PRODUCER COMPANY and Checklist for its Registration

A Producer Company itself is a unique kind of the corporation registered under the Companies Act, 2013. In legal terms, the Producer Company is a body of agriculturists/ Farmers with the ultimate aim of improving and upgrading their standard of living. A Company is registered as Producer Company, if it has one of the following as it is business objective- post-harvesting, procurement, grading, pooling, handling, marketing, selling, and exports of the primary products of members. Further to promote profits of its member, this Company also looks after bringing in the goods and services. Initially, the provisions of the companies act, 1956 applied to the Producer Company. But, after the amendment in the said act, section 465 subsection 1 of the Companies Act, 2013 clearly states that the all the provisions regarding Producer Company contained in the Company Act, 1956 shall be mutatis mutandis to a Producer Company. Hence, the objectives of a Producer Company are defined under section 581B of the Companies act, 1956. Producer Company can be started by a group of ten or more individuals or by the blend of ten or more individuals and two institutions. The ultimate aim of this type of Company is to handle various agricultural activities along with post-harvest processing activities. Producer Company is mostly a group of farmers who team up, firstly to upgrade their standard of living and secondly to improve their earning. Incorporating an organization as a Producer Company leads to many benefits to both the Company and its member.


The Indian Economy is a core agricultural economy. Approximately sixty-two per cent of the populace depends on various agricultural activities for their living. Still, the Indian farmers are entirely unorganized, and they are unable to make use of the latest technological advancement in the agricultural sector production. Because of this, farmers/ agriculturists report for twelve per cent of all the suicides in India.

 To deal with these troubles, the Indian government set up a committee of experts, headed by an economist, named Mr Y.K. Alagh to examine the issue. In the year 2002, this committee started the model of Producer Company in the Indian Economy. Ever since, this model has benefited a lot of primary producers in gaining access to credit, input, technology, production, market etc.

Concept of Producer Company

A Producer Company itself is a unique kind of the corporation registered under the Companies Act, 2013. In legal terms, the Producer Company is a body of agriculturists/ Farmers with the ultimate aim of improving and upgrading their standard of living. 

A Company is registered as Producer Company, if it has one of the following as it is business objective- post-harvesting, procurement, grading, pooling, handling, marketing, selling, and exports of the primary products of members. Further to promote profits of its member, this Company also looks after bringing in the goods and services.

Initially, the provisions of the companies act, 1956 applied to the Producer Company. But, after the amendment in the said act, section 465 subsection 1 of the Companies Act, 2013 clearly states that the all the provisions regarding Producer Company contained in the Company Act, 1956 shall be mutatis mutandis to a Producer Company. Hence, the objectives of a Producer Company are defined under section 581B of the Companies act, 1956.

Producer Company can be started by a group of ten or more individuals or by the blend of ten or more individuals and two institutions. The ultimate aim of this type of Company is to handle various agricultural activities along with post-harvest processing activities. Producer Company is mostly a group of farmers who team up, firstly to upgrade their standard of living and secondly to improve their earning. Hence, the concept of a Producer Company is based on the aim of making farmers.

Incorporating an organization as a Producer Company leads to many benefits to both the Company and its member. 

Benefits to the Producer Company include- 

  • Separate legal entity
  • Greater creditability
  • Owing property
  • Easy management
  • Acceptance of Deposits

Benefits to the Members of the Producer Company includes-

  • Members of the Company will be entitled to receive an amount for the pooled produce and supplied produce, after a determination by the directors of the Company. Further, the amount received shall be pay-out to the members in the form of cash/ kind/ equity shares.
  • Members of the Producer Company will be entitled to receive Bonus Shares in the proportion of the equity shares held by them.
  • Members of the Company may be provided with Patronage Bonus. 

Checklist for the registration of Producer Company 

  • Ten or more individuals
  • Two or more producer institution
  • Combination of ten or more individuals and two or more institutions
  • A minimum capital of worth Rs five lakh is required for the Incorporation of the Producer Company.
  • It is noteworthy to mention that a Producer Company can never be converted into a Public Company. However, it can be converted into a Multi-state Cooperative society.

Checklist concerning the management

  • There must be not less than five directors and a maximum of fifteen directors.
  • There must be a full-time chief executive officer to look after the affairs of the Company.

Procedure and Documentation necessary for the Incorporation of the Producer Company

Producer Company Registration Process includes the following documents:

1. DIGITAL SIGNATURE CERTIFICATE

All the directors need to obtain Digital Signature Certificate (DSC) for themselves. Required documents for obtaining DSC are

  • Director’s PAN CARD
  • Director’s AADHAR Card
  • Photograph
  • E-mail Id
  • Contact Number

2. DIRECTOR IDENTIFICATION NUMBER

After obtaining DSC, the next step for the directors is to get Director Identification Number (DIN) by filing a form DIR-3 along with self-attested identity proof, photo and address proof.

3. NAME OF THE COMPANY 

The third step is to finalize a name for the Company. Members of the Company need to file Form INC-1 along with six prospective names with the registrar. Prospective names should be arranged in the order of the preference along with the significance of their names. The name of the Company SHALL have the words Producer Company at the end. After the approval of the name, an application for Incorporation is to be filed within 20 days.

4DOCUMENTS REQUIRED AFTER THE APPROVAL OF NAME BY THE REGISTRAR

After acquiring of name approval, an application for Incorporation is to be filed in the SPICE form along with the required documents. Documents include the following -

  • Memorandum of Understanding (MOU) - The Company needs to draft MOU by including all the objectives which the Company intends to follow.
  • Articles of Association (AOA) – The Company need to prepare an AOA, including all the by-laws regarding the Producer Company.
  • Stamping of Memorandum of Understanding and Article of Association – Both MOU and AOA are required to be printed and stamp by the appropriate authority in accordance with the Indian Stamp Act, 1899. Stamping of documents can be done either electronically or physically. Further, it is noteworthy to mention that the requisite subscribers must be signed both the documents. Subscribers include ten or more individuals, each of them being a producer or two or more producer institutions or a blend of ten or more individuals and producer institutions. Further, each of the subscribers shall write with his hand his name/ his father name/ husband’s name, address, occupation, numbers of shares subscribed. Signature of all the subscribers shall also be witnessed. Moreover, the witness shall also write with his hand his name/father’s name/ husband’s name, address, number of shares subscribed, occupation.
  • Registered Office of the Company – According to section 12, subsection 1 and rule 35 of chapter II- a Company shall have a place in the state as its registered office. Moreover, the same shall be mentioned in the memorandum of understanding on or from the 15th day of its Incorporation.
  • Appointment of the First Directors – Company’s Article of Association contains the name of the First Directors of the Company. These directors will hold their office until the appointment of the directors is completed within ninety days of the registration of Producer Company.  However, in the case of the Inter-state appointment of cooperative society, which has been registered as Producer Company, the First Director will be appointed within 365 days from the date of registration as Compliances of Producer Company. The Minimum Number of Directors in a Producer Company shall be five, whereas the maximum number shall not exceed the count of fifty. Directors will hold their office for a minimum period of one year, and the maximum period shall not exceed five years.
  • Declaration in the format of INC-8 - The Company needs to draft a declaration in the prescribed format of form INC-8. The declaration is to be prepared by a professional.
  • Non- Objection Certificate - The Company needs to file a non-objection certificate along with a utility bill and the rent agreement, obtained by the owner, whose property is to be used as Company’s registered office. In case, the property is not owned by that person, then a copy of the lease agreement is to be annexed.
  • Consent of Directors - The Company requires the director’s consent to act. This consent will be obtained in form DIR-2 along with the details in form DIR- 8.
  • Documents to be uploaded to the Registrar Website - The Company needs to upload every drafted document to the registrar of companies’ website. Such a document needs to be annexed to form INC- 22, INC- 7 and DIR- 12. 
  • Verification of Documents- After proper verification, the ROC will issue a certificate of Incorporation, so that the Company can commence with its operation.

Reimbursement of Promotional Expenses

All the Promoters of the Producer Company may be reimbursed for their contribution related to the promotion and registration of the Producer Company along with all the legal fees, direct cost and expense related to the promotion and registration of the Company, printing of Memorandum of Understanding and Article of Association. It is noteworthy to mention that the payment will be subject to the approval of the members at Company’s first general meeting. Producer Company, after registration, will become a Body Corporate as if it is a Private Limited Company. Moreover, the liability of the ember will be limited by the Memorandum of Understanding concerning the shares held individually by each member.

Procedure to be followed after the Incorporation of the Producer Company

There are specific requirements which the members of the Producer Company need to fulfil after the Incorporation of Producer Company.

  • Open a Bank Account – Just after the Incorporation, the members of the Company is required to open a Bank Account with a minimum number of two signatories in the name of the Producer Company.
  •  Procure a PAN number – The second step is to procure a Permanent Account Number (PAN) from the Income Tax Department along with a Goods and Service Tax Identification Number (GSTIN) from the Goods and Service Tax Department to carry out the activities of the business. The Company is also required to get itself registered with Goods and Service Tax Department for Goods and Service Tax (GST).
  • Commercial Power Supply Connection – The Company is required to obtain Commercial Connection of Power Supply from the respective boards or agency.
  • Establishment of the Company’s Office – This means Company needs to arrange of the furniture and fixtures for the company along with a visible Sign Board.
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