Before moving to the process of Incorporating producer company, we will discuss the basic information about Producer Companies.

A producer company is a body corporate which is governed by the provisions under chapter IXA (Section 581A to 581ZL) of Companies Act, 1956 (CA, 2013 doesn’t have any specific provision about producer companies therefore Chapter IXA of Companies Act, 1956 has not been repealed). Producer Company can only be incorporated for pursuing objects under section 581B of Companies Act, 1956 which has been explained in detail later in the article. Producer Company can be formed only by producer.

Producer means any person engaged in any activity connected with or relatable to primary produce.

“Primary produce” means

(i) produce of farmers, arising from agriculture (including animal husbandry, horticulture, floriculture, pisciculture, viticulture, forestry, forest products, re-vegetation, bee raising and farming plantation products), or from any other primary activity or service which promotes the interest of the farmers or consumers; or

(ii) produce of persons engaged in handloom, handicraft and other cottage industries;

(iii) any product resulting from any of the above activities, including by-products of such products;

(iv) any product resulting from an ancillary activity that would assist or promote any of the aforesaid activities or anything ancillary thereto;

(v) any activity which is intended to increase the production of anything referred to in sub-clauses (i) to (iv) or improve the quality thereof;

If any person is engaged in the aforesaid activities, then such persons can form a Producer Company to pursue any of the following object –

a. Production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of primary produce of the Members or import of goods or services for their benefit :

Provided that the Producer Company may carry on any of the activities specified in this clause either by itself or through other institution;

b. Processing including preserving, drying, distilling, brewing, vinting, canning and packaging of produce of its Members;

c. Manufacture, sale or supply of machinery, equipment or consumables mainly to its Members;

d. Providing education on the mutual assistance principles to its Members and others;

e. Rendering technical services, consultancy services, training, research and development and all other activities for the promotion of the interests of its Members;

f. Generation, transmission and distribution of power, revitalisation of land and water resources, their use, conservation and communications relatable to primary produce;

g. Insurance of producers or their primary produce;

h. Promoting techniques of mutuality and mutual assistance;

i. welfare measures or facilities for the benefit of Members as may be decided by the Board;

j. Any other activity, ancillary or incidental to any of the activities referred to in clauses (a) to (i) or other activities which may promote the principles of mutuality and mutual assistance amongst the Members in any other manner;

k. financing of procurement, processing, marketing or other activities specified in clauses (a) to (j) which include extending of credit facilities or any other financial services to its Members.

FORMATION OF PRODUCER COMPANY:

Who can form Producer Company?

  • Any 10 or more individual producer;
  • Any 2 or more producer institution;
  • A Combination of 10 or more individual producer and producer institutions

Can form a producer company.

Notes:

1. There must be minimum 5 directors in a producer company.

2. Producer company is always a private limited company.

3. Producer Company will be governed by the provisions of Chapter IXA of Companies Act, 1956.

4. Voting rights in producer company shall be based on a single vote for every member.

5. No person, who has any business interest which is in conflict with business of the Producer Company, shall become a Member of that Company.

6. Every Producer Company shall deal primarily with the produce of its active Members for carrying out any of its objects specified in this section.

7. The name of the Company shall end with “Producer Company Limited” which shall be stated in the Memorandum.

8. The AOA and MOA of producer company shall be prepared in accordance with the provision under section 581F and 581G respectively.

9. One-fourth of the total membership shall constitute the quorum at a General Meeting.

10. Share Capital of a producer company shall consist of equity shares only.

INCORPORATION OF PRODUCER COMPANY:

  • A Producer Company can be incorporated through SPICe.
  • E-MOA and E-AOA shall not be applicable for producer companies. Scanned copy of signed MOA and AOA shall be attached with SPICe.
  • DIN of maximum 3 directors can be allotted through SPICe. In case of DIN for more directors, DIN-3 shall be filed.

Documents required to be attached in SPICe:

  • DIR-2 of the Proposed Directors
  • Affidavit from the 1st directors regarding non-acceptance of deposits by the Company.
  • INC-9 duly signed by each subscriber and first directors to the memorandum.
  • Proof of registered office address.
  • Proof of Identity (Voter ID/Driving License/Passport) and Residence (Bank Statement/Electricity Bill/Telephone bill not older than 2 months) of subscribers/Directors not having DIN.
  • Duly signed MOA and AOA.
  • List of subscribers duly signed.

General Practical issues observed in SPICe form while incorporating Producer Company:

The major issue being faced while incorporating producer Companies is the size of form after attaching documents and affixing DSC. In this case, following may help in reducing the size of the form:

  • It is advisable to obtain the DIN of all the proposed director through DIR-3 instead of obtaining through SPICe. This will reduce the attachment of ID and address proof of such directors.
  • No need of attaching copy of PAN Card as PAN details already gets verified with Income Tax database while filing the form.
  • Scan all the documents in Black & White mode.

The article has been written by Siddarth Agarwal, Practising Company Secretary carrying his practice in Delhi-NCR and Guwahati. Due care has been taken to ensure the correctness of information. However, this article cannot be construed as legal opinion and writer will not be liable for any claim. Any suggestions are welcome to increase the effectiveness of the article. For detailed analysis on any of the provision or for any query, writer can be contacted on the given contact details.

You can reach him on +91 99998 42474 or +91 84710 19192 or through email – [email protected]

Author Bio

Qualification: CS
Company: Siddarth Agarwal & Co.
Location: Noida, Uttar Pradesh, IN
Member Since: 17 May 2018 | Total Posts: 4
A young member of The Institute of Company Secretaries of India carrying on Practice and currently having presence in Delhi-NCR and Guwahati. View Full Profile

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7 Comments

  1. APOORVA GARG says:

    In MCA site, there is no DIR form for new directors in new company. How to obtain the DIN then., if the director is more than 3????

  2. Sidd1910 says:

    Dear Readers,

    Please note that now DIN of all Directors i.e. 10 directors has to be obtained through SPICe only. DIR-3 can only be filed for appointment in existing companies.
    So, kindly read the article accordingly.

    Thanks

    1. Sidd1910 says:

      DIN of max 5 directors are allotted through SPICe in case of producer company. DIN for remaining directors, if any, can be obtained through DIR-3 after the incorporation of the company.

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