Company IncorporationProducer Company

Which Act Is Applicable to Producer Companies?

Before knowing which act applies to Producer Companies, it is essential to understand what a producer company is. The primary producers and the farmers have several Acts applicable to them, and they must undergo various struggles in a country like India.

Under the Companies Act 1956, a certain description of agricultural production is given. All types of farming output that a farmer cultivates fall within the primary produce category. This includes animal husbandry, horticulture, fish-farming, viticulture, floriculture, sericulture, forestry, and hone gathering. 

Meaning of a Producer Company

As per the Companies Act of 1956, a Producer Company comprises ten individuals (can be even more), and there can be any two institutions (or even more), or it can be a suitable combination of both. This body has legal recognition and mainly has farmers and agricultural producers who want to improve their standard of living. Their main target is to ensure better income and much more profitable source generation for themselves and their company’s survival. 

The producer company is engaged in harvesting, selling, procurement, grading, pooling, handling, and exporting agricultural material. They also aim to furnish all the necessary details that might be required for forming a cooperative company or converting some form of cooperative business into a large company. All of the objectives of a Producer Company are given as rules under section 581B, and these activities are enlisted as below.

What Are the Authorised Activities of Producer Company?

The following are the authorised activities of a producer company:

  • They are engaged in the work of production, in major harvesting of crops, procuring, grading, handling of materials, and agricultural pooling of techniques that help in agricultural improvement. Moreover, they are also associated with exporting all primary production and marketing and selling sources that might benefit the company members. 
  • The producer company is also associated with the preservation, drying, and distilling of agricultural items, vinting, brewing of millets, canning of fish and other products and high levels of packaging of all those products that the members produce over time. 
  • Suppose it is about machines or the supply of commercial and industrial machine parts or equipment. In that case, the producer company can also be attached to the members’ selling and manufacturing equipment. For the company professionals, the Producer company also gives mutual assistance and provides the right type of education to keep them safe amidst all odds. They also undertake major welfare measures for the members of the board. 
  • Apart from these, the works of the producer company also include technical service, consultancy, training, and research about agricultural products that are newly launched into the market. This is done keeping the interest of the members in mind. Additionally, it is the work of the producer company to check the transmission and distribution of power, how the land and water can be revitalised and how proper conservation of natural resources can be done.


The Relevant Provisions of Companies Act In Brief:

One needs to check all the relevant provisions that are related to the Companies Act and those that relate to the producer company: 

  • A checklist and a few points are part of the pre-incorporation plan. These include coming together ten or more primary producers who may initiate a company. The minimum number of members needs to be 10, but there is no limit to the maximum number. 
  • There can be two or more institutions that can form a producer company. A capital of 5 lakhs is required; there should be five directors. There is a difference between a multi-state cooperative society and a public company. If you want to register as a producer company, you have to fill in all the papers that might lead to forming a multi-state cooperative society. 
  • There is a need for a digital signature and the Director Identification Number or DIN, which should be procured to set up the initial stage of the company. After these two are obtained, one needs to file an application to be filled as part of the Registrar of Companies or ROC. 
  • There is a law under the Companies Act that if a name of a producer company is to be given, it should end with the terms ‘Producer Limited Company.’ When the registrar is satisfied with all the paperwork submitted, there is an approval done, and the issue of certificate of incorporation is given. 
  • Major documents must be submitted, including the director’s PAN card, their Aadhaar card, photo, email i.d., and a valid contact number. When the DSC is received, the director should go for the Director Identification Number after filling up the form for DIR- there should be self-attested identity proof, residential address proof, and a photo should be uploaded. 
  • Once these basic and initial steps are done, the name of the primary production company should be finalised. Form INC-1 given to the Registrar of Companies should contain around six names and the significance of why those names are given. The names must contain the Producer Company at their end. If all criteria are fulfilled, then the ROC approves the names. 
  • The next step is to go for the Memorandum of Association and enlist every objective the company aims to follow. There is a phrase called the Articles of Association that contains all the major by-laws of any company. A professional declaration needs to be drafted and uploaded as part of the form INC-8. 
  • Finally, when everything is done, an affidavit signature is needed by all those who subscribe to the forthcoming company. The same affidavit should contain a declaration that they are legally competent to operate as subscribers. 


The producer company has a huge responsibility in running a company and taking care of all the other individual groups. A sphere of mutual assistance is always built up as part of the company policies. At the same time, the Companies Act also enables the channelisation of insurance for the producers and whatever items they produce. If you want to learn more about producer companies in detail, their works, which are the laws that apply to them, you can get help from Vakilsearch. It is a one-stop solution for all your queries related to company acts, producer companies and the applicable laws.

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