce for agriculture promotion or managing produce as collateral or engaged in any activity connected with or related to any produce or other related activities may establish Agriculture Promotion Company under this section in such form and manner and subject to such terms and condition and limitation as may be specified.
For this purpose, "Agriculture Promotion Company" includes a Producer Company or a Collateral Management Company involved in produce or any other company or class of companies or corporate body or any other entity as the relevant minister-in-charge of the federal government may, by notification in the official Gazette specify as Agriculture Promotion Company.
"Produce" means the produce of fanners, arising from agriculture (including animal husbandry, forest products. re-vegetation, bee raising and funning plantation products), or from any other activity or service which promotes the fanning business; or any product resulting from any of the above activities, including by products of such products; any activity which is intended to increase the production of anything referred to in above sub-clauses or improve the quality thereof.
Producer Company means any company, with or without share capital, formed under this section by farmers and engaged in any activity connected with or related to any produce including production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of produce of the members or import of goods or services for their benefit; processing including preserving, drying, distilling, brewing, canning and packaging of produce of its members and rendering technical services, consultancy services, training research; and development and all other activities for the promotion of the interests of its members; arranging insurance of produce and financing of procurement, processing, marketing, extending of credit facilities including microfinance subject to such term and condition as may be specified or any other financial services to its members.
Every Producer Company shall deal primarily with the produce of its members for carrying out any of its activities, the SECP said. The SECP said that the member of a Producer Company means farmers as promoters and sponsors of a Producer Company and fanners admitted to membership after registration in accordance with requirements as specified in the regulations.
Collateral Management Company means any company fanned under this section to engage in the activity of managing produce as collateral, including warehousing ie provision of quality storage and preservation services for a range of agricultural commodities; issuance of credible warehouse receipts for agricultural commodity financing and stock audit and verification services.
If an Agriculture Promotion Company or Collateral Management Company or Producer Company or their members indulges in any activity which is prejudicial to the interests of farmers, members, lending institutions, commodity exchange, consumers, or other stakeholders, shall be liable to a penalty on the standard scale.
Any dues outstanding against agriculture Promotion Company shall be recoverable as arrears of land revenue. The government or any institution or authority owned and controlled by the government may form an Agriculture Promotion Company, said the SECP provision.
The SECP said that every company acquiring agricultural produce directly or through its agents from the farmers shall make the payment to them against supply of such produce promptly and not later than ninety days from the date of acquisition, the SECP added.