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Preface: This post was originally published in 2022 and has been updated on February 17, 2025, to provide you with the most current and accurate information.
Producer Company is a business structure incorporated by producers engaged in production of primary goods like agricultural produce or pursuing one or more objectives related to primary production. The concept of Producer Company was introduced in 2002 to facilitate the incorporation of cooperatives as companies and the conversion of existing cooperatives. This kind of business can undertake only those objectives that are specified in Section 581B of Companies Act.
Through this article, you will gain a deeper insight into the concept of Producer Company.
A producer company is a business entity that a group of producers (mainly farmers) form to manage activities collectively. These activities include production, harvesting, procurement, grading, marketing and selling of their primary produce. The primary goal of a producer company is to improve its members’ lives.
The Companies Act, 1956, ("the Act") was amended in 2002 to include a new Part IXA (Sections 581A to 581ZT) to establish the concept of producer companies based on the recommendations of an expert committee headed by Mr. Y. K. Alagh, an economist.
The requirements pertaining to a Producer Company under Part IXA of the Companies Act, 1956 continue to apply, according to Section 465(1) of the Companies Act, 2013 (the "Act").
A company formed is said to be the producer company only when it is incorporated with the objectives mentioned below:
Manufacture, harvesting, obtaining, grading, pooling, handling, marketing, selling, export of primary production of the Members.
The activities in processing include preserving, drying, distilling, brewing, venting, canning, and packaging of the produce of its Members.
For the members manufacturing, selling or supplying of machinery, equipment or consumables.
On the provision of mutual assistance imparting education to its Members and others.
Providing technical services, consultancy services, training, research and development and all other activities for the promotion of the interests of its Members.
Generation, transmission, and distribution of power, revitalization of land and water resources, their use, conservation and communication relatable to primary production.
Providing insurance for producers or their primary produce.
Encouraging techniques of mutuality and mutual assistance.
Welfare measures or facilities for the benefit of Members.
The activities endorsing the principles of mutuality and mutual assistance amongst the Members and any other activities ancillary or incidental to any of the activities mentioned above.
Providing money for the procurement, processing, marketing or other activities specified in clauses (a) to (j) which include extending of credit facilities or any other financial services to its Members.
In order to obtain the registration of Producer Company, it is necessary to have below-mentioned members individually or in combination with one another:
Ten or more individuals and every one of them being a producer; or
Two or more producer institutions; or
A combination of ten or more individuals and producer institutions.
The following documents are necessary for the registration of a producer company:
PAN Card copy of all the directors.
Passport-size photographs of the directors.
Voter identity card/Aadhaar Card copy.
Rent agreement copy (if it is a rented property).
Water/Electricity bill copy (Business Place).
Property papers copy (if owned property).
No Objection Certificate (NOC) of the landlord.
The procedure of registration for the Producer Company is very similar to the registration of private limited company. Below, we have outlined the steps to incorporate the producer company in India:
To initialize the procedure of producer company registration, every director of the company is required to obtain the digital signature certificate. Digital Signature Certificate (DSC) is a digital signature that verifies the applicant’s identity.
After obtaining the DSC, the director needs to obtain a Director Identification Number (DIN). DIN is an eight-digit unique number allotted to every person who wants to become a director. The Ministry of Corporate Affairs allots it.
Memorandum of Association (MOA) is a document that defines the relationship of the shareholders with the company. It basically contains the objectives and powers of the company. Articles of Associations (AOAs) are the bye-laws that define the relationship of the company with outsiders. AOAs must include information such as the total number of members, share capital, rules for a meeting of the company and voting power of members. A draft of both MOA and AOA is required for producer company registration.
In this step, the applicant must upload various forms like INC – 7, INC – 22 and DIR – 12 on the MCA website. Along with this, all the relevant documents must be filed as well.
On proper verification of the forms filed and documents submitted, the ROC will issue a Certificate of Incorporation and the company can commence its business operations as a producer company.
A producer company is a legal business entity under the Companies Act. It helps the producers in managing production, marketing and selling agricultural produce efficiently. For farmers and other producers willing to work together for financial stability and market opportunities, registering a producer company is a good option. Connect with Registrationwala for company registration under the Companies Act 2013.
Q1. Which committee recommended the concept of the Producer Company?
A. An expert committee led by economist Y.K. Alagh recommended the concept of Producer Company.
Q2. Which Act introduced the concept of Producer Company?
A. The Companies Act 1956 introduced the concept of Producer Companies through an amendment in 2002.
Q3. Can I register a producer company as an LLP?
A. No, you cannot register a producer company as an LLP (Limited Liability Partnership). The producer company is a specific type of business entity under the Companies Act, not the LLP Act.
Also read: How to Become a Mutual Fund Distributor?
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