Producer Company Registration

If you are a primary producer or farmer, you can access inputs, market, production technology, and credits with Producer Company Registration.

To avail our services, we charge 499/- as an advance or security payment.

Producer Company

Producer Company Registration - An Insight

We recognize that the Agricultural Industry is considered the backbone of our Indian Economy because 62 percent of the total population directly or indirectly relies on agricultural activities for their living. However, our Indian Farmers are unorganized and in a deplorable state as they cannot afford high-level farming technologies due to a lack of funds. Hence, it ends up struggling to get its share of profit. As a result, more than 12 percent of Indian farmers choose to commit suicide.
Considering their miserable and pitiable state, the government finally decided to formulate an expert committee headed by Mr. Y.K. Alagh to examine into the matter. Further, in the year 2002, the committee acquired Producer Companies’ concept to the Indian Society. As the Central Government is working hard to glorify the status of Indian Producers (includes farmers and agriculturalists).

DEFINITION OF PRODUCER COMPANY

A Producer Company is a mixture of a Cooperative Society and a Private Company. It is a company organized under the terms of Part IX-A of the Companies Act, 1956, and Section 465(1) of the Companies Act, 2013 to deal with the initial production of its active members related to farming. Moreover, the main objective or the purpose of a Producer Company involves selling, distributing, and exporting primary output.
Furthermore, a Producer Company can be organized either with ten or more members being producers, or with two or more producer organizations, or by its combination. Further, like other business structures, the balance in a Producer Company is limited to the extent of the Overdue Share Capital by its members. Hence, a producer company is considered to be a Private Limited Company under the Companies Act, 2013. Still, the roof on the maximum members does not apply to the same.

BASIC REQUIREMENTS FOR PRODUCER COMPANY REGISTRATION

According to section article (1) of section 581C of the Companies Act, 1956, each of the following listed organizations can incorporate a Producer Company:

    • Ten or more people are needed to incorporate a Producer Company.
    • Two or more organizations are needed to organize a Producer Company.
    • A combination of both individuals and organizations is required for filing a Private Company.

Further, the following listed are the elements that require to be complied with from the management’s point of view:

    • A Minimum of 5 or a maximum of 15 directors is needed to join a Producer Company.
    • There should be a full-time Chief Executive Officer (CEO) to look after the authority and guidance of the company.
    • A Minimum of Rs 5 Lakhs is needed as the Paid-up Share Capital.
    • A Producer Company is able to possess only Equity Share Capital.
    • A Producer Company is needed to conduct at least four board meetings in a Financial Year. Furthermore, the time gap between the two meetings must be three months.

OBJECTIVE OF an PRODUCER COMPANY registration

A Producer Company intends to support all the small-scale farmers to increase their level of savings and the power to opt for the latest and advanced technologies to lead better and enhanced lives. 

The following listed are the objectives or the reasons behind organizing a Producer Company:

    • Handling and Poling of the primary agricultural produce.
    • Marketing of the primary agricultural produce.
    • Business of Import/Export activities concerning agricultural produce.
    • Production of the primary agricultural produce.
    • Procurement of the primary agricultural produce.
    • Harvesting and Grading of the primary agricultural produce.

Further, the primary intention of a producer company is to analyze the formation of a Kind business as a private company and make it probable to convert an existing cooperative company into a private company.

WHAT ARE THE AUTHORIZED ACTIVITIES THAT A PRODUCER COMPANY CAN PERFORM?

The allowed activities for a producer company are listed under section 581 B of the Companies Act, 1956, the complete list is mentioned below:

    • Production, selling, or supplying the equipment, machinery, or consumables primarily to its members.
    • It is offering education based on the principle of mutual assistance to its members and others.
    • Insurance of either the producers or their primary agricultural produce.
    • They are promoting techniques based on the principle of mutual assistance.
    • Welfare abilities or measures for the benefit of members as may be managed by the Board.
    • Technical services, Delivering consultancy services, training, research and development (R & R&D), and all other activities required to promote the interest of its members.
    • Manufacturing, Harvesting, Procurement, Pooling, Grading, Marketing, Selling, Handling, or Export of the main agricultural produce of the members or import produce for their advantage.
    • It is processing together with preserving, distilling, drying, venting, brewing, canning, and Packaging of the agricultural produce of its members.
    • Transmission, Generation, and delivery of the power.
    • Revitalization of land and water sources about their use, maintenance, and communications related to basic produce.

BENEFITS OF A PRODUCER COMPANY REGISTRATION

The benefits affixed with the registration of Producer Company is summarised below:

    • Producer Company holds the status of a separate legal entity.
    • The liability of members and production company is the limited term of the unpaid amount on subscribed shares.
    • Producer Company gives higher credibility to its members as compared to any unregistered organization of agriculturalists.
    • Producer Company is giving the benefit of easy management. And in case the stated company needs to change in its Board of control, the same can be informed to the Registrar of Companies (ROC) just by filling simple forms.
    • A certified producer company can get or sell property in its name.
    • A producer company can accept deposits or give the farmers loans at a fair interest rate.
    • A producer company is qualified to accept deposits in Fixed Deposits (FD) or Recurring Deposits (RD).

WHY IS A PRODUCER COMPANY KNOWN AS HYBRID STRUCTURE?

A producer company is a hybrid structure Private Limited Company, and Co-operative is that this company mixes the goodness of a cooperative enterprise and the efficiency and vibrancy of a private company and provides the unique facets of a joint business with the regulatory framework parallel to that of a Private Company.

WHICH LAW GOVERNS A PRODUCER COMPANY?

The incorporation and regulation of Producer Company are governed and organized by the provisions of Sections 581A to 581ZL of the Companies Act, 1956, register with the Companies Act, 2013, and the regulations made thereunder.

MANDATORY REQUIREMENTS REGARDING A PRODUCER COMPANY

The requirements to get Producer Company Registration are explained below:

    • In a Producer Company, only those fit to participate in ownership or are engaged in any activity related to primary produce.
    • All the members of a Producer Company need necessarily be primary producers.
    • The liability of members and production company is the limited term of the unpaid amount on subscribed shares.
    • The name of a producer company must complete with the suffix “Producer Company Limited.”
    • Producer Company allows as a Private Company for application of the law.
    • In the case of a Producer Company, there is no limit prescribed about the maximum number of members.

CHECKLIST OF DOCUMENTS REQUIRED FOR PRODUCER COMPANY REGISTRATION

The documents that are required for getting Registration of Producer Company are listed below:

From All The Directors And Shareholders

    • Proof of PAN Card, Voter ID Card, Passport
    • Proof of the Latest Bank Statement
    • Proof of the Telephone Bill or Mobile Bill
    • Passport-sized photos of all the Directors and Shareholders 

For The Proposed Registered Office

    • Proof of any Utility Bill, but it should not be older than two months.
    • Scanned Proof of the Rent Agreement with the No-Objection Certificate (NOC) from the actual owner.
    • If the said property is owned, then the ownership documents or the sale agreement are the same.

PROCEDURE of PRODUCER COMPANY REGISTRATION

The procedure of filing a Producer Company is quite comparable to that of a Private Limited Company. Further, for a Producer Company Registration, an application must be registered with the Registrar of Companies (ROC) in the designated format and the required documents. Furthermore, the registrar of companies must view all the documents submitted and then issue the Certificate of Incorporation(COI) on receiving the request.

The following listed are the steps involved in the process for obtaining registration of Producer Company:

    • Obtain DSC and DIN: The first and foremost step in the procedure is to receive Digital Signature Certificate (DSC) and Director Identification Number (DIN). Moreover, DSC must sign the documents digitally or electronically, and the Certifying Authority issues the same. Also, DIN is required for all the recommended directors of the company. Besides, the same can be acquired by just registering the SPICE form as there is no requirement to file a separate Form.
    • Application for the Name Approval: For reserving the name of a Producer Company, the members of the said firm are required to register a Reserve Unique Name (RUN) form with the ROC. After submitting the form, the ROC will then verify the availability of the name submitted by the members. Further, once the company’s name is approved, the certification of establishment is required to be registered within twenty days.
    • Drafting of MOA and AOA: After getting the name approval, an application for an association is required to be registered in SPICE form together with all the essential documents such as the Memorandum of Association (MOA), Article of Association (AOA), an affidavit signed by all the members, and the information regarding the competency to act as legal subscribers of the company, with the respective Registrar of Companies (ROC).
    • Certificate of Incorporation: After confirming the documents and the application for incorporation submitted, a COI (Certificate of Incorporation) is issued by the ROC, and the same takes around seven days.

RULES AND REGULATIONS PRESCRIBED FOR THE EASY AVAILABILITY OF LOANS AND CREDITS?

The ways in which Financial Assistance can be provided to the members of a Producer Company is listed below:

    • Credit Facility: The creditability will be given to a member of a farmer company just for a period not exceeding more than six months.
    • Loans and Advances: Loan and advances will be provided to the members upon some security for a term not exceeding more than seven years beginning from the date of loan disbursement.
    • NABARD Loan: NABARD stands for the (National Bank for Agriculture and Rural Development). Moreover, NABARD gives financial assistance for satisfying the requirements of a Producer Company. Furthermore, in 2011, the PODF (Producer Organization Development Fund) of worth Rs 50 Crore has been set-up by the NABARD out of its producing surplus.

What happens if in case a member of a producer company ceases to be a primary producer?

Suppose in case any member of a producer company ceases to be a primary producer. In that case, the directors of the said Producer Company will provide directions for submitting shares at par value or at the value determined by the directors and any specific power assigned to it. Moreover, the same will be done only when the declared member serves a written notice, and also, a chance of being heard is provided to him.

INTERNAL AUDIT REQUIREMENTS FOR A PRODUCER COMPANY

A Producer Company is needed to know internal audits at regular intervals by a Practising Chartered Accountant following the company’s AOA (Articles of Association).

Besides, the auditor will make an annual audit report only after doing proper analysis and research of the accounts to the members of a producer company.

Further, an Accountant is also needed to report on some additional details like the outstanding debts and bad debts, an investigation of the cash balance, details and items of the liabilities and assets, loans offered to the directors and donations received, and approvals made.

Tax ADVANTAGES AVAILED BY A REGISTERED PRODUCER COMPANY

A registered producer company enjoys multiple tax benefits, such as the exception from agricultural income given under section 10(1) of the Income Tax Act, 1961. Moreover, the exception differs based on activities carried out by the farmers or agriculturalists, such as the agricultural income produced is exempted 100 percent. In contrast, the income generated from the production of Tea is 60 percent exempted as per the law.

How is a Producer Company distinct from a Public Limited and a Private Limited Company?

DescriptionProducer CompanyPrivate Limited CompanyPublic Limited Company
ObjectThe object of a Producer Company is specified under Section 581B of the Companies Act, 1956.Any lawful objectAny lawful object
Name of the CompanyThe name of a Producer company must end with the suffix “Producer Company Limited.”The Name of a Private Company must end with the suffix “Private Limited Company.”The Name of Public Company should end with the suffix “Public Limited Company.”
MembersTen or more individuals, or two or more institutions, or their combination. However, there is no restriction prescribed on the maximum number of membersA minimum of two and a maximum of two-hundred.A minimum of seven, and there is no restriction prescribed on the maximum number of members.
DirectorsA Minimum of 5 and a maximum of 15 directorsA Minimum of 2 and a maximum of 15 directorsA Minimum of 3 and a maximum of 15 directors
Cessation of Membership

A person ceases to be the member of a Producer Company in the following listed cases:

  1. Ceases to be a Primary Producer
  2. His business interest is in conflict with the business of a Producer Company.

1. Buyback of shares, or

2.  Transfer of shares, or

3.  Non-payment of either the allotment or the call money, or

4.  On the death of a member, or

5.   If a member becomes insolvent, or

6.   By an order passed by the court etc.

1. Buyback of shares, or

2. Ttransfer of shares, or

3. Non-payment of either the allotment or the call money, or

4. On the death of a member, or

5. If a member becomes insolvent, or

by an order passed by the court etc.

FAQs for Producer Company Registration

After getting the prior approval of directors, a member of a Producer Company is eligible to transfer shares together with the special rights (if in case any).

We ensure quick and fast registration. Though, the same also depends upon the documents given by an applicant. Usually, it takes around 30 days.

A minimum of five directors are required to organize a Producer Company.

Rs 5 Lakhs are needed as Minimum Capital to register a Producer Company.

No, there is no necessary for you to be present to register a Producer Company as the registration process is done online. And you want to provide the required documents as needed in the portal.

The members of a Producer Company are asked to nominate a person in a prescribed manner within three months of becoming a member of a Producer Company.

 

Yes, after acquiring Director Identification Number (DIN) or Designated Partner Identification Number (DPIN), an NRI or a foreign national is qualified to become a Designated Partner in a Producer Company. However, it shall be considered that at least one designated partner of the Producer Company should be a citizen of India.

Any individual or organization is qualified to become a member of a Producer Company.

Yes, it is mandatory and essential for a Producer Company to gets its accounts audited.

 

A producer company is a hybrid structure Private Limited Company, and Co-operative is that this company mixes the goodness of a cooperative enterprise and the efficiency and vibrancy of a private company and provides the unique facets of a joint business with the regulatory framework parallel to that of a Private Company.

The incorporation and regulation of Producer Company are governed and organized by the provisions of Sections 581A to 581ZL of the Companies Act, 1956, register with the Companies Act, 2013, and the regulations made thereunder.

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