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    What is a producer company under the Companies Act?

    A company formed under the Companies Act 2013 and carrying on the activities as mentioned in section 581B of Companies Act 1956. These activities include-

    1. Production, harvesting, procurement, grading, pooling, handling, marketing, selling, export, and import of the primary produce of the members of the producer company. 

    2. Processing of produce. Processing includes preserving, drying, distilling, brewing, venting, canning, and packing of the produce of the members of the producer company. 

    3. Sale, supply, and manufacture of plants, machinery, and equipment. It also includes consumables for the members. 

    4. Providing insurance to the member producers and their produce. 

    5. Generation, transmission, and distribution of power. The usage and conservation of land and water resources.

    6. Providing technical services, consultancy, training, research and development, and other activities for the benefit of the members. 


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    Important Provisions Relating To Producer Company

    1. The members need to be primary producers and can carry only activity prescribed under the Act in India.

    2. The proposed name of the company shall end with the words “Producer Company Limited” only.

    3. There is NO maximum limit on the number of members applicable to these types of Companies.

    4. The producer company will become as if it is a “Private Limited Company” on registration, for the purpose of application of administration and law of the company.

    5. The limit of a minimum No. is 10 individual members.

    6. Share capital shall consist of equity shares only of a Producer Company.

    7. There must be a minimum of 5 and not more than 15 directors in the Producer’s company.

    8. Voting rights will be based on a single vote of individuals, for every member.

    9. A full time chief executive officer (CEO) should be appointed by the board only.


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    Who can form a Producer Company/ Producer Company Formation?

    A producer company can be formed by the following persons- 

    1. Ten or more individuals, all of them being producers.

    2. Two or more Producer institutions.

    3. A combination of 10 or more producer institutions and producer individuals. 

    Here, producer means any individual engaged in any activity related to the primary producers of a farmer is defined as a producer. 


    Can Producer Company accept deposits?

    Yes, a producer company can accept deposits in the form of fixed deposits and recurring deposits. It can also give loans to its members and charge reasonable interests from them.

    Do I need to be physically present during this process?

    No, the registration process has been fully automated and can be completed online. You can get the DIN (Directors’ Identification Numbers) and Certificate of Incorporation by email from the Ministry of Corporate Affairs.

    To Obtain Producer Company

    • Obtain DSC (Digital Signature Certificate)

      • The first step is to obtain DSC for all the proposed directors in a company. DSC is required to sign the documents electronically. It is issued by the certifying authority.

    • Obtain DIN (Director Identification Number)

      • The next step is to obtain DIN (Director Identification Number) by all the proposed directors in a company. Now DIN can be obtained directly through SPICE Form and there is no need to file a separate form.

    • Name Approval Application

      • For registering the Producer Company name, an application is filed with the prescribed fee in RUN (Reserve Unique Name) form with the registrar of companies. On application, ROC verifies the name availability. After the approval of the Producer Company name, an incorporation application is filed within 20 days.

    • Incorporation Application

      • After obtaining name approval, an incorporation application is filed in SPICE form along with the necessary documents such as MOA, AOA, affidavit, and declaration with the concerned Registrar of Companies. After verification of the incorporation form, Certificate of Incorporation is issued by the ROC

    Estimate Time Required

    It takes around 35 to 40 days to complete the entire procedure. This will, however, depend on whether all papers in order and the workload of the RoC.

    Documents Required for Producer Company Registration

    From All Directors And Shareholder
    1. PAN Card or Passport or Election ID Card
    2. Latest Bank Statement/Telephone or Mobile Bill
    3. Voter's ID/Passport/Driver's License
    4. Passport-sized photo of all directors and shareholders

    For Proposed Registered Office (Residential Or Commercial)
    1. Copy of any Utility bill
    2. Scan copy of Rent agreement with NOC from the owner
    3. In case of owned Property then copy of Property Papers.

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    FAQ

    A Producer Company is a company registered with the object of agriculture production, post-harvesting processing activities, procurement, selling and distribution, the export of primary production of the members or import of goods for their benefit.
    Following are the minimum requirements to obtain registration as a producer company: 1) The main object of the company must be too as provided in Section 581B of Companies Act, 1956 2) Minimum 10 individuals (who are a producer) or at least 2 producer institutes must subscribe to the shares of the company 3) Minimum 5 directors in the company, one of which must be Indian citizen and resident 4) The registered office of the company must be located in India
    The Companies Act defines Producer as any person engaged in any activity connected with or relatable to any primary produce (Produce: “things that have been produced or grown, especially by farming”). A Producer Company is thus a body corporate having an objective that is one or all of the following: production, harvesting, grading, procurement, pooling, handling, marketing, selling, the export of primary produce of the Members or import of goods or services for their benefit.
    In India, more than 80% of farmers are small and marginal farmers with less than 2 hectares land holdings which leads to disorganization. This is the reason Indian farmers are not able to opt for the latest technologies. However, economies of scale can be achieved through producer company registration. Farmer Producer company registration will help in improving the livelihood of farmers by organizing the farmers. By the creation of the clusters of the farmers in the form of Farmer Producer Company will help in empowering farmers in India.
    There are 3 types of companies that can be incorporated under the Act: 1. A producer company is a hybrid between a private limited company and a cooperative society. 2. It combines the goodness of a cooperative enterprise and the vibrancy and efficiency of a company. 3. It accommodates the unique elements of cooperative business with a regulatory framework similar to that of a private limited company

    Registered Producer Company enjoys tax benefits such as exemption from agricultural income under section 10(1) of the income tax act, 1961. The exemption varies based on activities carried out by the farmers such as the agricultural income is 100% exempted from the income tax while the income earned from the production of green tea is 60% exempted as per the law.

    All these benefits make Producer Company Registration more advantageous for all the farmers in India. This could help them in more production and better credit facilities, thus resulting in more profits for their produce. All in all, the producer company is bliss for all the farmers in India.

    Separate Legal Entity- Producer Company is a legal entity and a juristic person incorporated under the Companies Act 1956. Hence it enjoys all the benefits of a separate legal entity. 

    Perpetual Succession- A Producer Company enjoys an uninterrupted existence. That is it is unaffected by the death or departure of its members and continues to be in existence irrespective of changes in its ownership and membership. It can only be legally dissolved. 

    Owning property- A producer company being a juristic person can own property in its name.

    Credibility- Producer Companies have better credibility as they are registered and monitored by the Central Government
    There should be at least 5 directors in a producer company, and the maximum limit is 15 directors. Each director should hold his office for a minimum of 1 year and a maximum of 5 years. Directors can be reappointed.
    Whenever a new member joins a producer company, he shall within 3 months nominate a nominee as specified in its articles of association, to whom his shares will be transferred in the event of his death.
    Follow on Public Offering (FPO) is the issuance of shares to investors by a listed company. It is offered after an Initial Public Offering (IPO) and thus it is known as a secondary offering. FPOs are offered by companies to raise their equity or reduce debts.

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