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.
