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.
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.
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.
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:
o PAN card
o Aadhaar card
o Passport-size photograph
o 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:
o Self-attested PAN card
o Address proof
o 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.
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.
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.
• 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.
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.
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.
The main objectives include:
o Production, harvesting, processing, marketing, and sale of produce.
o Providing education and training to members.
o Supplying inputs and equipment.
o Facilitating credit access.
o Promoting welfare activities for members and their families.
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.
Advantages include:
o Collective bargaining power for producers.
o Improved market access and better prices for produce.
o Value addition through processing and packaging.
o Access to credit and other financial services.
o Democratic management and control by members.
o Limited liability for members.
Main activities can include:
o Production, processing, and marketing of agricultural produce, livestock products, handicrafts, or other goods.
o Providing inputs like seeds, fertilizers, and equipment.
o Offering training and skill development programs.
o Facilitating credit and insurance access.
o Conducting research and development.
Membership is open to primary producers engaged in activities related to the company’s objectives. Members typically hold shares in the 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.
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.
Yes, cooperative societies can convert themselves into Producer Companies by following a prescribed procedure under the Companies Act.
Yes, Producer Companies can operate nationwide, subject to compliance with relevant state and central laws.
There is no minimum share capital prescribed by the act. However, the company must have sufficient capital to carry out its operations effectively.
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).
Compliance requirements include:
o Maintaining proper books of accounts.
o Conducting annual audits.
o Filing annual returns with the MCA.
o Complying with tax regulations.
o Adhering to other applicable laws.
Post-incorporation steps include obtaining a PAN and TAN, opening a bank account, registering for GST (if applicable), and complying with other regulatory requirements.
Name availability can be checked on the MCA portal before applying for registration.
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.
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.
Yes, Producer Companies can hire professional managers to improve their operational efficiency and expertise.
Return Filings can assist with the entire registration process, including name reservation, document preparation, filing with the MCA, and post-incorporation compliance.
Covered in the registration procedure details.
Discussed in the advantages section.
Primary producers as defined in the Act.
While both serve producers, they are governed by different laws and have some structural differences.
Covered in the regulatory aspects section.
Good governance, professional management, and member participation are key.
Member contributions, loans, grants, etc.
Market access, funding, management capacity, etc.
Market research, networking, online platforms, etc.
