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A Producer Company is an officially established group of farmers or agriculturists to enhance their quality of life, financial support, and income. This kind of company combines elements of both private limited companies and cooperatives. Its primary goal is to encourage cooperative businesses to form as companies and to allow current cooperatives to transition into company structures.
Producer companies aim to provide farmers with better financial support, enhance their incomes, and improve their overall quality of life through cooperative businesses.
Solocorp Verifocus Legal LLP offers expert guidance to simplify the registration process for Producer Companies. Their services ensure legal compliance under the Companies Act 2013, making the process seamless for agricultural ventures.
A Producer Company, also known as a Farmer Producer Company, is an officially recognized organization composed of farmers or agriculturists. Its main objective is to improve the livelihoods of its members, enhancing their resources, incomes, and profitability.
It operates as a hybrid between private limited companies and cooperative societies, combining the benefits of both. A Producer Company is registered under the Companies Act 2013 and adheres to democratic governance principles, ensuring each member has an equal say in decision-making, regardless of the number of shares they hold.
The structure of a Producer Company fosters long-term sustainability by focusing on the welfare of its members while ensuring effective management and resource utilization.
A Producer Company is a legal entity established under the Companies Act, 1956, and it is governed by the provisions outlined in Section 465 of the Companies Act, 2013. This entity operates under the regulations specified in Part IX A of the Companies Act, 1956, with necessary modifications.
The objectives of a Producer Company incorporation must align with the activities outlined in Section 581B of the Companies Act, 1956. These regulations ensure the proper formation and governance of Producer Companies, enabling them to function effectively within the legal framework.
This Act governs the functioning of all types of companies in India, including Producer Companies. It defines the regulations and procedures for incorporation, governance, and operation.
This section outlines the specific activities and objectives that must align with the formation of a Producer Company. It provides the legal framework for such companies, focusing on the welfare of the producers.
This part of the Companies Act provides the necessary modifications and regulations for the establishment and functioning of Producer Companies, ensuring their compliance with cooperative principles while operating under corporate laws.
A Producer Company's primary objective is to advance its members' interests by facilitating activities related to the production, marketing, sale, and export of their primary products.
Additionally, the producer company incorporation is empowered to import goods or services essential for the welfare of its members, further supporting their economic growth and ensuring a sustainable livelihood.
Producer Companies are established with diverse objectives aimed at enhancing their members' welfare and economic status. They engage in various activities that support the overall growth and development of their members.
A Producer Company incorporation combines the professional management of a Private Limited Company with the mutual benefits of a Cooperative Society.
Ownership and membership are held exclusively by 'primary producers' or 'Producer Institutions,' ensuring that the organisation remains focused on benefiting those involved in primary production. Member equity cannot be traded, safeguarding against takeovers or exploitation.
While adhering to the clauses of a Private Limited Company, a Producer Company operates under specific clauses outlined in the Producer Company Act (referenced from 581-A to 581-ZL), providing a professional framework tailored to the needs of primary producers.
In a Producer Company, members' financial responsibility is capped at their share contribution. This implies that members' assets are safeguarded against the company's debts or financial setbacks, limiting their liability strictly to the amount they've invested in shares.
With a minimum paid-up capital of Rs. 1 Lakh and minimum authorised capital of Rs. 5 lakh, it is easier to mobilise small capital for a Producer Company.
A minimum of 10 producers is required to form a Producer Company, with no limit on the maximum number of members. This flexibility allows even small groups of 10 individuals to establish a Producer Company, promoting accessibility.
Producer Companies cannot have government or private equity stakes, preventing them from becoming public or deemed public limited companies. This ensures autonomy and professional functioning without external threats.
Producer Companies can operate nationwide, providing flexibility to expand and conduct business freely and professionally.
Registering a Producer Company involves a structured procedure resembling incorporating a Private Limited Company in India. The steps are methodically designed to ensure legal compliance and the proper establishment of such a company. Here's a detailed breakdown of the farmer Producer company registration process:
The initial step is to acquire a Digital Signature Certificate (DSC) for all the proposed directors of the company. The DSC is an electronic signature used to submit e-forms online securely. The documents required for obtaining a DSC include PAN Card of the Director, Aadhaar Card of the Director, Recent Photograph, Email ID, and Contact Number.
Subsequent to the acquisition of DSC, the next step involves obtaining the Director Identification Number (DIN) for each director. The DIN is a unique identifier for a director and is required for a director to be appointed in any company. This can be obtained by filing the DIR-3 form or through the SPICe+ form, accompanied by Self-attested identity proof (like PAN card), Address proof, and Recent photograph.
The name of the Producer Company must be unique and end with the words 'Producer Company.' For name reservation, Form SPICe+ is filed with the Registrar of Companies (ROC), proposing two names in order of preference and the significance behind those names. The ROC will then approve one of the proposed names based on availability and compliance with naming standards.
Once the name is approved, the following vital documents need to be prepared for incorporation: Memorandum of Association (MoA), Articles of Association (AoA), Form INC-22 for the Registered Office, Form DIR-12 for Directors Appointment, Affidavit (if necessary), and Registered Office Proof.
All the prepared documents and the application for incorporation are to be filed in Form SPICe+ with the ROC. The application must meticulously detail the company’s proposed structure, directors, and registered office.
The ROC will scrutinise the application and the attached documents for compliance with legal requirements. Upon satisfaction, the ROC will issue the Certificate of Incorporation, proving that the company has been legally constituted. The company can then commence its business operations.
After incorporation, the company may need to undertake additional steps such as applying for a PAN, TAN, and opening a bank account in the name of the Producer Company. The experts at Solocorp Verifocus Legal LLP are ready to assist you at every step of the registration process.
Producer Companies must adhere to various regulatory and operational compliances to ensure smooth functioning and alignment with legal and tax requirements.
Producer Companies must ensure rigorous financial management, including annual audits and presenting audited financials and reports at the AGM, with mandatory filings to the Registrar of Companies.
Existing cooperative societies in primary production can transition into Producer Companies under the Companies Act 2013.
Producer Companies are subject to standard corporate taxation but may qualify for agricultural activity-related tax benefits.
A minimum of Rs. 5 lakhs authorised and Rs. 1 lakh paid-up share capital is required, with options to raise further capital per the Companies Act provisions.
The company's objectives must emphasise the production, handling, and marketing of members' primary produce, including import for member benefits.
Managed by a member-elected board, ensuring decisions align with company and member interests.
Dividends can be distributed, capped at 20% of annual profits, in line with shareholdings.
Speculative activities unrelated to primary production are prohibited.
Conversion to a regular company is possible under specific conditions.
Voluntary or NCLT-ordered winding up follows standard company procedures.
Voting by proxy is disallowed, focusing only on production-related resolutions.
At least four board meetings yearly, adhering to quorum requirements.
A statutory reserve from net profits is mandated until it matches the paid-up share capital designated for specified uses.
Option to hire professional managers with board and member approval.
Registration with NABARD enables access to financial and technical support for agricultural advancements.
Branches for primary activities are permitted under central management and Companies Act compliance.
An annual return detailing company operations, membership, and financial health must be filed with the Registrar of Companies.