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With agriculture being the mainstay of the Indian economy, the concerned sector employs more than 50 per cent of India’s total workforce and also contributes almost 17 to 18 per cent to the country’s GDP (Gross Domestic Product).In view of the pressing issues of farmers and agriculturalists (collectively termed as “Producers”) in India, like agricultural labour, policy changes, technological advancements etc., and to fetch in better governance and channelize the agricultural activities, the concept of the “Producer company” was introduced in the year 2002. In this learning blog, we will further talk about what does a producer company means, what is the procedure for registering a producer company, the incorporation and the benefits of choosing a Producer Company in India.
The Producer Companies are the companies which is registered under the Companies Act 2013 and which is incorporated with the following objective:
Produce can is defined as all those things that have been produced or grown especially by the process of farming.
Any producer company deals primarily with agriculture and post-harvest processing activities.
The concept of the Producer Company Registration is based on empowering farmers by creating clusters of farmers organized as a Producer Company.
There are following types of Producer Company in India:
Production Businesses are those types of Producer Companies which are mainly involved in the business of a) production b) procurement c) manufacture of any primary produce for its members.
Even that business that is involved in marketing or promotion of primary produce or provision of educational services of its members can constitute itself as a Producer Company.
Any company offering technical assistance to producers, providing training and education or conducting research and development can register as a Producer Company in India.
Any business financing producer activities, be it marketing, producing, development domain can register as a producer company.
The business involved in providing infrastructure to producers whether, in the form of electricity, water resources, irrigation techniques, land utilization may constitute themselves as a producer company.
Minimum authorized capital required for the formation of Producer Company in India is₹. 5 Lakhs.
The share capital of Producer Company Compliances cannot consist of preference shares it can consist only of equity shares, these equity shares shall be non-transferable. The shares having special rights can be transferred to another active member but that too with the approval of the Board.
Advantages of Forming a Producer Company:
A Producer Company can be formed by any of them:
If any member at any time ceases to be a primary producer he is entitled to surrender his shares at that time only.
Following listed are the important compliances that a Producer Company is needed to adhere to –
The procedure for incorporating a Producer Company in India is almost similar to the registration of a Private Limited Company. Following listed are the steps involved in the procedure for incorporating a Producer Company –
At the time of registration, the Producer Company shall become a body corporate as if it is a private limited company to which the provisions contained in the Companies Act apply.
And the producer company shall not in any circumstances, whatsoever become or deemed to become a public limited company under this Act.
So, the conclusion is a producer company in India shall never become a public (or deemed public) limited company.
Read our article:Producer Company Compliances: Compliances of the Producer Company
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