Producer Company is another classification of Private and Public Company. These types of companies have the features of co-operative societies. Only ‘primary producers’ or ‘producer institution’ can form a producer company and participate in the ownership of such companies.
‘Primary Producers’ means people engaged in the process of Primary Produce. Primary produce means produce of farmers arising from agriculture including animal husbandry, horticulture, floriculture, pisciculture, viticulture, forestry, forest products, re-vegetation, bee keeping and farming plantation products. It can also include produce of persons engaged in handloom, handicraft and other cottage industries, by-products of such products and products arising out of ancillary industries.
A Producer Company will primarily deal with the produce of its members for carrying out any of the following objects:
- Production, harvesting, procurement, grading, pooling, handling, marketing, selling, exporting of primary produce of the members or importing of goods or services for their benefit. They may carry on any of the activities specified in this clause either by itself or through other institutions
- Processing including preserving, drying, distilling, brewing, venting, canning and packaging of produce of its members
- Manufacture, sale or supply of machinery, equipment or consumables mainly to its members
- Providing education on the mutual assistance principles to its members and others
- Rendering 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, revitalisation of land and water resources, their 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 for the benefit of members as may be decided by the Board
- Any other activity, ancillary or incidental to any of the activities referred to in clauses (a) to (i) or other activities which may promote the principles of mutuality and mutual assistance amongst the members in any other manner.
- Financing of 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.
- The main features of a Producer Company are:
- The registered producer company will be treated as a private limited company
- Ten or more ‘Primary Producers’ are required to form a producer company. As in the case of private company, a minimum of two persons cannot get them registered.
- The maximum number of members can exceed 50.
- Maximum number of Directors shall be 5.
- Minimum authorized and paid-up capital should of Rs.5 lakh.
- It shall never become a public limited company.
- The liability of the members is limited to the unpaid amount of the shares held by them.
- Profit share will be in the ratio of business contribution and investment
The benefits of a Producer Company include:
- Single Market: All producers within the company can supply their products to the company and receive compensation for their contributions.
- Profit Sharing: If the Producer Company generates profits from selling the products, the profits are distributed among the producers based on their contributions. This allows producers to increase their earnings by pooling their products together.
- Bonus Shares: Producers may receive bonus shares in proportion to the amount they contribute to the company.
- Financial Assistance: Members of a Producer Company are eligible for financial assistance, such as credit facilities, for a period of up to six months.
- Loans and Advances: Producers can obtain loans and advances from the company, with repayment terms extending up to seven years, against appropriate security.
These benefits make the Producer Company structure attractive for producers as it provides them with a platform to collectively market their products, share profits, and access financial assistance for their agricultural or rural-based businesses.
Checklist/Requirements for forming a Producer Company:
Basic Requirements:
- Minimum of 10 individual producers or 2 producer institutions as members (No upper limit on the number of members).
- Minimum authorized capital of Rs. 5,00,000 is required.
- Minimum of 5 directors and a maximum of 15 directors.
Documents Required:
For Each Director and Shareholder:
- PAN card* (mandatory for Indian nationals, and for others if held).
- Passport* (for NRIs, foreigners, and Indians if held).
- Address proof (any one of the following documents, not more than 2 months old): a. Bank Statement. b. Phone Bill. c. Mobile Bill. d. Electricity Bill.
(Note: For NRIs and foreigners, documents issued by foreign authorities or signed outside India must be notarized and apostilled.)
For Registered Office Address:
- No Objection Certificate (NOC) from the owner*.
- Rent Agreement* (if the office is rented).
- Utility Bill* (such as electricity bill, water bill, etc.) as proof of address.
Please note that the items marked with (*) are mandatory documents, and all other requirements may vary depending on the specific regulations and laws applicable in your country or jurisdiction. It’s advisable to consult with a professional or legal expert for accurate guidance based on your location and circumstances.
To register a Producer Company in India, follow the steps below:
- Obtain Digital Signature Certificate (DSC) and Director Identification Number (DIN):
- Apply for a DSC, which is a secure electronic signature used for digital document signing.
- Obtain DIN for all directors of the company.
- Apply for name reservation:
- Choose a unique name for the producer company.
- Submit an application for name reservation through the MCA website.
- Draft and file the Memorandum of Association (MOA) and Articles of Association (AOA):
- Prepare the MOA and AOA, which outline the objectives and rules of the company.
- File the MOA and AOA with the Registrar of Companies (ROC).
- Apply for PAN and TAN of the company:
- Once the company is incorporated, apply for a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) for the company.
- Apply for PAN and TAN online through the Income Tax Department website.
- Receive the Certificate of Incorporation along with PAN and TAN:
- After successful processing of your application, you will receive the Certificate of Incorporation from the Registrar of Companies.
- The Certificate of Incorporation confirms the legal existence of the producer company.
It is important to note that the specific requirements and procedures may vary based on the latest regulations and guidelines issued by the Ministry of Corporate Affairs (MCA). It is advisable to consult a professional or visit the MCA website for the most up-to-date and accurate information before proceeding with the registration process.
Key Deliverables for Incorporating a Producer Company in India:
- Digital Signature Certificate (DSC) of directors and shareholders
- Share Certificates
- Certificate of Incorporation
- Permanent Account Number (PAN)
- Tax Deduction and Collection Account Number (TAN)
- Memorandum of Association (MOA)
- Articles of Association (AOA)
What do you want to know?
Yes, A producer company can sell its products in the open market and make profit. Out of which later the profit can be divided amongst the members of the company.
Yes, a producer company can make finished products such as tomato ketchups, fruit jams, Juices. Later pack them and sell to the suppliers or through retail or any other channels.
Yes, it is mandatory to have shareholders of the producer company to be the producers only. One or more producer companies can become shareholders as well.
Yes, Producer companies have to follow the standard compliances that are described in the companies act 2013. More or the less producer company compliances are similar to private limited company compliances