Summary: Indian economy is an agricultural-centric economy. Around 60% of the population depends on agricultural activities for their livelihood. But the primary producers and farmers have had a long struggle in India. A Producer Company, under the Companies Act, 2013, is a legally recognized entity formed by farmers or producer institutions to improve market access and income. Governed by Section 465 of the Act and aligned with Part IX A of the Companies Act, 1956, it operates like a hybrid of private companies and cooperatives, ensuring equal voting rights for members. A Producer Company must have at least ten individual producers or two producer institutions, with a minimum of five and a maximum of fifteen directors. The company’s name must end with “Producer Company Limited.” Registration follows a process similar to private limited companies, starting with name reservation through SPICe Part A, followed by submission of physical MOA and AOA, and filing of SPICe+ with required documents, including identity proofs, office address proof, and a producer certificate from the agriculture department. Upon verification, the Registrar of Companies (ROC) issues a Certificate of Incorporation. Benefits of a Producer Company include collective bargaining, value addition, access to finance, tax benefits, and economies of scale, helping primary producers strengthen their market position.
What is a Producer Company: –
A Producer Company under the Companies Act 2013 is a legally recognized group of individuals or institutions engaged in the production of primary produce. It aims to improve the livelihoods of its members by collectively managing and marketing their produce.
Legal Framework of Farmer Producer Company:
- Governed by the provisions outlined in Section 465 of the Companies Act, 2013, it is subjected to the regulations outlined in Part IX A of the Companies Act, 1956, with necessary modifications.
- The objectives of a Producer Company incorporation must align with the activities specified in Section 581B of the Companies Act 1956.
Key Features:
Membership: Any ten or more individuals, each of them being a producer or any two or more Producer Institutions, or a combination of ten or more individuals
Objectives: Focuses on activities related to primary produce, such as production, harvesting, processing, marketing, and export
Governance: Follows democratic principles with equal voting rights for all members, irrespective of shareholding and Operating as a hybrid between private limited companies and cooperative Societies, a producer company incorporation is registered under the Companies Act 2013
Benefits:
- Collective Bargaining
- Value Addition
- Access to Finance
- Economies of Scale
- Tax Benefits
Pre-Incorporation requirements;
1. Any ten or more individuals each of them being a producer
2. Or any two or more Producer Institutions
3. Or Combination of 10 or more individuals and Producer Institutions.
4. There should be a minimum of 5 and maximum of 15 directors in a producer Company.
5. All the Subscribers should have Digital Signature in spite of the no of the Directors
6. There is a requirement under the Act that the name of a producer company must end with the words “Producer Company Limited
7. A Producer Certificate form the concerned Agriculture department/Patwari/Tehsildar/ Agriculture Officer
REGISTRATION PROCEDURE/ INCORPORATION PROCESS OF PRODUCER COMPANY:
The process of registering a Producer Company follows a similar registration process as a private limited company under the Companies Act 2013.
1. Name Reservation
The name of the Company should be applied through SPICE Part A along with the fees of Rs. 1,000/- or directly applied with the Company.
2. Preparation of MOA and AOA:-
MOA & AOA of Producer Company shall always be physical MOA & AOA and accordingly, the requirement of filing SPICE MOA and AOA is dispensed with while incorporation of the Producer Company.
3. Preparation of E-form SPICE+
Applicant has to fill in the information in the e-form “Spice+”.
All the drafted documents will be attached to Form Spice+ and uploaded to the ROC website. Attachments would be:
i. Proof of identity and residential address of all Subscribers
ii. NOC from the owner of the property and proof of office address (Rent Agreement/Conveyance Deed, etc.) along with the copy of the utility bills (not older than two months).
iii. Producer Certificate form the concerned Agriculture department/Patwari/Tehsildar/ Agriculture Officer
iv. MOA
v. AOA
vi. Khasra/ Khatauni or Land record documents if required
On proper verification, the ROC will issue a Certificate of Incorporation and the company can start its business operations.
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