Producer Company Registration – Overview
The Indian economy is known for the amount and quality of agricultural produce in the world. After China, India is the largest exporter of rice in the world. The amount of export from India depends on the amount of production in India.
Agricultural Sector is predominantly the backbone of the Indian economy. Most of the population in India directly and indirectly depends on the agriculture sector. However, in this sector farmers are the most deprived in the chain of agriculture process. They do not have access to technology and digitization due to lack of knowledge and shortage of funds.
Due to this the Government of India, headed by the Alagh Committee examined the matter in advance. This committee came out with a whitepaper to increase the benefits for farmers in deprived sector.
In 2002, the term producer company was brought out. Due to this the status of producers and agriculture individuals has drastically improved. Till date the government has brought out different measures to improve the status of farmers.
Statutory Meaning of Producer Company
The meaning of Producer Company was already present even before the implementation of the Companies Act, 2013. Hence the meaning of a producer company was present under the Companies Act, 1956.
Under part IXA of the Companies Act, 1956 the meaning and objects of producer company is present. This part has been incorporated in the provisions of the Companies Act, 2013 under section 465(1).
Section 581 A (m) provides the meaning of a producer institution. A producer institution can be understood as a producer company, where the members and directors have incorporated the company with the primary objects to carry out activities of a producer company. This company also agrees to carry out any form of services and activities carried out by a producer company.
Under section 581 (B) of the Companies Act, 1956 the objects of the producer company are present. Any individual or farmer that wants to incorporate this form of institution must go by the objects of the business.
Hence from the above it can be understood that a producer company is a mix between a co-operative society and a company incorporated as a private company under the provisions of the Companies Act. Under section 465(1) of the Companies Act, 2013 the members have to be actively engaged in activities related to production.
More than ten members are required for incorporation of a producer company. The liabilities of the members are limited to the amount of unpaid share capital of the company. It is crucial to go for the producer company registration process, as the members would get added benefits of technology, market information and opportunities related to seed funding.
Objects of the Producer Company
The main objects of the producer company are:
When individuals form a producer company, then the objects must be in accordance to incorporating a producer company. The company must ensure not to deviate from the main objects.
The objects of the producer company are present under section 581(B) of the Companies Act, 1956 and section 465(1) of the Companies Act, 2013. The above objects are explained below:
Production activities can include any form of production or any other activity which relates to harvesting, grading, procurement, pooling, marketing or export of agriculture produce outside the country.
Processing would include any activities related to processing. This will include preserving, distilling, drying, brewing, vinting and canning related activities.
Any activities related to manufacturing would be included here. Manufacturing would also include any sale or machinery or other equipment which help in manufacturing activities.
Education and other activities which relates to mutual based activities to the members and directors of the producer company.
Rendering Technical Services
Technical services would include any technology-related services. Consultancy services and any research and development (R & D) would also be an integral part of a producer company.
Any form of generational activities which relates to producing electricity and water for producing agricultural activities.
Any activities related to insurance of producers and primary producers.
Activities related to the promotion of technology and allied services would be included under this.
Any producer company that comes out with different processes related to welfare measure for agriculture produce.
Any other Allied Activity
Any other activity which is incidental or allied to the above activities which are carried out will be included in the meaning of a producer company.
Benefits of Producer Company Registration
The following are benefits of producer company registration:
The principle of separate legal entity would apply to a producer company. When a company is incorporated as a producer company, the liability of members and directors is limited to a specific amount of capital. This capital is the measure of the unpaid capital related to the company. Any third-party creditors will not go after the personal assets off the members and directors for any debts payable by the company.
Liability is Limited
One of the main benefits of this form of entity is the principle of limited liability. Through this principle, the liability of the company is limited to a specific amount. The liability of the members is also limited.
By incorporating a producer company, the members get additional benefits such as increased transparency and credibility. Other advantages would be increase in access to technology, digitisation and seed funding processes. Apart from this, members of the public would also find this form of entity credible to invest in.
Forming Management is Simple
Forming the management in the company is simple when compared to other business structures. The company must have members and directors in compliance with the requirement of the act. All particulars relating to management have to be submitted to the Registrar of Companies (ROC).
Easy Dealings for Conveyance
Conveyance would include the buying and selling of agricultural land. As this company is primary engaged in carrying out agricultural activities, the process of buying and selling land would become seamless.
Can Accept Deposits
A producer company can accept any form of deposits. These deposits would include any form of fixed deposits or recurring deposits.
Eligibility Criteria for Farmers Producer Company
The following requirements have to be met to incorporate a producer company:
Ten or More Individuals
Ten individuals who are natural persons are required for the formation of a producer company.
Two or More Institutions
Two or more private registered companies can also register for incorporating a producer company. Either 10 or more individuals can start the producer company or along with institutions.
Combination of Institutions and Individuals
Either the above requirement can be satisfied or institutions and individuals can combine to form the producer company.
Under the Companies Act, 1956 and Companies Act, 2013 there has to be minimum number of directors to form a producer company. The minimum amounts of directors are 5 and the maximum amount of directors which a producer company can have is 15.
Full Time Executives
Apart from directors and members, the entity must also have a full time Chief Executive Officer (CEO) to overlook the operations of a producer company.
Minimum Paid- up Share Capital
Every Company has to have a minimum paid up capital for formation. Similarly, a producer company must have a minimum paid-up capital of Rs. 5 Lakhs to establish itself. Apart from this, the producer company is permitted to have only and raise equity share capital for the business.
Minimum Amount of Board Meetings
Annually the producer company must have at least four board meetings.
The name of the entity must comply with the requirements of the Companies Act in India. After the end of the name, the company must have the words ‘producer company Ltd’. Apart from this, the name of the producer company must be unique.
Members have to be Individuals
All the members of the producer company must be individuals.
Procedure for Incorporation of Producer Company
The process or procedure to incorporate a producer company is similar to incorporating a private limited company. The above procedure is required to incorporate this form of entity:
Apply and Obtain the DIN and DSC
In the first step, the applicant must make an application for obtaining the digital signature certificate. The digital signature certificate allows the applicant to make any form of electronic or digital signature. The applicants must also apply for the Director Identification Number. All the above must be carried along with the SPICe form.
After the above step, the process of name approval for the producer company must be initiated. The name approval process can be initiated by applying for the MCA (Ministry of Corporate Affairs) and the ROC. This can be done by considering the RUN process (Reserve Unique Name). After this procedure is carried out, the ROC and MCA will check for the name availability. If the name is available, then within 20 days of the application, the applicant has to make the process for securing the certificate of incorporation.
Drafting the Memorandum of Association and Articles of Association
The next step, is carrying out measures related to drafting the memorandum of association and articles of association. This must be done after the documents with the SPICe Form are submitted. An affidavit with the same must be signed and provided by the members of the company indicating their purpose.
In the final step, the certificate of incorporation is provided by the company. Usually this would take around 10 days for the company to receive the certificate of incorporation.
Recent Amendments related to Agriculture in India
The Farmers Amendment Bill, 2020
This bill is also known as the Farmers Produce Trade and Commerce Bill, which brings out many remunerative benefits for farmers. This bill supports the requirement for trading between states.
The Farmers Agreement for Price Assurance Bill, 2020
This bill would affect the prices at which farmers would get an assured price for their produce. Under this bill, farmers can have an agreement which would affect the prices of their produce.
Essential Commodities Act, 2020
This amendment would be applicable to any form of commodity which is considered to be essential. Any form of government control is present on the commodities under this act.
Documents required for Incorporation of Producer Company
Member Related Documents
- Identification Documents- Such as PAN Card, Election ID, Aadhaar Card and any other information relating to identification.
- Latest Bank Statement of the Producers.
- Utility Bills related to telephone or mobile.
- Passport Size Photos of members and directors.
Registered Office Documents
- Utility Bills of the Premises- The utility bill has to be not older than three months.
- Rent Agreement.
- No Objection Certificate from the Owner of the Premises.
- Information pertaining to the sale deed.
- MOA and AOA.
- Certificate of Incorporation.
Enterslice Advantage- Producer Company Registration
- Our team of professionals comprising of Chartered Accountants, Company Secretaries, Lawyers, and Financial Executives.
- We have experience in registering different forms of entities.
- Constant monitoring and 24*7 customer service.