Producer Company Registration

Producer Company Registration

Producer company registration is corporate form of business incorporated by a body of farmers engaged in agriculture produce, procurement, harvesting, grading, pooling, handling, marketing, selling or export of agriculture products. These Producer company registration is done to facilitate the farmers requirement and needs.

Call Us: +91 9910123091
Start With Confidence
CA/CS Assisted | 4.8/5 Rating

Producer Company Registration

Comprehensive Guide to Producer Company Registration in India

1.     Introduction

More than 60% of India’s population depends on agriculture for their livelihood. However, a significant portion of farmers and agricultural workers operate in an unorganized manner, with limited education and exposure to modern agricultural technologies and market developments. To support and organize agricultural producers, the Government of India has introduced several schemes and incentives, one of which is the registration of a Producer Company.

Producer Company registration is governed by the provisions of Part IX-A of the Companies Act, 1956, as these provisions continue to apply under Section 465(1) of the Companies Act, 2013. A Producer Company is a hybrid between a private limited company and a cooperative society, allowing farmers to collaborate in business activities while retaining democratic governance.

2.     Activities of a Producer Company

A registered Producer Company can undertake the following activities:

  • Producing, processing, harvesting, procurement, grading, pooling, handling, export, or import of goods or services.
  • Providing technical consultancy services, training, education, and research for members.
  • Revitalization and cultivation of land and water resources related to primary produce.
  • Offering financial assistance to members of the Producer Company.

3.     Eligibility for Producer Company Registration

To register a Producer Company, the following criteria must be met:

  • A minimum of 10 or more individuals engaged in agricultural activities.
  • A minimum of 2 or more producer institutions can also form a Producer Company.
  • A combination of individuals and producer institutions can also register as a Producer Company.
  • A minimum of 5 directors and a maximum of 15 directors.
  • The company must be registered as a private limited company but with the benefits of a cooperative society.

4.     Producer Company Registration Process

Producer Company registration is an online process, with applications submitted through the Ministry of Corporate Affairs (MCA) portal. The steps involved are:

Step 1: Obtain Digital Signature Certificate (DSC)

All proposed directors must obtain a DSC, which is required for filing online documents.

  • Documents required:
    • PAN card
    • Aadhaar card
    • Passport-size photograph
    • Email ID and mobile number

Step 2: Obtain Director Identification Number (DIN)

Each proposed director must obtain a DIN, which serves as a unique identifier for company directors.

  • Required documents:
    • Self-attested PAN card
    • Address proof
    • Passport-size photograph

Step 3: Name Reservation

The company name must be unique and must include ‘Producer Company’ at the end. The SPICe+ Form is used for name reservation, with two name options submitted to the Registrar of Companies (ROC).

Step 4: Drafting MoA and AoA

  • Memorandum of Association (MoA): Defines the primary activities and objectives of the company.
  • Articles of Association (AoA): Outlines the operational and governance structure of the company.

Step 5: Filing of Incorporation Application

The SPICe+ form is used for incorporation, along with the following attachments:

  • MoA & AoA
  • Address proof of the registered office
  • Directors’ KYC documents

Step 6: Certificate of Incorporation

Upon verification, the ROC issues the Certificate of Incorporation, marking the official registration of the company.

5.     Compliance Requirements for Producer Companies

To ensure smooth operations, Producer Companies must comply with the following requirements:

  • Annual Filings: Submission of financial statements and annual returns to the ROC.
  • Audit Reports: Conducting annual audits.
  • Board Meetings: At least four board meetings per year.
  • Income Tax Filing: Filing returns and availing tax exemptions based on agricultural activities.
  • Maintenance of Books of Accounts: Proper records of transactions, investments, and financial statements.

6.     Taxation of Producer Companies

While agricultural income is exempt under Section 10(1) of the Income Tax Act, 1961, tax benefits depend on the nature of agricultural activities:

  • 100% exemption for income from growing and selling crops.
  • Partial exemption for activities involving processing of agricultural products (e.g., tea manufacturing).
  • Tax benefits for cooperative principles under the Income Tax Act.

7.     Advantages of Producer Company Registration

  • Limited Liability: Members’ liability is limited to their share capital contribution.
  • Access to Government Support: Eligibility for subsidies, grants, and credit facilities.
  • Legal Recognition: Provides a structured business framework.
  • Tax Benefits: Exemptions on agricultural income.
  • National Operational Scope: Producer Companies can operate across India.
  • Better Market Opportunities: Facilitates better access to markets and enhanced price realization.

8.     Conclusion

A Producer Company offers a structured approach for farmers and agricultural producers to collaborate, access financial support, and leverage government incentives. The registration process ensures legal recognition, enabling them to function effectively while availing multiple benefits. With expert assistance from service providers like Return Filings, agricultural entrepreneurs can seamlessly complete their registration and compliance requirements, ensuring long-term success and sustainability in the agricultural sector.

With expert assistance from Return Filings, you can ensure a smooth registration and compliance process for your Producer Company. For professional assistance, reach out to us on email: info@returnfilings.com or on whatsapp: https://wa.me/919910123091.

9.     Additional Resource

For further reading, explore:

·       Society Registration in India: Step-by-Step Guide for Easy Setup

·       Nidhi Company Registration: Detailed guideline for registration of Nidhi Company

·       Credit co-operative society registration: detailed guideline for registration

·       Housing co-operative society registration: step-by-step guide for registration

Frequently Asked Questions (FAQs) on Producer Company Registration in India

A. General Information about Producer Companies

  1. What is a Producer Company?

A Producer Company is a legally recognized business entity formed by primary producers, such as farmers, artisans, craftspeople, or any other individuals involved in the production of goods or services. Its primary focus is to organize and promote the business activities of its members, ensuring better market access, value addition, and overall economic well-being.

  1. What are the primary objectives of a Producer Company?

The main objectives include:

    • Production, harvesting, processing, marketing, and sale of produce.
    • Providing education and training to members.
    • Supplying inputs and equipment.
    • Facilitating credit access.
    • Promoting welfare activities for members and their families.
  2. What legal framework governs Producer Companies in India?

Producer Companies are governed by the Companies Act, 2013, specifically Chapter IX-A, which deals with Producer Companies. They are also subject to other relevant regulations.

  1. What are the advantages of starting a Producer Company?

Advantages include:

    • Collective bargaining power for producers.
    • Improved market access and better prices for produce.
    • Value addition through processing and packaging.
    • Access to credit and other financial services.
    • Democratic management and control by members.
    • Limited liability for members.
  2. What are the main activities of a Producer Company?

Main activities can include:

    • Production, processing, and marketing of agricultural produce, livestock products, handicrafts, or other goods.
    • Providing inputs like seeds, fertilizers, and equipment.
    • Offering training and skill development programs.
    • Facilitating credit and insurance access.
    • Conducting research and development.

B. Membership and Governance

  1. How is membership structured in a Producer Company?

Membership is open to primary producers engaged in activities related to the company’s objectives. Members typically hold shares in the company.

  1. What is the governance structure of a Producer Company?

The governance structure is democratic, with members having voting rights in proportion to their shareholding. The management is vested in a Board of Directors elected by the members.

  1. Is there a requirement for regular meetings in Producer Companies?

Yes, Producer Companies must hold regular board meetings and an Annual General Meeting (AGM) of members to discuss business matters, approve financial statements, and make important decisions.

  1. Can existing cooperative societies transition into Producer Companies?

Yes, cooperative societies can convert themselves into Producer Companies by following a prescribed procedure under the Companies Act.

  1. Can Producer Companies operate nationwide?

Yes, Producer Companies can operate nationwide, subject to compliance with relevant state and central laws.

C. Incorporation and Compliance

  1. What are the minimum share capital requirements for a Producer Company?

There is no minimum share capital prescribed by the act. However, the company must have sufficient capital to carry out its operations effectively.

  1. What is the registration procedure for a Producer Company?

The registration process is similar to that of other companies and is done through the MCA portal (SPICe+ form). It involves obtaining a Digital Signature Certificate (DSC) and Director Identification Number (DIN), reserving a name, drafting the Memorandum of Association (MoA) and Articles of Association (AoA), and filing the necessary forms with the Registrar of Companies (RoC).

  1. What are the compliance requirements for Producer Companies?

Compliance requirements include:

    • Maintaining proper books of accounts.
    • Conducting annual audits.
    • Filing annual returns with the MCA.
    • Complying with tax regulations.
    • Adhering to other applicable laws.
  2. What are the post-incorporation steps for Producer Companies?

Post-incorporation steps include obtaining a PAN and TAN, opening a bank account, registering for GST (if applicable), and complying with other regulatory requirements.

  1. How can one verify the availability of a company name for a Producer Company?

Name availability can be checked on the MCA portal before applying for registration.

D. Finance and Taxation

  1. What are the taxation considerations for Producer Companies?

Producer Companies are subject to corporate income tax on their profits. They may also be eligible for certain tax benefits. It is important to consult with a tax professional for specific advice.

  1. Can Producer Companies distribute dividends?

While the primary focus is not profit maximization, Producer Companies can distribute dividends to their members, but there are certain restrictions and conditions that apply.

  1. Is there a provision for hiring professional managers in Producer Companies?

Yes, Producer Companies can hire professional managers to improve their operational efficiency and expertise.

E. Return Filings Assistance

  1. How does Return Filings assist in Producer Company registration?

Return Filings can assist with the entire registration process, including name reservation, document preparation, filing with the MCA, and post-incorporation compliance.

F. Other generally asked questions related to Producer company registration:

           20.   How do I register a Producer Company in India?

            Covered in the registration procedure details.

  1. What are the benefits of forming a Producer Company?

Discussed in the advantages section.

  1. Who can be a member of a Producer Company?

Primary producers as defined in the Act.

  1. What is the difference between a Producer Company and a cooperative society?

While both serve producers, they are governed by different laws and have some structural differences.

  1. What are the legal requirements for a Producer Company?

Covered in the regulatory aspects section.

  1. How do I manage a Producer Company effectively?

Good governance, professional management, and member participation are key.

  1. How do I raise funds for a Producer Company?

Member contributions, loans, grants, etc.

  1. What are the challenges faced by Producer Companies?

Market access, funding, management capacity, etc.

  1. How can I find buyers for the products of a Producer Company?

Market research, networking, online platforms, etc.