Frequently ask Questions (FAQs) on Producer Company

Narendra Kumar

20 Jan, 2021

Q.1: What is Producer Companies?

Ans.: Producer Company is the company registered under the Companies Act 2013^[1]. 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.

Produce are all those things that have been produced or grown especially by the process of farming. A producer company deals primarily with agriculture and post-harvest processing activities.

The concept of Producer Company is based on empowering farmers by creating clusters of farmers organized as a Producer Company.

Q.2: What are the types of Producer Companies?

Ans.: There are following types of Producer Company:

• Production Businesses: These type of Producer Companies are those which are mainly involved in production, procurement or manufacture of any primary produce for its members.
• Marketing Businesses: Even a business that is involved in the marketing or promotion of primary produce or provision of educational services of its members can constitute itself as a Producer Company.
• Technical Services Businesses: Any company offering technical assistance to producers, providing training and education or conducting research and development can register as a Producer Company.
• Financing Businesses: Any business financing producer activities, be it marketing, producing, development domain can register as a producer company.
• Infrastructure Businesses: 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.

Q.3: How a Producer Company is formed?

Ans.: A Producer Company can be formed in the following ways:

• with 10 or more individual members each of them being a producer or;
• 2 or more producer institutions or;
• With the combination of 10 or more individuals and producer institutions.

If any member ceases to be a primary producer he is entitled to surrender his shares.

Q.3: Minimum number of Directors required for Producer Company registration?

Ans.: For the Registration of Producer Company a minimum of 5 Directors are required and the maximum number of Directors can be 15.

Q.4:  Period of Directorship?

Ans.: The Minimum period for directorship is 1 year and the maximum is for 5 years. But the retired director shall be eligible for appointment.

Q.5: Minimum Capital required for the Formation of Producer Company?

Ans.: Minimum authorized capital required for the formation of Producer Company is Rs. 5 Lakhs.

Q.6: Requirement of Board Meeting?

Ans.: The minimum number of Board Meetings required in a Producer company is 4 and not more than 3 months gap should be there between two Board Meetings.

The quorum for such Board meeting will be 1/3^rd of the total strength or 3 whichever is greater.

Q.7: Requirement of appointing a Company Secretary?

Ans.: Every Producer company having an average annual turnover exceeding Rs. 5 crore in each consecutive 3 financial years shall compulsorily appoint whole-time Company Secretary.

Q.8: What are the advantage of forming a Producer Company?

Ans.: Advantage of forming a Producer companies:

1. Limited liability.
2. Economies of scale.
3. Better Management.

Q.9: How much time is required in the formation of the Producer Company?

Ans.: Usually, 35-40 working days are required in the formation of the Producer Company.

Read our article: Producer Company: Incorporation Requirements, Tax benefits and much more