What is a Producer Company?

Section 465(1) of the Companies Act, 2013 provides that the provisions relating to a Producer Company under the Part IXA of the Companies Act, 1956 shall continue to apply.

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A producer company can be defined as a legally recognized body of farmers/ agriculturists with the aim to improve the standard of their living and ensure a good status of their available support, incomes and profitability.

The main objective of the farmer producer company is to facilitate the formation of co-operative business as companies and to make it possible to convert the existing co-operative business into companies.

Objectives of the Producer Company

As per the Act, the objectives of a producer company should relate to all or any of the following matters:

  •  Production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of primary production of the Members or import of goods or services for their benefit, provided that the Producer Company may carry on any of the activities specified in this clause either by itself or through other institution.
  • Processing including preserving, drying, distilling, brewing, vinting, canning, and packaging of the 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, revitalization of land and water resources, their use, conservation and communication 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.

Requirements of Producer company

  • Any 10 or more producers (individuals) can join together to form a production company but there is no upper limit on the number of members.
  • Or, any 2 or more producer institutions can form a producer company.
  • A minimum paid-up capital is required to incorporate a producer company.
  • There should be a minimum of 5 directors (maximum of 15) in a producer company.
  • It can never be converted into a public company however it can be converted into a multi-state co-operative society.

Required documents for registration

  • PAN Card of the Director
  • Aadhaar Card of the Director
  • Photo
  • A utility bill and a NOC have to be taken from the owner whose address is to be used as the registered office of the company.
  • DSC of all the directors

Registration Procedure

  1. Name approval: The name of the production company is to be finalized. For that, Form SPICe+ to the Registrar of Companies (ROC) is to be filed by giving 2 names in the order of preference along with the significance of the names. The name shall have the words PRODUCER COMPANY at the end.
  2. Other documents to be submitted: After the name is approved by the ROC, the following documents are to be prepared:
    1. The Memorandum of Association is to be drafted by incorporating all the objects that the company intends to follow.
    2. The Articles of Association is to be drafted containing all the by-laws of the company.
    3. An affidavit has to be signed by all the subscribers of the proposed company declaring their legal competency to act as the subscribers.
  3. Filing form: All the drafted documents will be attached to Form SPICe+ and uploaded to the ROC website.
  4. Certificate of Incorporation: On proper verification, the ROC will issue a Certificate of Incorporation and the company can start its business operations.