Producer Company

A Producer Company is an officially established group of farmers or agriculturists to enhance their quality of life, financial support, and income. This kind of company combines elements of both private limited companies and cooperatives. Its primary goal is to encourage cooperative businesses to form as companies and to allow current cooperatives to transition into company structures.

Complete your Producer Company registration with Global Taxman’s expert guidance. Our team simplifies the process, ensuring legal compliance under the Companies Act 2013. Contact Global Taxman today and take the first step towards empowering your agricultural venture.

Producer Company

A Producer Company also referred to as a Farmer Producer Company, is an officially acknowledged organisation composed of farmers or agriculturists. Its primary goal is to improve the livelihoods of its members and ensure the long-term viability of their resources, incomes, and profitability. Operating as a hybrid between private limited companies and cooperative societies, a producer company incorporation is registered under the Companies Act 2013. It functions with democratic governance principles, ensuring that each member or producer has an equal say in decision-making, regardless of the number of shares they hold.

Legal Framework of Farmer Producer Company

A Producer Company, as defined, is a legal entity established under the amended Companies Act of 1956.

Governed by the provisions outlined in Section 465 of the Companies Act, 2013, it is subjected to the regulations outlined in Part IX A of the Companies Act, 1956, with necessary modifications. The objectives of a Producer Company incorporation must align with the activities specified in Section 581B of the Companies Act 1956.

Objective of Producer Company

A Producer Company's objective is to advance its members' interests by facilitating activities related to the production, marketing, sale, and export of their primary products.

Additionally, the producer company incorporation is empowered to import goods or services essential for the welfare of its members.

Activities of Producer Company

• Agricultural Advancements: Initiating and supporting activities related to the production, harvesting, procurement, grading, pooling, handling, marketing, selling, and exporting of members' primary produce. Additionally, it includes importing goods or services beneficial to the members.
• Processing and Preservation: Engaging in processing activities such as preservation, drying, distilling, brewing, venting, canning, and packaging of the members' produce to add value and extend its marketability.
• Equipment and Consumables Supply: Manufacturing, marketing, or supplying machinery, equipment, and consumables, primarily catering to the needs of its members.
• Educational Initiatives: Offering education and training based on the principles of mutual assistance to its members and the broader community.
• Technical and Consultancy Services: Providing a spectrum of services, including technical assistance, consultancy, training, research and development, aimed at promoting the interests and enhancing the capabilities of its members.
• Energy and Resource Management: Involving in power generation, transmission, distribution and revitalisation and sustainable management of land and water resources.
• Insurance Services: Offering insurance products tailored to protect producers or their primary produce.
• Mutual Cooperation: Promoting techniques and practices of mutuality and mutual assistance among members.
• Member Welfare: Implementing welfare measures or facilities decided by the Board for the benefit of members.
• Ancillary Activities: Engaging in any other activity that is ancillary or incidental to the primary objectives or that may promote the principles of mutuality and mutual assistance among members in different manners.
• Financial Support: Financing the procurement, processing, marketing, and other specified activities, which includes extending credit facilities or other financial services to its members.

Advantages of a Producer Company

• Hybrid Structure: A Producer Company incorporation combines the professional management of a Private Limited Company with the mutual benefits of a Cooperative Society.
• Ownership by Primary Producers: Ownership and membership are held exclusively by "primary producers" or "Producer Institutions," ensuring that the organisation remains focused on benefiting those involved in primary production. Member equity cannot be traded, safeguarding against takeovers or exploitation.
• Professional Framework: While adhering to the clauses of a Private Limited Company, a Producer Company operates under specific clauses outlined in the Producer Company Act (referenced from 581-A to 581-ZL), providing a professional framework tailored to the needs of primary producers.
• Limited Liability: In a Producer Company, members' financial responsibility is capped at their share contribution. This implies that members' assets are safeguarded against the company's debts or financial setbacks, limiting their liability strictly to the amount they've invested in shares.
• Minimal Capital Requirement: With a minimum paid-up capital of Rs. 1 Lakh and minimum authorised capital of Rs. 5 lakh, it is easier to mobilise small capital for a Producer Company.
• Flexibility in Membership: A minimum of 10 producers is required to form a Producer Company, with no limit on the maximum number of members. This flexibility allows even small groups of 10 individuals to establish a Producer Company, promoting accessibility.
• No Government or Private Equity Stake: Producer Companies cannot have government or private equity stakes, preventing them from becoming public or deemed public limited companies. This ensures autonomy and professional functioning without external threats.
• National Scope: Producer Companies can operate nationwide, providing flexibility to expand and conduct business freely and professionally.

Membership Structure of Producer Company

A producer company's membership excludes primary producers or producer organisations.

Membership is attained through the purchase of shares in the company. The actions of a Producer Company are solely executed through its members.

Members are pivotal in establishing the company and hold the authority to initiate its dissolution. Decisions within the company are made collectively through general meetings convened by the members.

Governance Structure of a Producer Company

You can legally authorise your producer company with producer company registration. The following emphasizes the governance structure of a producer company:

• A Board of Directors oversees the management of a Producer Company.
• Members of the company elect the Board during a general meeting.
• The Board must consist of a minimum of 5 directors.
• Directors serve a term of five years.
• Directors can be re-elected for up to two consecutive terms.

Minimum Share Capital Requirements

• The minimum Authorized Capital for a Producer Company is Rs. 5 lakh.
• The Authorized Capital can exceed Rs. 5 lakh as specified in the Memorandum of Association.
• The Authorized Share Capital must adequately fulfil the objectives outlined in the memorandum.
• The Authorized Share Capital needs to be realistic.
• The minimum paid-up capital for a Producer Company is Rs. 1 lakh.

Producer Company Registration Procedure

• Step 1: Obtain a Digital Signature Certificate (DSC)
• Step 2: Obtain Director Identification Number (DIN)
• Step 3: Name Reservation
• Step 4: Preparation of Essential Documents
• Step 5: Filing of Incorporation Application
• Step 6: ROC Verification and Certificate of Incorporation

After incorporation, the company may need to undertake additional steps such as applying for a PAN, TAN, and opening a bank account in the name of the Producer Company.

The experts at Global Taxman are ready to assist you at every step of the registration process.

Compliance for Producer Companies

• Audit and Reporting
• Conversion
• Taxation
• Share Capital Requirements
• Operational Objective
• Leadership and Decision-making
• Profit Sharing
• Operational Restrictions
• Structural Flexibility
• Dissolution/Winding-Up Procedures
• Voting Limitations
• Regular Meetings
• Financial Prudence
• Expertise Utilization
• NABARD Registration
• Operational Expansion
• Annual Return

Seamless Producer Company Registration with Global Taxman

Global Taxman offers comprehensive assistance in starting a Producer Company, providing expert support throughout the process. With a dedicated team of professionals, Global Taxman ensures seamless end-to-end support for Farmer producer company registration process, guiding you through every step, from initial paperwork to final approval. Beyond the registration phase, Global Taxman offers a range of post-incorporation services designed to help your Producer Company thrive and comply with regulatory requirements, making it a one-stop solution for all your incorporation needs.