Producer Company Registration
India is an agriculture-based country with around 62% of its people depending directly or indirectly upon agriculture. Indian farmers are completely unorganized and they are not able to use the latest technologies in the agricultural sector production. Due to this, farmers account for 12% of all suicides in India. An expert committee has been set up by the government to look in this matter.
What is a Producer Company?
A Producer Company is a company registered with the object of agriculture production, post-harvesting processing activities, procurement, selling and distribution, export of primary production of the members or import of goods for their benefit. In India, Producer Company can be set up by the 10 or more individuals or by the combination of 10 or more individuals and 2 institutions. The main object of the Producer Company is to deal with agricultural activities and post-harvest processing activities. It is mainly a cluster of farmers who come together to improve their income and standard of living. Producer Company is a kind of body corporate whose main objective is defined under Section 581B of the Companies Act 1956.
What is the Producer Company Registration?
In India, more than 80% of farmers are small and marginal farmers with less than 2 hectares land holdings which leads to disorganization. This is the reason Indian farmers are not able to opt for the latest technologies. However, economies of scale can be achieved through producer company registration. Producer company registration will help in improving the livelihood of farmers by organizing the farmers. By the creation of the clusters of the farmers in the form of Producer Company will help in empowering farmers in India.
What are the Basic Requirements for Producer Company Registration?
- 10 or more individuals
- 2 or more producer institution
- Combination of 10 or more individuals and 2 or more institution
Elaborate on the aspect of management of the Producer Company?
- There must be at least 5 and maximum 15 directors.
- There must be a full time chief executive officer who will look after the management of the company.
What is the primary object of Producer Company Registration?
Producer Company aimed at empowering farmers by creating a registered body of farmers as Producer Company and this will help them to use the latest technology and reduce the cost of agriculture harvesting.
Producer Company can be set up with any of the following below mentioned object:
- Production of the primary produce
- Procurement of the primary produce
- Harvesting and Grading of the primary produce
- Poling and Handling of the primary produce
- Marketing of agricultural primary produce
- Selling or export/import activities in relation to agricultural produce
The main purpose of the Producer company is to form a society in the form of company and the conversion of existing co-operative society into the company.
Note: Primary produce is defined under the Companies Act 1956 as a “Produce from agriculture activity which consists animal husbandry, floriculture, horticulture, viticulture, pisciculture, re-vegetation, bee raising, forestry, forest products, and farming plantation products, produce of hand-loom, handicraft, and other cottage industries”.
What activities are performed by the Producer Company in India?
Following activities are performed by the Producer Company:
Production, procurement, harvesting, pooling, grading, marketing, handling, selling and export of the primary produce of members.
Provided above-mentioned activities shall be continued by the Producer Company itself or through any other institution;
- Process concern with drying, preserving, brewing, venting, canning, distilling and packaging of the produce;
- Manufacturer/supply of machinery, equipment or consumables to its members;
- Imparting knowledge on the mutual assistance principles to its members;
- For the promotion of interests of its members, delivering technical services, consultancy services, training, and other activities;
- For the promotion of the interest of the members, render technical and consultancy services;
- Insurance of producers and or the primary produce;
- Promotion of mutual assistance techniques;
- Any other activity incidental to above mentioned.
What are the advantages of Producer Company Registration in India?
- Separate Legal Entity
- Greater Credibility
- Easy Management
- Owing Property
- Deposits Acceptance
A producer company is a separate legal entity, and there is a limited liability of its members.
Greater credibility is offered by Producer Company as compared to other unregistered organizations of agriculturists or farmers.
Through the filing of simple forms with the concerned ROC, we can make changes in the Board of Management of a producer company swiftly.
Duly registered producer company can sell or own a property in its own name and it is entitled to accept deposits from or give loans to its agriculturist members at very reasonable rates of interest.
A Producer Company is eligible to accept deposits in the form of recurring deposit or fixed deposit. It can also disburse loan among the members and farmers at a reasonable rate of interest.
What are the member's benefits in the Producer Company?
- Initially, members of the Producer company will receive the amount for the produce pooled and produce supplied after a determination by the directors of the producer company. Further, the amount shall be disbursed in the form of cash/ kind/ equity shares to the members.
- Producer company members will also get the bonus shares in the same proportion they hold the equity shares in the producer company.
- To the members of the Producer Company, surplus (after providing provision for payment of limited return and reserves) may be given as patronage bonus.
Note: Patronage bonus denotes the surplus income distribution among the producer company members in proportion of their respective patronage. On the other hand, Patronage is the member participation in business activities.
What are the provisions regarding loans and investments made by the Producer Company?
Producer Company is formed by the number of individuals who are primary producers and in need of timely financial assistance. Therefore, a special provision was passed as per companies act for loan sanctioning to the members of the producer company.
Financial assistance can be provided to the members of the Producer Company through the following:-
- Credit facility
- Loans and advances
- NABARD (National Bank for Agriculture & Rural Development) Loan
The credit facility will be available to a member of the producer company for a period of not more than 6 months.
Loan and advances will be issued to the members against security for a period of not more than 7 years from the date of loan disbursement.
To meet the requirement of the Producer Company, financial assistance is provided by the NABARD (National Bank for Agriculture & Rural Development). In the year 2011, Producer Organization Development Fund (PODF) of Rs. 50 Crore has been set up by the NABARD out of the NABARD operating surplus.
What are the tax benefits available to the Producer Company in India?
Agriculture income is exempt under section 10(1) of the Income Tax Act, 1961. However, this exemption varies on the basis of the agricultural activity carried out. No special tax benefit is provided by the Income Tax Act to the producer companies while certain tax benefits and exemptions can be availed subject to the agricultural activity carried out by the producer company.
For instance, agriculture income is currently 100% exempt. Income generated from the green tea leaves is tax-free while in case tea leaves are used for the purpose of tea manufacturing then 60% income shall be exempt and 40% shall be taxed.
Therefore we can say that tax exemption depends upon the activity carried out.
At the time of patronage bonus and limited return distribution, dividend tax is required to be paid by the Producer Company at the applicable rates and it will be tax-free in the hands of the members.
At the time of Bonus shares allotment, no tax liability will be there in the hands of the members however provisions of capital gain tax shall apply at the time of sale or redemption.
What are the pre-registration requirements for Producer Company Registration?
- There is a requirement of minimum 5 directors and 10 members.
- There must be a minimum paid-up capital of Rs. 5 Lac.
- There is no restriction on the maximum number of members.
- Producer Company cannot be deemed as a public company.
- A Producer Company can have only equity share capital.
- The board meeting shall be held not less than once every three months and at least four board meetings shall be held every year.
What are the documents required for Producer Company Registration?
I. From All Directors and Shareholder
- PAN Card or Passport or Election ID Card
- Latest Bank Statement/Telephone or Mobile Bill
- Voter's ID/Passport/Driver's License
- Passport-sized photograph of all directors and shareholder
II. For Proposed Registered office (Residential or commercial)
- Copy of any Utility bill
- Scan copy of Rent agreement with NOC from the owner
- In case of owned Property then copy of Property Papers.
What is the Procedure Required to be Followed for Producer Company Registration?
The process of Producer Company registration is quite similar to the process of Private Limited Company Registration. For Producer Company registration, an application will be filed with the registrar of companies in the prescribed format along with the necessary documents. On receiving the application, the registrar will scrutinize the documents and issues the Certificate of incorporation
For incorporating Producer Company in India, the following steps are required to be taken:
- Obtain DSC (Digital Signature Certificate)
- Obtain DIN (Director Identification Number)
- Name Approval Application
- Incorporation Application
The first step is to obtain DSC for all the proposed directors in a company. DSC is required to sign the documents electronically. It is issued by the certifying authority.
The next step is to obtain DIN (Director Identification Number) by all the proposed directors in a company. Now DIN can be obtained directly through SPICE Form and there is no need to file a separate form.
For registering the Producer Company name, an application is filed with the prescribed fee in RUN (Reserve Unique Name) form with the registrar of companies. On application, ROC verifies the name availability. After the approval of the Producer Company name, an incorporation application is filed within the period of 20 days.
After obtaining name approval, an incorporation application is filed in SPICE form along with the necessary documents such as MOA, AOA, affidavit, and declaration with the concerned Registrar of Companies.
After verification of the incorporation form, Certificate of Incorporation is issued by the ROC and it takes around 7 days.
What are the internal audit requirements in case of Producer Company?
An internal audit of the Producer Company will be carried out at regular intervals by a Chartered Accountant in accordance with the articles of association. An annual audit report shall be made by the auditor after proper examination of the accounts to the members of the producer company.
Auditor has to make a report on some additional items such as debts due and bad debts, scrutiny of the cash balance, details of assets and liabilities, loans to directors and donations and subscriptions.
What are the other mandatory requirements for Producer Company?
- In a Producer Company, only those persons can participate in ownership who is engaged in any activity concerned with primary produce.
- Producer Company members need to be primary producers.
- The liability of the producer company members will be limited up to the unpaid amount of the shares.
- The name of the producer company shall end with "Producer Company Limited"
- Producer Company is considered as a private limited company for the purpose of application of the law.
- In the Producer Company, there is no limit on the maximum number of members.
Producer Company is governed under which law in India?
Producer Company registration is governed by the Section 581 B of the Companies Act, 1956 read with Companies Act 1956 and the rules made thereunder.
What will happen in a case member of the producer company ceased to become a primary Producer?
In case member ceased to be a primary producer, directors of the Producer Company will direct the surrender of shares at par value or the at the value determined by the directors together with special right attached if any. It will be done only when written notice is served by the member and an opportunity of being heard is given.
What is the difference between the Producer Company, Private Limited Company, and Public Limited Company?
|Description||Producer Company||Private Limited Company||Public Limited Company|
|Object||The object specified under Section 581B of the Companies Act, 1956.||Anylawful object||Anylawful object|
|Nameof the Company||End with “Producer Company Limited”||End with “Private Limited Company”||End with “Public Limited Company”|
|Members||10 or more individuals or 2 or more institutions or their combination. No restriction on the maximum number of members||Minimum 2 and maximum 200.||Minimum 7 and no restriction on the maximum number of members|
|Directors||Minimum 5 and maximum 15 directors||Minimum 2 and maximum 15 directors||Minimum 3 and maximum 15 directors|
|Cessation of Membership||
A person ceases to be a member in the following cases:
|Buy-back of shares/ transfer of shares/ Non-payment of allotment or call money/ if a member gets expired/ if a member becomes insolvent or by the order of court etc.||Buy-back of shares/ transfer of shares/ Non-payment of allotment or call money/ if a member gets expired/ if a member becomes insolvent or by the order of court etc.|
How Enterslice will you in Producer Company Registration?
Enterslice is a leading platform which provides all type of legal compliance services in all over India and in more than 22 countries. You just have to go through the following below mentioned steps in order to get your producer company registration in India:
- First provide us your basic details such as name, Email Id & Mobile No on our website (Enterslice – Producer Company) and then – Click on Get Started button.
- After this, wait for a Call back by an expert or directly pay online if you are clear about the Producer Company Registration process.
- Within 4 to 8 Working hours, our expert will call you back and assist you however in case of further queries someone from senior management will speak with you on Skype. You can also drop an email to firstname.lastname@example.org.
- After understanding the structure of your proposed producer company, a team of Enterslice will share a detailed checklist of documents required from your end for further action.
- After this, you will receive a unique order Number to track the progress of the assignment.
- You can upload documents through a mobile application (Enterslice Mobile app is available on Google Play Store for Android users and on Apple App Store for iOS users). You can also email your documents to email@example.com
- Thereafter we will assign your order of producer company registration to our team of professionals.
- You can track the status of your order on our website or by using Mobile App.
- We will send you regular updates via email about the work progress.
- Our team will handle end to end process in Producer Company Registration such as obtain DSC for all the proposed directors, file incorporation application, documentation and filing of PAN application.