Producer Company

What is a Producer Company?

A Producer Company is a corporate entity that caters to the agricultural sector in India, where a significant portion of the population—about 60%—earns their livelihood from agriculture. Despite the sector’s vast contribution to the economy, Indian farmers and primary producers have historically encountered numerous challenges. To address these, the Government of India, guided by economist Y.K. Alagh introduced the concept of producer companies in 2002. These entities have since played a pivotal role in providing primary producers with better access to markets, credit, inputs, and production technologies.

Essentially, a Producer Company is an organization registered to manage the agricultural production of its active members. It combines the efficiency of a private limited company with the principles of a cooperative society, offering its members the collective benefits within a clear legal framework. The registration of a Producer Company is exclusive to entities already established as Private Limited Companies. Upon incorporation, these entities bear the suffix “Producer Company Limited” in their names.

In India, individuals and organizations involved in primary production can come together to form a Producer Company. This initiative has been instrumental in elevating the status of farmers to that of corporate entities, thereby fostering the growth of the agricultural sector. Over recent years, the global recognition of agriculture has expanded, paving the way for more incorporations of Producer Companies, reflecting a modern approach to agricultural business and empowerment.

Objectives of Producer Company Registration

The primary objective of registering a producer company is to advance the interests of its members by facilitating production, marketing, sales, and export of their primary products. By providing a structured platform for collective growth, the company aims to enhance market access and increase rewards for its members. Additionally, the company is empowered to import goods or services essential for the well-being and smooth operation of its members.

The producer company strives to ensure the overall welfare of its member producers, promote sustainable development, and elevate income levels through these activities.

Key Objectives as Defined by Section 581B of the Companies Act, 1956

Producer company registration under Section 581B of the Companies Act, 1956, outlines the following key objectives:

• Facilitate activities such as harvesting, production, grading, pooling, marketing, procurement, and sale of agricultural produce to benefit its members.
• Provide financial assistance such as insurance and extend credit facilities to its members.
• Offer technical and educational services to aid members in their operations.
• Foster harmony, cooperation, and mutual assistance among its members.
• Explore and implement strategies to benefit the agricultural sector.

Legal Framework for Producer Companies

Producer companies operate under specific legal frameworks to ensure compliance across the country. These include:

• Governed by Section 465 of the Companies Act, 2013, and Part IX A of the Companies Act, 1956, with necessary modifications.
• Objectives of the producer company must align with those specified under Section 581B of the Companies Act, 1956.

By adhering to these legal provisions, producer companies can conduct their business smoothly and effectively meet the needs of their members.

Benefits of Producer Company Registration in India

1. Limited Liability for Members: Members of a Farmer Producer Organization (FPO) enjoy limited liability, meaning their personal assets remain protected in case the company faces insolvency.
2. Easier Access to Credit: FPOs are deemed more creditworthy than individual farmers, making it easier for them to secure loans from banks and financial institutions, often at more favorable interest rates due to their collective bargaining power.
3. Perpetual Succession: A Producer Company enjoys perpetual existence, continuing operations regardless of changes in membership or the demise of any members, thanks to its status as a separate legal entity.
4. Profit Distribution: Profits generated by a farmer-producer company are shared among its members, ensuring that the income benefits the community it serves.
5. Tax Exemptions on Agricultural Income: Producer Companies are exempt from taxes on agricultural earnings, aligning with current tax regulations that favor agricultural prosperity.
6. Deposit Acceptance: Producer Companies are authorized to accept deposits in various forms, such as fixed or recurring, under their governing bylaws.
7. Asset-Backed Loans: They are permitted to provide credit facilities to their members, secured against tangible assets like government securities, gold, or fixed deposits.
8. Increased Efficiency and Production: FPOs empower farmers with access to better resources, technology, and training, leading to enhanced productivity and efficiency.
9. Wider Market Reach: With collective strength, farmers can negotiate better prices for their produce and tap into broader markets.
10. Smooth Business Operations: The limited liability and separate legal entity status relieve financial pressure on individuals, allowing for uninterrupted business activities.
11. Ownership and Contractual Rights: As independent legal entities, Producer Companies can own property and enter contracts, which can foster trust and credibility among stakeholders.
12. Government-Supported Loans and Investments: Special provisions by the government for lending to primary producers within a Producer Company, such as NABARD Loans, provide financial support tailored to the needs of farmers and producers.

Requirements for Producer Company Registration

Registering a producer company is crucial for farmers and agriculturists aiming to accelerate business growth. Here are the requirements for Producer Company Registration:

• The company must have a minimum of 10 members to obtain registration.
• All members must be producers actively engaged in producing goods or services.
• Farmers must be willing to contribute to the company’s minimum capital requirement, set at Rs 5 Lakhs.
• The company must establish a board of directors consisting of at least 5 members, with two-thirds of them being producers.
• Essential documents such as PAN (Permanent Account Number), TAN (Tax Deduction and Collection Account Number), Articles of Association, and Memorandum of Association must be prepared.
• The company’s name must conclude with ‘Producer Limited Company’.
• The company must have a registered office address within the country.

Meeting these requirements ensures compliance and facilitates the smooth registration of a producer company, enabling agricultural communities to benefit from collective growth and enhanced market access.

Registration Process for a Farmer Producer Company in India

The registration process for a Producer Company involves obtaining Digital Signature Certificate (DSC) and Director Identification Number (DIN) for the proposed directors, choosing a unique name for the company, drafting the Memorandum of Association (MOA) and Articles of Association (AOA), and submitting the necessary documents to the Registrar of Companies (ROC). The registration process can take approximately 30-45 days, subject to the availability of all necessary documents and compliance with all legal requirements.

• Application Filling and Submission: Corporate Raasta Consulting provides comprehensive services for filling out and submitting the necessary forms for Producer Company registration.
• Assistance with DSC, DIN, TAN, and PAN: Our team of seasoned professionals offers guidance and support during the application process for obtaining a Digital Signature Certificate (DSC), Director Identification Number (DIN), Tax Deduction and Collection Account Number (TAN), and Permanent Account Number (PAN), ensuring all required documents are collected and submitted accurately.
• Name Search and Approval: The uniqueness of your Producer Company’s name is paramount. Corporate Raasta Consulting’s experts conduct thorough searches to ensure that the chosen name is distinctive and secures approval, avoiding any potential legal conflicts.
• Drafting MoA and AoA: The Memorandum of Association (MoA) and Articles of Association (AoA) are foundational documents for your company. Corporate Raasta Consulting’s experts draft these documents with precision, considering all critical aspects to set a strong legal foundation for your company.
• Preparation of Necessary Documentation: Corporate Raasta Consulting extends full support in compiling and preparing all the essential documents required for the registration process, ensuring they meet the regulatory standards.
• Taxation Services: Navigating tax compliance is crucial for any business. Corporate Raasta Consulting’s tax experts guarantee adherence to all tax-related compliances during the registration phase, laying the groundwork for future financial diligence.

Documents Required for Producer Company Registration

Certain documents are necessary to obtain a Producer Company Registration. The list of these documents is given below –

• Director’s and member’s PAN & Aadhar card.
• Directors’ and members’ passport-sized photographs
• Proof of registered official address (gas bill/ electricity bill/ telephone bill/ rent agreement, etc.)
• PAN, TAN, Articles of Association (AoA), and Memorandum of Association (MoA).
• Digital Signature Certificate (DSC) & Director Identification Number (DIN)
• No Objection Certificate from the owner of the registered office (if Applicable).
• District Horticulture Officer’s issued producer certificate.
• Producer Organization’s registration certificate copy.
• The director’s consent is in Form DIR- 2.

Why Corporate Raasta Consulting for Producer Company Registration

Corporate Raasta Consulting stands out as a premier consultancy, guiding entrepreneurs to launch their Producer Company from scratch. Our registration services for Producer Companies are backed by a wealth of expertise, a solid history of success, transparent fees, round-the-clock support, and an impressive rate of customer satisfaction.

As a tech-forward platform in India, Corporate Raasta Consulting is dedicated to delivering a broad spectrum of services, encompassing all legal documentation, yearly compliance, and company formation for Producer Companies. Our team at Corporate Raasta Consulting, comprising adept company secretaries, attorneys, and chartered accountants, plays an integral role in the registration journey of Producer Companies and their ancillary services.

A Producer Company is confined to leveraging the support of its members for activities like procurement, processing, harvesting, grading, pooling, selling, and trading primary produce. It also has the capacity to fund these operations through credit offerings. While it operates exclusively with its members and not the public, adding new members is a straightforward process involving minimal paperwork.

Corporate Raasta Consulting offers a full suite of registration services for Producer Companies in India, including company name reservation, assistance with Digital Signature Certificates (DSC), Director Identification Number (DIN) services, issuance of Registration/Incorporation Certificates, company PAN and TAN, GST registration, drafting of Memorandum of Association (MOA) and Articles of Association (AOA), support in opening company bank accounts, registration with the Employees State Insurance Corporation (ESIC), the Employees Provident Fund Organization (EPFO), and tax registration services.

CRC for Producer Company Registration

Corporate Raasta Consulting is equipped to assist you through the hurdles of establishing a Producer Company. Here’s how we can help:

• Securing a Director Identification Number (DIN): The DIN acquisition process is rigorous, requiring meticulous verification and a collection of specific documents. Corporate Raasta Consulting simplifies this with our team of experts who guide you through each step, ensuring all compliances are met with precision.
• Filling Out Registration Forms: The initial step of filling out a new user registration form or an E-form is critical. It’s easy to get lost in the technicalities, but Corporate Raasta Consulting’s meticulous attention to detail guarantees that every form is filled out correctly and verified, mitigating any potential for delay in the registration process.
• Acquisition of Digital Signature Certificate (DSC): A DSC is a crucial element for a director during the registration phase. It serves as an electronic passport for the company. Our Corporate Raasta Consulting specialists are thorough in their approach, ensuring that every application and form related to DSC procurement is handled with the utmost care and research.
• Company Name Approval: Choosing a unique and distinct name for your Producer Company is a challenge in itself. Corporate Raasta Consulting assists in this endeavor by conducting a comprehensive search to ensure that your company name stands out and is approved without complications.
• Document Preparation: The preparation of necessary documents is a complex task, requiring the gathering of various types of paperwork to comply with the rules and regulations. Our Corporate Raasta Consulting experts are adept at verifying and ensuring that all the necessary documents are in order, tailored to meet the specific needs of the Producer Company registration process.
• Compliance Management: Keeping up with the myriad of compliance requirements is essential. At Corporate Raasta Consulting, our experts, with their extensive experience, maintain a vigilant check on all compliances. We provide guidance and support to ensure that our clients successfully overcome these regulatory hurdles.