Producer Companies consist of a group of individuals involved in producing primary products or having one or more objectives related to primary products. There are specific provisions for Indian Producer Companies in Part IXA of the Companies (Amendment) Act, 2002. In order to introduce this concept, the main objective was to frame a piece of legislation allowing cooperatives to be incorporated as companies or for existing cooperatives to be converted into companies. An Indian Producer Company (IPC) is a company incorporated under Section 581B of the Indian Companies Act and has specified its activities and objectives.

In the midst of the COVID-19 and lockdown, a producer company from Kadur, Karnataka, has come forward to extend their assistance to farmers in order to help them sell their produce on the local market. There are 81 Farmer Producer Companies with the approval of the State Horticulture Department of Haryana involved in supplying fruits and vegetables from their member farms to the end-consumers within their respective areas. These companies are committed to ensuring uninterrupted supplies of fruits and vegetables.

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Activities of a Producer Company

1. Production, procurement, harvesting, pooling, grading, marketing, handling, selling and export of the primary produce of members. Provided that the Producer Company shall continue these activities themselves or through other institution;
2. Processing including drying, preserving, brewing, venting, canning, distilling and packaging of the produce;
3. Manufacture, supply or sale of machinery, equipment or consumables to its members;
4. Imparting of knowledge on the mutual assistance principles to its members;
5. Delivering technical services, consultancy services, training and other activities for the promotion of interests of its members;
6. Insurance of producers and or the primary producer.

Click here to know more about Activities Authorised Under Producer Company

Procedure for Incorporation

Applicant: Any person (10 or more) being a producer, or two or more producer institutions, or a combination of the above, can incorporate an Indian Producer Company.

Filing of Name: File an application in FORM-1A along with a fee of Rs.1000. The application has to be made to the Registrar of Companies of the state where the producer company office is proposed to be located. A name that is available and one that best defines the purpose of your producer company is to be selected. When the ROC informs about the availability of the name, a MOA and AOA of the company is drafted in accordance with the rules of Sec. 581F and 581G respectively.

MOA and AOA: These documents have to be stamped by the appropriate authority in agreement with the rules of the Indian Stamp Act, 1899 either physically or electronically. These documents have to be signed by each producer. The date will be the date of stamping.

Object: The object clause in MOA must specify all the matters which are specified in Sec. 581B.

Appointment of the First directors– The AOA of the company mentions the first directors of the producer company who hold office till directors are appointed within a period of 90 days of the registration. The minimum number of directors is 5 and maximum 50.

Filing of Documents

1. AOA and MOA duly signed, dated and stamped.
2. Power of Attorney
3. Statutory declaration in the e-Form- 1(on Stamp paper) declaring compliance of all and incidental matters regarding the formation of companies.
4. Payment of stamp duty electronically through the MCA portal. In case it is not paid electronically, then original stamped physical copies of the uploaded e-Form-1, AOA, MOA along with a copy of the challan in the concerned office of ROC has to be submitted.
5. Filling of Form-18
6. Filling of Form-32
7. Registration Fees

Certificate of Incorporation

The registrar issues an incorporation certificate having a CIN consisting of 21 digits within 30 days of the receipt of the documents required for company registration in India.

Documents Required

• Copy of PAN Card of all the directors
• Passport size photographs of the directors
• Copy of the voter identity card/Aadhaar Card
• Copy of the Rent agreement(If it is a rented property)
• Water/Electricity bill (Business Place)
• Copy of the Property papers (If owned property)
• Landlord NOC
• What is a Producer Company?

A producer company is a unique business entity in India that combines features of a cooperative society and a Private Limited Company. It aims to benefit its member producers by providing a robust legal structure. Only business entities registered as Private Limited Companies are eligible for Producer Company registration, and their names must end with “Producer Company Limited.” These companies are formed by individuals and institutions engaged in primary production activities.

Objectives of the Farmer Producer Company 

The main objectives of a farmer-producer company are:

1. a) Facilitating the formation of cooperative businesses as companies and converting existing cooperative businesses into companies.
2. b) Engaging in activities related to production, harvesting, procurement, grading, pooling, handling, marketing, selling, and exporting primary produce of its members, or importing goods or services for their benefit.
3. c) Processing, preserving, drying, distilling, brewing, canning, and packaging the produce of its members.
4. d) Selling machinery, equipment, or consumables mainly to its members.
5. e) Providing education and technical services for the mutual assistance and benefit of its members.
6. f) Engaging in activities related to power generation, land and water resource revitalization, conservation, and communication related to primary produce.
7. g) Offering insurance for producers or their primary produce.
8. h) Promoting mutual assistance principles and welfare measures for its members.
9. i) Undertaking any other activity that promotes mutuality, mutual assistance, and benefits the members.

Additionally, a producer company can provide financial services like credit facilities to its members for procurement, processing, marketing, and other related activities.

Overall, a producer company serves as a cooperative platform for primary producers to collectively enhance their economic prospects and improve their livelihoods.

Benefits of the Farmer Producer Company

The benefits enjoyed by members of a Farmer Producer Company are as follows:

1. Fair Value for Produce: Members of the producer company receive a fair value for their pooled and supplied produce, as determined by the directors. This value can be given later in the form of cash, kind, or equity shares.
2. Bonus Shares: Members are entitled to receive bonus shares in proportion to the shares they hold in the producer company. This provides them with additional ownership and benefits.
3. Patronage Bonus: The surplus income of the producer company, after setting aside provisions for limited return and reserves, may be distributed as a patronage bonus to its members. This bonus is given based on the members’ participation and usage of the services offered by the producer company.

Overall, being part of a Farmer Producer Company allows members to earn fair returns for their produce, gain additional ownership through bonus shares, and receive patronage bonuses based on their active participation and support for the company’s activities.

Procedure of Farmer Producer Company Registration in India

The procedure for Farmer Producer Company registration in India involves the following steps:

1. Online Application: The proposed members need to make an online application in the e-form called Spice+ on the MCA portal. This form is available under the services section of the MCA portal, and applicants can access it after creating an account.
2. Filing Part A and Part B: The Spice+ e-form is divided into two parts. Part A is used to legalize the proposed name of the company. Part B provides various services, including incorporation, DIN (Director Identification Number) allotment, PAN (Permanent Account Number) allotment, TAN (Tax Account Number) allotment, EPFO registration, ESIC registration, GSTIN allotment, Profession Tax registration, and opening of a bank account.
3. Certificate of Registration: After applying, the Ministry of Corporate Affairs typically takes around 30 days to grant the certificate of registration from the date of receipt of the application.

By following this process, prospective members can register their Farmer Producer Company in India with ease and efficiency.

• Cost and time for Producer Company registration

Generally, it takes 10 to 15 days to register a Producer Company and its costs are around Rs. 15,000/- (inclusive of all taxes and fees). 

• Producer Company Incorporation Checklist

For incorporating a Farmer Producer Company in India, the following mandatory documentation is required:

• PAN & Photographs:

PAN and photographs of active directors and shareholders.

• ID Proof:

Aadhar card, Driving License, passport, or voter ID of the Directors, members, and shareholders.

• Address Proof:

Bank statements and utility bills such as landline bills, mobile bills, and electricity bills.

• Producer Proof:

Sarpanch letter, Khasra – Khatuni, Income Tax Return (ITR) with Agriculture Income, or any other proof of a person serving as a member.

• Registered Address Proof:

No objection certificate from the owner, utility bill, or rent agreement.

Having these documents ready will facilitate a smooth and efficient process of incorporating your Farmer Producer Company in India.

Conclusion

It is our hope that the information provided has answered your question; however, if you require additional assistance, please do not hesitate to leave a comment.

FAQs

How do I register a Producer Company?

To register a Producer Company in India, you need to follow these steps: 1. Obtain name approval for the business from the Ministry of Corporate Affairs (MCA). 2. Prepare the Memorandum of Association (MOA) and Articles of Association (AOA) of the company. 3. File the incorporation application with the Registrar of Companies (ROC) along with the necessary documents

What is the difference between FPO and Producer Company?

The difference between FPO and Producer Company is that FPO stands for Farmer Producer Organization, which is a group of farmers who come together to pool their resources and market their produce. A Producer Company, on the other hand, is a company formed by producers engaged in activities related to producing, particularly by farming, to carry on any of the following activities by itself or through other entities on behalf of the members

How a Producer Company is formed?

The procedure for forming a Farmer Producer Company is similar to the one for forming a private limited company. The registration process takes around 32-35 business days, subject to government authorization. The mandatory documents required for registration include identity proof, address proof, documents of the premises, and legal drafts

How do I register my farmer producer Organisation?

You can register your farmer-producer organization with the help of our experts. All you need to do is request a callback, our incorporation professionals will take it from there.

What are the rules for a producer company?

The rules for Producer Company include that every member shall initially receive only such value for the produce or products pooled and supplied as the Board of Producer Company may determine. Every member shall, on the share capital contributed, receive only a limited return, and the surplus, if any, remaining after the payment of limited return, may be disbursed as a patronage bonus amongst the members in proportion to their participation in the business of the Producer Company

What is the minimum capital of a producer company?

The minimum capital of a Producer Company is Rs. 5 lakhs, and it must have at least ten producers to register the company. The company can have a maximum of 15 directors and a maximum of 200 members if it is willing to function as a private company

What is the minimum number of members in a Producer Company?

In India, a producer firm must be registered with a minimum of ten people.

What is the difference between a Producer Company and a private company?

The difference between a Producer Company and a private company is that a Producer Company is formed by ten or more producers, two or more producer institutions, or a combination of ten or more producers and producer institutions. A private company, on the other hand, is formed by two or more persons and has a maximum of 200 members

Read more,

• Why is FPO not successful?
• Reasons to Register your Producer Company
• Steps to Form a Producer Company