Producer Company: Overview

The agriculture sector contributes almost 17-18% to the country’s GDP, employs more than 50% of India’s total workforce, and is the backbone of our country. The farmers and agriculturalists are collectively-termed as “Producers.” The concept of “Producer company” was introduced in 2002 to address the issue of agricultural labour, technological advancements, policy changes and to bring in better governance and channelize the agricultural activities. 

Definition of Producer Company: 

Farmers cooperatives can function as a corporate entity once they form a Producer company. As per the Companies Act 1956, the objective of a Producer Company is related to Production, Harvesting, Procurement, Grading, Pooling, Handling, Marketing, Selling and Import-Export of primary produce.

The Members can carry activities of processing, preserving, drying, brewing, distilling, vinting, canning, and packaging in production activities by themselves or through other entities. 

Other activities include Manufacture or sale of equipment/machinery, providing education on the mutual assistance principles to its Members and others, offering technical services, consultancy services, training, and R&D. Producer Company will primarily deal with the produce of its members for carrying out any of the above items. 

Formation and Producer Company Registration

Ten or more individuals can form a Producer Company. Each can be Producers or Two or more Producer institutions; or a combination of Ten or more persons and Producer institutions. The Registrar will issue the Certificate of Incorporation within 30 days of receiving the necessary documents to his satisfaction.

Registration of a Producer Company 

The Producer Company registration is almost similar to that of a Private Limited Company that is, obtain DSC, DIN, File Form – 1A (proposed company name), draft the documents to incorporate the objective of the company and the share capital to be registered and fill statutory declaration in the Form-1 i.e., declaring compliance of all items related to the formation of companies.

The Certificate will be issued after which the company shall become a corporate body similar to a private limited company.

Management of Producer Company 

A minimum of five directors and a maximum of 15 directors (by electing through AGM within 90 days of registration) are needed in the Producer company. The term of Director is a minimum of one year and a maximum of 5 years.

Internal Audit needs to be conducted by the CA at a frequency specified in the company’s articles.

Producer Company benefits:

The members will receive a monetary value of the products pooled/supplied which will be determined by the Director. The amount will be distributed in cash or by allotting equity shares. Also, members may get bonus shares in proportion to the amount held. The additional amount remaining may be distributed as a patronage bonus in proportion to their participation in business activities. Members can get credit facility for a period of fewer than six months.

Formation of a Producer Company

Ten or more producers or persons can join to form a Producer Company with no maximum limit. Any two or more producer institutions can also start a producer company. A minimum capital of Rs. 5 Lakh is required to incorporate a producer company.

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.