Producer Company Registration
Are you a group of farmers or small-scale producers wishing to join forces and establish your own enterprise? Look no further than the Producer Company model for registration in India. A Producer Company is a business entity formed by and for farmers, artisans, weavers, and other producers to enhance their income through collective actions and initiatives. This model of registration brings with it an array of advantages that includes access to better quality resources and services, faceless transactions, and easier access to credit. In this blog post, we dive deep into the various advantages of Producer Company registration, the complex process involved and steps to register your Producer Company in India. Read on to find out why a Producer Company registration might just be the answer you’ve been searching for to boost your businesses.
1. Definition of Producer Company in India
In India, agriculture has always been a vital contributor to the country’s economy. However, the sector has grappled with issues such as labor policy changes, technological implementation, and more. To ensure better governance, the Government of India introduced the concept of Producer Companies in 2002. A Producer Company is a body corporate registered under the Companies Act, 1956, possessing objects or undertakings cited in Section 581B. The goals of such companies are related to all or any of the matters mentioned in the Act. Such companies deal with the production, procurement, or manufacturing of primary produce. These entities also provide infrastructure to producers in terms of land utilization, irrigation techniques, electricity, water resources, and more. There is no limit on the number of members secured by a Producer Company, which has one key requirement – the members must be primary producers. [
Eligibility criteria for Producer Company registration
A producer company is a legally recognized body of farmers or agriculturists aiming to improve their living standards and profitability. To register a producer company in India, it must have ten individuals or more, two institutions or more, or a combination of both, with business objectives specified in the Companies Act 2013. The objectives should relate to production, harvesting, procurement, grading, handling, marketing, selling, export of primary production, imports of goods or services, processing, equipment manufacturing, training, technical service consultation, research and development, power generation, insurance, promoting principles of mutuality and mutual assistance, welfare measures, or ancillary or incidental activities related to promoting such principles among members.
Moreover, producer companies’ aim is to facilitate co-operative businesses, including conversion of existing ones, enabling equal voting rights to each member, and providing democratic governance. The producer company is authorized to conduct several activities, such as processing, preserving, browning, selling, or packaging its members’ products. Also, it can manufacture machinery, equipment or supplies, providing educational principles, and rendering technical services to promote the members’ interests.
The Ministry of Corporate Affairs (MCA) plays a vital role in approving the business names for registrations under the Companies Act. To register a company in India, the first step is to get the name approval for the business, which usually takes about 24-48 hours. A private limited company name in India must end with the words “private limited,” One Person Company ends with (OPC) private limited, LLP end with LLP, and Section 8 companies can end with words like association or institution.
Moreover, trademarks are registered in India with the Office of the Controller General of Patents, Designs, and Trade Marks under the 45 trademark classes. Each class represents a distinct type of goods or service, and any trademark application filed must denote the type of goods or services represented. Finally, there are different types of business entities in India, including proprietorship, limited liability partnership, and company. Each type carries different criteria for registration and tax filing based on the entity’s size and turnover.
Procedure for registration of a Producer Company
With the aim to support primary producers and farmers in India, the concept of Producer Companies was introduced in 2002.
A Producer Company is a legally recognized body of agriculturists that enables co-operative businesses to function as companies under the Ministry of Corporate Act. These companies have democratic governance, with each member or producer having equal voting rights.
The primary objective of a Farmer Producer Company is to improve the standard of living and profitability of its members. The company can deal with the produce of its active members and engage in various activities such as processing, manufacturing, technical and consultancy services, power generation and transmission, and insurance.
The registration of a Producer Company requires the fulfillment of objectives specified in the Act, along with the submission of necessary documents to the registrar. The registration procedure involves obtaining a Digital Signature Certificate and Director’s Identification Number, submitting a name application, filing the Memorandum of Association and Articles of Association, and obtaining the Certificate of Incorporation. Once registered, the company must adhere to certain compliances, such as having a minimum of 5 directors and filing annual returns.
Compliance requirements for a registered Producer Company
A Producer Company is a legally recognized entity under the Companies Act of 2013, aimed at facilitating the formation of co-operative businesses that benefit farmers, agriculturists and primary producers. Compliance requirements for a registered Producer Company include adhering to the objectives laid out in the Act, which relate to production, harvesting, procurement, grading, handling, marketing, selling and exporting of primary production by the members, as well as providing education and technical services to its members. Producer Companies are required to deal with the produce of its members and can carry out activities such as processing, manufacturing and supply of machinery and equipment, financing procurement and marketing activities, and welfare measures for members.
Membership of a Producer Company is limited to individuals and institutions, and each member has equal voting rights irrespective of the number of shares held. Governance of the company is managed by a board of directors, which is elected by the members for a term of five years and can be re-elected for a maximum of two terms. Members of a Producer Company have limited liability, which means that their personal liability is limited to the extent of their investment in the company.
A Producer Company must maintain proper books of accounts and get them audited annually, with the audited financial statements and annual reports presented to the members in the annual general meeting. The company is taxed as a regular company under the Income Tax Act and is eligible for various tax benefits available to companies engaged in agricultural activities. The minimum authorized and paid-up share capital for a Producer Company is Rs. 5 lakhs and Rs. 1 lakh respectively, and the company can be incorporated as a private or public limited company. An existing cooperative society that is engaged in primary production can also be converted to a Producer Company as per the provisions of the Companies Act of 2013.
2. Formation Requirements for a Producer Company
To a producer company in India, there are some basic formation requirements. The company must consist of a committee of 10 or more people and 2 institutions, who have a joint objective of dealing with agricultural and post-harvesting processing activities. These individuals and institutions must have a minimum of 5 directors and 10 members, with a minimum paid-up capital of Rs. 5 Lakhs required to form the company. Additionally, the producer company in India cannot be deemed as a public company and can only have equity share capital. There should be at least four board meetings every year, with meetings occurring no less than once every three months.
To register a producer company, there are a few steps that need to be followed. The first step is to obtain digital signature copies (DSC) and Directors Identification Number (DIN) for all the directors and shareholders of the company. Then, the company name must be approved from the registrar of offices by filing an application in a prescribed format and fee in Reserve Unique Name (RUN) form. Once the company name has been approved, all the required documents, like proof of identity, voter ID or driver’s license, photographs, rental agreement, and property papers, should be submitted. After the documents have been submitted, the registrar of companies will verify them, and if all documents are found to be in order, the producer company registration will be deemed successful.
3. Objectives of Farmer Producer Company
Farmer Producer Company (FPC) is a company registered under the Companies Act, 1956 in India. The primary objective of FPC is to empower farmers by providing facilities and training to enhance their earnings,
The objectives of FPC include harvesting, procurement, pooling, production, selling, grading, handling, marketing, and exporting of the primary produce of its members. The company also offers processing, preservation, canning, brewing, distilling, packaging, and venting services.
FPC also provides technical services, education, consultancy, research and development, and all other activities to promote its members’ interests. It assists in revitalizing land and water resources and the generation, transmission, and distribution of power, communication, and conservation related to primary produce.
The company promotes mutual assistance, financial services, and insurance for producers and their primary produce. It also sells and supplies machinery, equipment, or consumables mainly to its members.
FPC benefits its members by limited liability to the unpaid amount of shares held by them. It also enjoys the benefits of professional management from a Private Limited Company and can have an unlimited number of members.
The company has certain limitations, such as no exit route for investors, non-producers cannot invest in the equity, and it also has limited access to donations due to its profit orientation. However, FPC receives support from the government, non-government organizations, banks, and other financial institutions.
4. Activities Undertaken by a Producer Company
A Company is a legally recognized body of farmers and agriculturists with the objective of improving their standard of living and profitability. One of the primary advantages of registering a Producer Company is that the ownership and membership are limited to primary producers or Producer Institutions, ensuring that their livelihoods are protected. Additionally, a minimum of ten members is required to form a Producer Company. The maximum number of members, however, is limitless. Producer Companies operate with a commercial purpose of marketing, grading, export selling, and other activities that benefit its members.
Producer Companies can undertake a wide range of activities that relate to the interests of its members. They can carry out processing, preserving, drying, distilling, brewing, vinting, canning, and packaging of its members’ produce. They can also provide education, technical and consultancy services, training, research and development, as well as extend credit facilities or other financial services to its members for purchase, processing, marketing, and more. Furthermore, Producer Companies can participate in the production, supply, and sale of machinery, equipment, and consumables mainly for the benefit of its members.
A Producer Company engages in many other activities that promote the principles of mutuality and mutual assistance amongst its members. For example, they may be involved in insurance of producers or their primary produce. They may also promote welfare measures or facilities for the benefit of members as decided by the Board. The company may deal with the produce of its members either directly or through other institutions. Moreover, they may carry out 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.
Registered Producer Companies must comply with the legal responsibilities stated under the Companies Act 2013. The company should deal with the products of its members and is permitted to carry out a wide range of activities relating to primary produce. These activities include preservation, brewing, vinting, dehydrating, and packing its members’ products among other services. They must cultivate a spirit of cooperation and mutual aid, promote the principles of mutuality and mutual assistance, and use any other means to promote member welfare and convenience. The company must also abide by all regulations relating to taxation, accounting, and reporting as per their legal responsibilities.
5. Legal Structure of a Producer Company
A Producer Company is a legally recognized entity formed by a group of farmers or agriculturalists to facilitate co-operative business operations. Under the Ministry of Corporate Act, a Producer Company can function as a corporate entity and must have its objectives related to agricultural activities such as processing, manufacturing, marketing, distribution, and more. The registration process involves fulfilling the necessary requirements with the Registrar of Companies (RoC) and obtaining a certificate of incorporation within 30 days.
The legal structure of a Producer Company is similar to that of a private limited company and can be formed by ten or more individuals, two or more producer institutions, or a combination of both. The company must have a minimum of five directors and a maximum of 15 directors, appointed or elected by the members in the annual general meeting. The essential compliances of a producer company include complying with the objectives specified in the Act, dealing primarily with the produce of its active members, and following the statutory declaration and affidavit to ensure compliance with incidental matters regarding the formation of companies.
Though it is a hybrid between private limited companies and cooperative societies, the farmer producer company provides democratic governance where every member or producer has equal voting rights, irrespective of the number of shares held. The main objective of the farmer producer company is to improve the standard of living of primary producers by providing access to input credit, production technology, market, and profitability. The objectives of the Farmer Producer Company relate to all agricultural matters such as procurement, processing, training, research and development, generation and distribution of power, insurance of producers, promoting techniques of mutuality and mutual assistance, and financing of procurement, processing, and marketing.
6. Benefits of Registering a Producer Company
Registering a Producer Company in India carries several benefits for the primary producers and farmers. Here are some of them:
– Access to Credit Markets, Input Production Technology, and More: The main purpose of the Producer Company concept is to help primary producers gain access to credit markets, input production technology, and other necessary resources. This can help improve the livelihoods of farmers and other producers.
– Legally Authorized Entity: A Producer Company is a legitimate and juristic entity developed under the Act, which means it has a legally recognized limit. It can own property and obtain obligations, and its members or directors have no obligation to the company’s lenders as it is a separate legal entity.
– Tax Benefits: If registered as a farmer-producer company, companies with an annual turnover of up to Rs. 100 crore can avail of a 100% tax deduction. This can help reduce the financial burden on small and medium-sized companies.
– Various Authorized Activities: A Producer Company can carry out several authorized activities that benefit its members, including processing the produce of its members, providing training and technical services, and marketing financing of procurement, processing, or related activities.
– Increased Legitimacy: A registered Producer Company provides farmers with more legitimacy than unregistered farmer or agriculturist associations. It can accept deposits and provide loans to its members at affordable interest rates, which can help improve their financial situation.
– Limited Liability: Registering as a Producer Company provides members with a separate legal entity, which means they have a separate identity from the company in the eyes of the law, providing them with the benefit of limited liability. This can help reduce risk and improve the financial stability of members.
7. Process of Obtaining Name Approval for a Company in India
The of obtaining name approval for a company in India is the first step towards its registration. It involves submitting an application to the Ministry of Corporate Affairs (MCA) along with the proposed name options. The MCA will then verify the availability and suitability of the names based on several factors such as their uniqueness, similarity to existing names, and compliance with naming guidelines for different types of companies. Once the name is approved, it remains valid for 20 days from the date of approval. In case the company is not registered within this period, the name approval needs to be obtained again. The entire process usually takes 1-2 working days, and it is essential to ensure that the name reflects the company’s nature and objectives and is memorable and easy to pronounce for customers and stakeholders.
8. Income Tax Filing Requirements for a Producer Company in India.
A producer company is a legally recognized organization that aims to improve the livelihoods and profitability of farmers and agriculturists in India. It can be formed by a group of individuals or institutions with specified business objectives. Under the Companies Act 2013, the provisions relating to a producer company continue to apply. A producer company is a hybrid between private limited companies and cooperative societies, with democratic governance and equal voting rights for all members.
One of the main objectives of a producer company is to facilitate the formation of cooperative business as companies and to convert existing cooperative businesses into companies. The producer company must deal with the produce of its members and can carry out activities related to production, harvesting, procurement, grading, pooling, handling, marketing, selling, exporting, import of goods or services for their benefit, processing, manufacturing, sale or supply of machinery, equipment or consumables, providing education and technical services to its members, generating and distributing power, providing insurance for producers or their primary produce, and promoting mutual assistance principles and welfare measures for the benefit of members.
To incorporate a producer company in India, any 10 or more individuals or 2 or more producer institutions can join together, with a minimum capital of Rs. 500,000. A producer company needs a minimum of 5 directors and can have a maximum of 15 directors. The incorporation process takes around 10-15 working days and involves submitting various documents such as proof of identity, PAN, Aadhar, passport size photo, specimen signatures, business names, objects, electricity bill/landline bill of registered office, and a farmers certificate for each director and subscriber.
Once a producer company is formed, it is required to file its income tax returns to comply with the Indian tax laws. The income tax filing requirements for a producer company include filing of a return in the prescribed form, obtaining a tax audit report if the total income exceeds Rs. 1 crore, and payment of any applicable tax liabilities. It is advisable to seek the assistance of tax experts to ensure accurate and timely income tax filing for a producer company.
9. Disadvantages of Producer Company registration in India
Producer Registration in India comes with a set of benefits, but there are also some disadvantages that need to be considered before proceeding with registration. Here are some key points to keep in mind:
– One of the main disadvantages of Producer Company Registration is the cost involved. Unlike a regular partnership or sole proprietorship firm, the registration process for a Producer Company can be time-consuming and expensive.
– Since a Producer Company is a separate legal entity from its members, there may be some paperwork and compliance requirements that need to be fulfilled regularly. This can add to the administrative burden of running the company.
– Another disadvantage of Producer Company registration is that it may not be suitable for all types of agricultural activities. While some primary producers may benefit from the formation of a Producer Company, others may not find it feasible or profitable.
– Additionally, Producer Companies may face challenges in terms of raising funds or obtaining credit from financial institutions. This is because the company’s assets and liabilities may be limited by its legal structure.
– Finally, it is important to note that not all Producer Companies are successful. Like any other business venture, there is always a risk involved, and there is no guarantee of success, profitability, or sustainability over the long term. It is essential to conduct proper research and due diligence before proceeding with the registration of a Producer Company.
In conclusion, while there are several benefits of registration of a Producer Company, it is important to be aware of the potential disadvantages as well. Proper planning, research, and consultation with legal and financial experts can help mitigate these risks and ensure the success of the company.
10. Documents required for Producer Company registration in India
Producer company registration in India has become a popular option for those in the agricultural sector. To form a producer company, there are certain requirements and documents that need to be submitted. Here is a list of documents required for producer company registration in India:
– PAN card, passport, or election ID card of all directors and shareholders.
– Voter’s ID, driver’s license, or passport of all directors and shareholders.
– Passport-sized photographs of all directors and shareholders.
– Copy of any utility bill as a residential proof.
– In the case of rented property, a scan copy of rent agreement along with an NOC from the owner.
– In the case of owned property, a copy of property papers.
In addition to these documents, there are certain pre-registration requirements that need to be fulfilled. A minimum of 5 directors and 10 members are required, with a minimum paid-up capital of Rs. 5 lakhs. The producer company cannot be deemed a public company and can only have equity share capital. At least four board meetings need to be held every year, with meetings scheduled once every three months.
The process for producer company registration in India is similar to that of private limited company registration. The first step is obtaining digital signatures for all directors and shareholders of the company. Next, directors’ identification numbers are required to move ahead with the process. Company names need to be approved by the registrar of offices, and an application needs to be filed in a prescribed format along with the fee in the RUN (Reserve Unique Name) form.
In conclusion, there are several documents required for producer company registration in India. It is important to fulfill all pre-registration requirements and follow the correct steps in the process to ensure a smooth registration process. With its many benefits, a producer company can provide a much-needed boost to those in the agricultural sector.
11. Frequently Asked Questions about Producer Company registration in India
Producer Company registration in India is a topic that can be confusing for many people. In this FAQ, we will answer some common questions about Producer Company registration in India.
What is a Producer Company?
A Producer Company is a company registered under the Companies Act 2013. It is incorporated with the objective of harvesting, procurement, grading, pooling, handling, marketing, selling, and export of primary products of its members and import of goods or services for the benefit of its members.
What are the types of Producer Companies?
There are different types of Producer Companies, including those involved in production, marketing, training, research and development, and infrastructure development.
How is a Producer Company formed?
A Producer Company can be formed by 10 or more individual members, two or more producer institutions, or a combination of both. The minimum authorized capital required for the formation of a Producer Company is Rs. 5 Lakhs.
Do Producer Companies require a Company Secretary?
Every Producer Company having an average annual turnover exceeding Rs. 5 crore in each consecutive three financial years shall compulsorily appoint a whole-time Company Secretary.
What are the benefits of forming a Producer Company?
Forming a Producer Company allows farmers and other primary producers to organize themselves and work together to improve their bargaining power, gain access to credit and markets, and increase efficiency. It also helps in utilizing technology, increasing productivity and profitability of the members.
How much time is required in the formation of a Producer Company?
Generally, it takes around 35-40 working days for the formation of a Producer Company.
Overall, a Producer Company registration in India is an excellent way for farmers and other primary producers to work together and improve their livelihoods.