Farmer Producer Company Registration in India

What is producer company? Producer Company is a special business Model. The term "Producer Company" indicates that only certain categories of persons, known as "primary producers," can become shareholders in the Producer Company. Primary Producer means those persons who are engaged in primary agriculture activities such as:

1. Animal Husbandry: breeding or caring for animals on the farm.
2. Horticulture: Producing and growing plants, fruits, or vegetables.
3. Floriculture: Growing Flowers.
4. Pisciculture: Fish farming.
5. Viticulture: Producing grapes.
6. Forestry: Preserving forest.
7. Re-vegetation: Rebuilding or replanting disturbed land.
8. Bee raising: keep bees to collect honey.

Other businesses like handloom, handicraft, etc. can be the producer company's activities. Producer companies are the preferred choice of business model amongst farmers because producer company areas of operations are not restricted to a particular state as in the case of a Cooperative society. Moreover, it has lesser government intervention in a running company and can also access financial institutions for raising money for day-to-day expenses requirements.

Objectives Of the Producer Companies

The varied objectives to establish a Producer Company in India can be on the following matters:

• Production, harvest, procurement, grading, pooling, handling, marketing, selling, and export of primary produce of the Members.
• For processing, including preserving, drying, distilling, brewing, venting, canning, and packaging of the produce of its members.
• Manufacture, sell or supply machinery, equipment, or consumables mainly to its members.
• Provide education on mutual assistance principles to its members and others.
• Render 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, land, and water resources revitalization, use, conservation, and communications relatable to primary produce.
• Insurance of producers or their primary produce.
• Promoting techniques of mutuality and mutual assistance.
• Welfare measures or facilities decided by the Board to benefit members.
• Any other activity, ancillary or incidental to any of the activities mentioned above, may promote the principles of mutuality and mutual assistance amongst the members.
• Financing procurement, processing, marketing, or other activities include extending credit facilities or other financial services to its members.
• Every Producer Company must deal primarily with the produce of its active members for carrying out any of its above-specified objectives.

Features of Producer Company 

There are some unique features of the Producer Companies:

• Producer companies are private limited companies.
• Though it is a private limited company, its members can be more than 50 members
• A minimum of 10 or more individuals, producers, or any two or more producer companies, or a combination thereof, are required to form a Producer Company.
•  shall have at least 5 but not more than 15 directors.
• Conversion is not possible in any other business structure, such as Pvt. Limited company, Public Limited Company, LLP, etc.
• Producer Company shall have the words "Producer Company Limited" at the end of its name. For example, Vanilla India Producer Company Limited.
• The Minimum Paid-up capital must be Rs. 5 lakh.

Voting rights in the producer company are aligned with the principle of "one man-one vote," regardless of the producer companies' shareholding.

Benefits of a Producer Company

Why Producer Company?

• Producer companies can take advantage of various central and state government schemes like "Rashtriya Krishi Vikas Yojana funds, National Food Security Mission," and so on.
• Equity Grant Scheme: To raise the capital base, a grant of upto Rs. 10 lakh is provided to each Producer Company.
• Credit Guarantee Fund (CGF): This will cover 85% of the loans given by banks to Producer Companies.

What are Producer Company Benefits to Members?

• Every Member of a Producer Company receives value for the produces or products pooled and supplied, as determined by the Board of Producer Company.
• The withheld price will be disbursed later in cash or by allotment of equity shares in proportion to the produce supplied to the Producer Company.
• Every member receives only a limited return, provided that every member is allotted bonus shares.
• The surplus, if any, remaining after making payment will be disbursed as a patronage bonus, amongst the members, in proportion to their participation in the business of the Producer Company.

Eligibility Criteria for Producer Company Registration

Membership and Capital requirements:

To get the answer of what are producer company eligibility criteria, check the following membership requirement that must be observed by the applicant to register as a Producer Company under the Companies Act of 2013:

1. A minimum of five directors are allowed in a Producer company.
2. A minimum of ten members are allowed in a Producer company.
3. A minimum of two institutions can come together to form a Producer company.
4. A minimum capital of five lakh rupees is required for Producer company incorporation.
5. A Producers company cannot be transformed into a public limited company.

Appointment of Directors

• Every Producer Company must have at least five and not more than fifteen directors. Except for an Inter-State cooperative society, which is incorporated as a Producer Company, it has more than fifteen directors for one year from its incorporation.
• The Members who sign the Memorandum and the Articles of Association are designated the Board of Directors, not less than five.
• The election of directors will be conducted within a period of ninety days of the registration of the Producer Company.
• Every appointed director can hold their office for a period not less than one year and not exceeding five years.
• Every retired director is eligible for re-appointment as a director.
• The directors of the Board are elected or appointed by the existing members in the Annual General Meeting (AGM).
• The Board may co-opt one or more expert directors, not exceeding one-fifth of the total number of directors,  or appoint any other person as an additional director for a period as the Board may deem fit, provided that the expert directors shall not have the right to vote in the election of the Chairman.

Documents Required for Producer Company

The documents listed below must be submitted with the application for registration of a Producer Company to the Ministry of Corporate Affairs:

• Self-attested PAN card copy
• One (Color) Photograph
• Self-attested copy of any one of the Identity Proofs like Driving License, Passport, or Voter ID.
• Self-attested copy of any one of the Address Proofs like Bank Pass Book/Bank Statement, Telephone Landline Bill/ Mobile Bill, or Electricity Bill.
• Electricity Bill, Telephone Bill, Mobile Bill, or Gas Bill is required for the Company Address proof.
• In the case of a rented property, a Rent Agreement, and a NOC (No-Objection Certificate) for doing Business & for taking Registration

Process for Producer Company Registration in India

Farmer Producer Company Registration Process

The step-by-step procedure for the registration of a Farmer Producer Company Registration in India is as follows:

1. Choose a unique name for the company.
2. Reserve the name of the Producer company using the RUN application on the MCA web portal.
3. Obtaining the DSC and DIN of the directors of the company
4. Drafting MOA and AOA of the company
5. Submitting the online application for Producer company incorporation
6. Assessment of the application by the Ministry of Corporate Affairs

Investment from General Reserves

A Producer Company can make investments from and out of its general reserves in one of the following or a combination of the following:

• Approved securities, fixed deposits, units, and bonds issued by the Central Government, State Governments, cooperative societies, or scheduled banks.
• Cooperative bank, State cooperative bank, cooperative land development bank, or Central cooperative bank.
• A scheduled bank
• Securities specified in the Indian Trusts Act of 1882
• Shares and securities of any other inter-State cooperative society or any cooperative society
• Shares, securities, or assets of public financial institutions

Producer Company compliances

Every Producer Company must have an internal audit of its accounts carried out at a definite interval by a chartered accountant.

Functions of an Auditor

The appointed auditor for the internal inspection must report on the following matters relating to the Producer Company:

• Amount of debts due along with particulars of bad debts.
• Cash balance and securities
• Details of assets and liabilities
• Contradictory transactions
• Loans given by the Producer Company to its directors
• Donations and subscriptions given by the Producer Company
• Any other matter considered necessary by the auditor.

How can we help

We, at Registrationwala provide end to end solutions for Producer company registration in India. Our services include:

• Company name research
• Obtaining DSC and DIN
• MOA and AOA drafting
• Application filing
• Following up with the Ministry of Corporate Affairs.

In order to keep up with these requirements, you need the assistance of the business experts. Additionally, the process of Producer company registration in India is something that only experts like CA or CS should handle.

Therefore, Registrationwala is here to help out. Our complete Producer company registration services shall ensure that you can setup your company and be on your way to success in no time.

Frequently Asked Questions