Overview
The Indian economy is predominantly agricultural, with agriculture serving as the primary livelihood for a majority of the population and employing more than 50% of the Indian workforce. However, many producers and farmers are marginalized within the agricultural process, lacking access to essential technology, knowledge, and funding. To address these challenges, the concept of the Producer Company was introduced in 2002, aiming to enhance the lives of farmers and producers.
A Producer Company is a corporate entity composed of producers, farmers, and agriculturists with the primary objective of facilitating activities such as procurement, production, harvesting, grading, pooling, handling, marketing, selling, or exporting goods and services for its members, and importing goods and services for their benefit.
In simple terms, a Producer Company aims to improve the lives of individuals in the agriculture industry by providing them access to technology, markets, credit, and other essential resources.
It is registered as a public company under the Companies Act, 2013, and must include "Producer Company Limited" as the last words of its name.
According to Section 581B of the law, the objectives of a Producer Company include the following:
- Production, harvesting, procurement, grading, pooling, handling, marketing, selling, or exporting the primary produce of its members, or importing goods or services for their benefit. These activities can be carried out directly by the Producer Company or through other institutions.
- Processing activities such as preserving, drying, distilling, brewing, vinting, canning, and packaging the produce of its members.
- Manufacturing, selling, or supplying machinery, equipment, or consumables primarily to its members.
- Providing education on mutual assistance principles to its members and others.
- Offering technical services, consultancy services, training, research and development, and other activities that promote the interests of its members.
- Generation, transmission, and distribution of power; revitalization of land and water resources; their use, conservation, and communication related to primary produce.
- Insurance coverage for producers or their primary produce.
- Promoting techniques of mutuality and mutual assistance.
- Implementing welfare measures or facilities for the benefit of members as decided by the Board.
- Engaging in any other activity ancillary or incidental to the activities referred to in clauses (a) to (l), or any other activities that may promote the principles of mutuality and mutual assistance among the members.
- Financing procurement, processing, marketing, or other activities specified in clauses (a) to (l), including extending credit facilities or providing other financial services to its members.
Minimum Requirements for Producer Company Registration:
- A minimum of 10 producers or individuals are required to form a Producer Company, with no upper limit on the number of members.
- Alternatively, at least two producer institutions can form a Producer Company.
- Among the 10 members, a minimum of 5 directors are required to incorporate the Producer Company.
- A minimum capital of ₹5 lakh is required for the registration of a Producer Company.
- A Producer Company cannot be converted into a public company.
Advantages:
1. Separate Legal Entity:
A Producer Company is a separate legal entity, meaning it can acquire assets and incur debts in its own name. The directors have no personal obligation to the company's lenders.
2. Loan and Investment Provisions:
As a Producer Company is formed by individuals or institutions who are primary producers, the government has established special provisions for providing loans to these producer members. The NABARD Bank was established to offer financial assistance to producers and farmers through the NABARD Loan program.
3. Tax Benefits:
Producer Companies enjoy certain tax benefits and exemptions depending on the agricultural activities they undertake.
Limited Liability:
Under the Companies Act, 2013, directors and shareholders of a Producer Company have limited liability protection. This means that in the event of financial issues, the personal assets of the directors are secure and cannot be seized by banks or other authorities.
4. Acceptance of Deposits:
A registered Producer Company can accept deposits in the form of fixed or recurring deposits. Additionally, the company can advance loans to its members and farmers at a reasonable rate of interest.
Documents Required for Producer Company Registration:
- Passport-size photographs of all members.
- Copy of PAN Card for all members.
- Copy of Aadhar Card or Voter ID for all members.
- Bank statement (not older than two months) for all members.
- Proof of registered place of business, such as a utility bill.
- No Objection Certificate (NOC) from the owner of the property.
Registration Procedure
Step 1: Application for Digital Signature Certificate (DSC)
Producer Company registration is a fully digital process, necessitating a Digital Signature Certificate. Directors and subscribers to the company's memorandum must apply for a DSC from certified agencies. The DSC application process is entirely online and can be completed within 24 hours, involving three simple verifications: document verification, video verification, and phone verification.
Step 2: Application for Name Approval
The name application for a Producer Company can be done through the SPICe+ RUN form, which is part of the SPICe+ form. When submitting the name application, the industrial activity code and the company's object clause must be defined. Ensure the chosen business name does not resemble any already registered company and does not violate the provisions of the Emblems and Names (Prevention of Improper Use) Act, 1950. You can easily check name availability using a company name search tool.
Step 3: Filing of SPICe+ Form (INC-32)
After name approval, details for the company's registration must be entered in the SPICe+ form, a simplified proforma for electronic company incorporation. The form includes:
- Company details
- Details of members and subscribers
- Application for Director Identification Number (DIN)
- Application for PAN and TAN
- Declaration by directors and subscribers
- Declaration and certification by a professional
Step 4: Filing of eMoA (INC-33) and eAoA (INC-34)
The SPICe+ eMoA and eAoA are linked forms that must be completed during the company registration application. The Memorandum of Association (MOA) is defined under Section 2(56) of the Companies Act, 2013, and outlines the company's foundation, powers, and objectives. The Articles of Association (AOA) is defined under Section 2(5) of the Companies Act, detailing the rules and regulations related to the company's management.
Step 5: Issuance of PAN, TAN, and Incorporation Certificate
Upon approval of the aforementioned documents by the Ministry of Corporate Affairs, the PAN, TAN, and Certificate of Incorporation will be issued by the concerned department. You can then use these documents to open a business bank account. For assistance with opening your business bank account, you can contact us.
