What exactly is the term "producer" company?
A producer company is defined as a legal entity of farmers or agriculturists with the goal of improving the standard of their lives and ensuring that they have a high level of assistance in terms of income, profits, and profitability. Section 465(1) of the Companies Act, 2013 (the "Act') provides that the requirements for the term "producer company" under Part IXA of the Companies Act, 1956 shall remain in effect. According to the Act, the term "producer" means that a company may be created by 10 persons (or many) or two establishments (or greater) or a mix of two (10 individuals and two institutions) with a business goal.
A farmer-producer company is a hybrid of private limited corporations and cooperative societies that are incorporated in accordance with the Act. They are governed by a democratic system, and producers and members have equal voting rights regardless of the number of shares owned.
What are the most important decisions to be made prior to beginning the producer company?
- What will the proposed business operations be?
- What is the amount of capital that must be reinvested?
- What benefits are offered to members?
- Who are the potential initial directors for the business?
- What is your name for the business?
- What is the registered address of the business?
Benefits of Farmer-Producer Companies
These are the advantages that a farmer-producer company has:
- The investors of the producer company will at first be paid the sum for the item pooled and given by the chiefs. The amount will be paid to the members in the future as cash, kind, or equity shares.
- The shareholders in the company that produces are entitled to bonus shares that are equal to the shares owned by them.
- The excess (after making provision for repayment of the limited return as well as reserves) can be paid as patronage bonuses to members of the producer corporation.
- Patronage bonus refers to the distribution of the extra earnings to participants of a producer business in proportion to their patronage. Patronage, in contrast, is the involvement of members in their own business activities through the services offered by the company that produces them.
Documents Required for Registering a Producer Company in India
The documents are classified into three categories: documents of members, documents for the company, and documents for the premises on which the business will be conducted. A comprehensive list of these documents is provided in the table below.
| Documents of the Members |
Documents on the Premises |
Legal Draughts |
| Size: passport-sized colored photo |
Proof of Registered Address |
Questionnaire for Company Registration |
| PAN Card |
A No-Objection Certification from the Owner |
Consent of Directors in Form DIR-2 |
| Proof of Identity |
Agreement |
Specimen Signature of Directors |
| Proof of Registration |
|
Signed subscriber sheet |
| Size: passport-sized colored photo • PAN Card • Proof of Identity • Proof of Registration • Provenance of Producer Activity |
|
|
Producer Company Incorporation Checklist
Businesses that plan to register with the producer companies must first meet certain requirements for registration as specified under Section 465 (1) of the Companies Act 2013. These are related to the number of directors as well as the number of directors. Address, name, and capital of the business A complete listing of all these legally obligatory conditions is included in the table below.
- At least 10 producers or at least two producer organizations as members
- A minimum capital investment of Rs. 5 lakhs
- A unique name ending in "Producer Limited Company."
- An address registered for the principal location of business or for the main office
What are the various types of producer companies in India?
What is the length of directorships in a producer company?
The term of the directors of the producer company must not be less than one year and cannot exceed five years.
What are the benefits members receive from the producer company?
In accordance with the provisions of the agreements of association of the Producer Company, every Member will initially be paid only the value of the products or other products that are pooled and provided by the Board of the Producer Company, and the amount withheld will be paid later, either in cash or kind, or through the allotment of equity shares according to the amount of produce provided by the Producer Company. Producer Company during the financial year, in the same amount, in the same way, and under any conditions that are determined by the Board.
Each member will, on the capital share contributed, only be eligible for a small return. The surplus that is not paid following the payment of a limited return can be distributed as patronage bonuses to the members in proportion to their involvement in the activities of the producer company, either in real money or by means of the distribution of value shares or both, as not entirely settled by the individuals at the comprehensive gathering of the members.
Which are the tax advantages for producers? Producer Company?
The Income Tax Act, 1961, is not a source of special tax advantages that can be applied to all producer companies in India. However, exemptions from tax for farmers are provided for agriculture-related incomes of a producer company derived from specific varieties of agricultural activity only.
Is it required that a producer company appoint a company secretary?
Each producer company having an average annual turnover of more than five crore rupees during the three preceding financial years is required to choose a full-time company secretary. Failure to do this could result in the CS being penalized by the company that is in default as well as its officers responsible for appointing the CS.
Procedure for Incorporation of a Producer Company
A producer company is registered as a private limited company, which means that the registration process for the producer company is similar to the registration process for a private limited company. The application must be completed by the director of the company and is then sent to the Registrar of Companies, who examines the information provided in the application as well as the supporting documents. After the examination of the application has been completed and the application is approved, the ROC issues the Certificate of Incorporation in the name of the business.
Step 1: Documentation
You need to present certain legal documents to submit an application for the incorporation of a limited producer company. The following section contains an inventory of every document required to register. It is essential to ensure that you have all these documents prior to beginning the process of producer company registration. If you do not have them, arrange for these documents immediately.
Step 2. Name choice
The name of a producer-limited company must be distinct and communicate its business and brand. In addition, there are a set of conditions that must be fulfilled for the establishment of the Producer Limited Company that have been established by the Companies Act, the Company (Incorporation) Rules, the Trademark Act, and the Names and Emblems Act. The name of a company cannot be the same as or identical with the names of an existing business, an LLP, or an applied or registered trademark.
Step 3: Name Approval and Reservation
After you have chosen legal and valid names for your business, you need to register your name with the Registrar of Companies in order to prevent other businesses from making use of it without your consent or from stealing the name. All you need to do is utilize our name reservation and approval services, which will not just check the legitimacy of the names that you have suggested but also request their registration in the RUN (Reserve Unique Name) or Part a SPICe+ application.
Step 4: Filing a SPICe+ application
It is possible to continue with the incorporation of a producer limited company after you have approved its name. It is necessary to complete the online SPICe+ application found on the MCA's official website in order to be eligible for the incorporation of your company. Part A of the SPICe+ application is used to reserve a name, as is Part B, which is for producer company registration. Chiefs or officials of any head of the producer company may endlessly finish the application prior to making it accessible to the ROC along with the essential supporting records.
Step 5: Issue of a Certificate of Incorporation
The ROC, upon receipt of the request in respect of producer company registration, verifies all the information and documents included in the application. Once the ROC is satisfied with the veracity of these documents and details, he will signify with the Producer Limited Company and issue an official Certificate of Incorporation to the company to serve as a definitive confirmation of registration. In addition, the ROC also assigns a corporate identification number to serve as a unique identification for the business.
Cameron Williamson 
