What is a Producer Company?
A producer company can be defined as a legally recognized body of farmers/ agriculturists to improve the standard of their living and ensure a good status of their available support, incomes, and profitability. Section 465(1) of the Companies Act, 2013 (‘Act’) provides that the provisions relating to a Producer Company under the Part IXA of the Companies Act, 1956 shall continue to apply. Thus, under the Act, a Producer Company can be formed by ten individuals (or more) or two institutions (or more) or by a combination of both (10 individuals and two institutions) having their business objective as specified under the Act.
Producer Company Registration
A farmer-producer company is a hybrid between private limited companies and cooperative societies registered under the Act.Our task is simply to identify the client and help in the Producer Company Registration in Lucknow. They have democratic governance, and each member or producer has equal voting rights irrespective of the number of shares held.
Objectives of the Producer Company
The main objective of the producer Company is to facilitate the formation of cooperative businesses as companies and to make it possible to convert the existing suitable business into companies. As per the Act, the objectives of a producer company should relate to all or any of the following matters
- a) Production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of primary production of the Members or import of goods or services for their benefit, provided that the Producer Company may carry on any of the activities specified in this clause either by itself or through other institution.
- b) Processing, including preserving, drying, distilling, brewing, venting, canning, and packaging of its members’ produce.
- c) Manufacture, sell, or supply machinery, equipment, or consumables mainly to its Members.
- d) Providing education on the mutual assistance principles to its Members and others.
- e) Rendering technical services, consultancy services, training, research and development, and all other activities for the promotion of its members’ interests.
- f) Generation, transmission, and distribution of power, land and water resources revitalization, use, conservation, and communication relatable to primary produce.
- g) Insurance of producers or their primary produce.
- h) Promoting techniques of mutuality and mutual assistance.
- i) Welfare measures or facilities for the benefit of Members as may be decided by the Board.
- j) Any other activity, ancillary or incidental to any of the activities referred to in clauses (a) to (i) or other activities which may promote the principles of mutuality and mutual assistance amongst the Members in any other manner.
- k) Financing of procurement, processing, marketing, or other activities specified in clauses (a) to (j) which include extending credit facilities or any other financial services to its Members.
Authorized Activities of Producer Companies
The Producer Company is required to deal with the produce of its members and is authorized to carry on any of the following activities:
- Processing (processing also includes preserving, brewing, venting, drying, distilling, canning, and packaging) of the produce of its members;
- Manufacture, sale, or supply of equipment, machinery, or consumables to its producer members;
- To provide education on the mutual assistance principles to the producer members of the producer company and others;
- To render consultancy services, technical services, training, R&D, and all other required activities for promoting the interests of producer members;
- Generation, transmission, and distribution of power, conservation, and communication relatable to primary produce, revitalization of land and water resources,
- Insurance of the primary produce and its producer;
- To promote the techniques of mutuality and mutual assistance;
- The welfare of members as may be decided by the Board;
- Financing of procurement, marketing, processing, or other activities such as extending credit facilities or any additional financial assistance to its producer members.
- Any other activity (ancillary or incidental to the main objectives of the producer company) to promote mutual assistance amongst the producer members and the principles of mutuality.
The methods therefore acquired to achieve are difficult yet we make them easier and more efficient to avoid problems for our clients in the process of Producer Company Registration in Lucknow.
Pre-Incorporation Checklist
- Any ten or more producers (individuals) can join to form a production company, but there is no upper limit on the number of members.
- Or, any two or more producer institutions can form a producer company.
- A minimum paid-up capital is required to incorporate a producer company.
- A producer company should have a minimum of 5 directors (maximum of 15).
- The producer company can never convert it into a public company; however, it can be converted into a multi-state cooperative society.
Producer Company Registration Process
Registering a Producer Company is similar to that of a Private Limited Company. Digital Signature (DSC) and Director Identification Number (DIN) must be obtained first for the proposed first Directors of the Company. Once, Digital Signature (DSC) and Director Identification Number (DIN) are acquired, an application for name reservation is to be filed with the relevant Registrar of Companies (ROC).
There is a requirement under the Act that the name of a producer company must end with the words “Producer Limited Company.” Once the Registrar approves the suggested title of Companies (ROC), an application for incorporation is to be filed in the prescribed format for the incorporation of the Company. Once the Registrar is satisfied with the application and the required documents filed for incorporation of the Producer Company, he will approve the same and issue Certificate of Incorporation.
Documents required in Producer Company Registration
The first step is to obtain a Digital Signature Certificate (DSC) from all the directors. Documents required to obtain a DSC are:
- PAN Card of the Director
- Aadhaar Card of the Director
- Photo
- Email Id
- Contact Number
- After obtaining the DSC, the next step is to get the Director Identification Number (DIN) by filing form DIR – 3 or SPICe+ Form along with a self-attested Identity proof, address proof, and a photo.
- Then the name of the production company is to be finalized. For that, Form SPICe+ to the Registrar of Companies (ROC) is to be filed by giving two names in the order of preference along with the significance of the names.
- After the ROC approves the name, the following documents are to be prepared:
- The Memorandum of Association will be drafted by incorporating all the objects the Company intends to follow.
- The Articles of Association are to be drafted containing all the by-laws of the Company.
- All subscribers of the proposed Company have to sign an affidavit declaring their legal competency to act as the subscribers.
- A utility bill and a NOC have to be taken from the owner whose address is to be used as the Company’s registered office. A lease agreement will be attached to the form if it is not owned.
- All the drafted documents will be attached to Form SPICe+ and uploaded to the ROC website. The ROC will issue a Certificate of Incorporation on proper verification, and the Company can start its business operations.
- This form of establishment promotes the primary producer, who is in a low-income group, to optimize their income with collective bargaining and by selling the products directly to consumers.
Benefits of Farmer Producer Companies
The following are the benefits enjoyed by a Farmer Producer Company:
- The members of the producer company will initially receive the value for the produce pooled and supplied as determined by the directors. This amount will be given out later as cash/ kind/ equity shares.
- The members of the producer company will be entitled to get bonus shares in the same proportion as the shares held by them.
- The surplus (after providing provision for payment of limited return and reserves) may be given as a patronage bonus* to the members of the producer company.
- Patronage bonus signifies a distribution of the surplus income to the members of the producer company in proportion to their respective patronage. Patronage, on the contrary, is the participation by members in their business activities by using the services offered by the producer company.
Loans and Investments
As mentioned above, the Producer Company consists of individuals who are primary producers and, thus, require financial support from time to time. Hence, a special provision under the Act was passed for giving loans to producer members. A Producer Company can provide financial assistance to its members through:
- Credit facility: This is available to any member for a period not exceeding six months (such facility must be in connection with the business of the Company).
- Loans and advances: These are provided to the producer member against security, repayable within a period not exceeding seven years from the date of disbursement of such loans or advances.
- NABARD Loan: NABARD provides support and financial assistance to meet the needs of Producer Companies. In 2011, NABARD set up a Rs. 50 crore Producer Organization Development Fund (PODF) out of its operating surplus.
Here we have established the best and smoothest way to develop and run a Producer Company.
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