Producer Company Registration in India

Contributed By: Geetanjli Aggarwal
Email: geetanjali@simplybiz.in

The Indian Economy holds the fifth position in the world’s top economies by the GDP in 2024. Indian economy has always been an Agrarian and it contributes roughly 14% of the country’s total GDP. Although the agriculture sector plays a crucial role in the Indian Economy, but somehow this sector always been deprived of the formalisation and good governance.

In view of the pressing issues of farmers and agriculturalists (collectively termed as “Producers”) in India, like their limited asset and capital base, climate issues, mobilisation of resources, issues relating to agricultural labour, policy changes, technological advancements etc., and to fetch in better governance and channelize the agricultural activities, the concept of the “Producer company” was introduced in the year 2002.

In this article, we will learn about what does a producer company means, what is the procedure for registering a producer company, the incorporation and the benefits of choosing a Producer Company in India.

What is a Producer Company?

Producer Company is a body corporate formed by Producers or Producer institutions or combination of both engaged in agricultural or alloied activities i.e., produce of farmers arising from agriculture including animal husbandry, horticulture, floriculture, pisciculture, viticulture, forestry, forest etc. In short, A Producer company deals primarily with agriculture and post-harvest processing activities only.

The concept of the Producer Company Registration is based on bringing farmers/producers coming together and joining hands to form a group and giving it a legal structure i.e. Producer Company.

Objects of a Producer Company

The objects of the Producer Company shall include:

• production
• harvesting
• procurement
• grading
• pooling, handling, marketing, selling, and export of primary produce of its members or import of goods or services for their benefit.

 Reasons why Producer Company has gained popularity

• Co-operatives have largely been state promoted, with a focus on welfare rather than to do business on commercial lines and more State government intervention in the management of Co-operatives.
• Whereas Companies Act is a central legislation giving transparency and true picture of the Company rather than a Co-operatives which lack transparency.
• A Producer company has features of both the private limited companies and cooperative societies.
• It combines the goodness of a co-operative enterprise and vibrancy and efficiency of a company and accommodates the unique elements of cooperative business with a regulatory framework similar to that of a company.

Who can form a Producer Company

Any 10 or more individual producers can join together to form a production company but there is no upper limit on the number of members. OR

• Any 2 or more producer institutions OR
• A combination of ten or more producer as individuals and Producer Institutions.

Checkpoints to be taken care of

• No minimum paid-up capital is required to incorporate a producer company.
• There should be a minimum of 5 directors (maximum of 15) in a producer company.
• DSC should be ready for all the Directors and Subscribers of the Company.
• KYC documents of all the directors and subscribers.
• Producer certificate on the letterhead of the concerned department containing its name, address, phone number and with the name and seal of the officer signing. It must contain the details of land of the Producer. Every letter of the government department must contain its file number and date.

Can a Producer Company become a Public Company?

At the time of registration, the Producer Company shall become a body corporate as if it is a private limited company to which the provisions contained in the Companies Act apply. And the producer company shall not in any circumstances, become a public limited company under this Act but can be converted into a Cooperative society.

Conclusion

Introduction of registering a Producer Company is a welcome move from the regulators to organise the agriculture sector in India which is a major contributor to the Indian economy. Farmers can come together and pool their resources in order to sell their produce at a better price. Registration, governance and regulation of Producer company is as per the provisions of the Companies Act 2013 and they are subject to similar compliance requirements as regular companies.

SimplySet-up help you from start to finish right from incorporating your entities in India be it Private Limited, Non-Profit or Wholly Owned Subsidiaries. For further enquiries reach out to our Product Head – Ms. Geetanjli Aggarwal at the mail ID  geetanjali@simplybiz.in or  Simplysetup@simplybiz.in  or  ‪+91 8121011571‬.

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