A Producer Company in India is a type of company created for farmers, agricultural producers, and rural entrepreneurs. Its main purpose is to help them improve their livelihoods and advance their common interests. It is formed with a minimum of five members and can engage in activities related to producing, selling, and marketing agricultural products. The members of a producer company have limited liability, meaning their personal assets are protected in case of company debts. The company's profits are distributed among its members based on their involvement in its activities. It enjoys certain tax benefits and exemptions provided by the government.
BENEFITS
COLLECTIVE STRENGTH
A producer company allows farmers, agricultural producers, and rural entrepreneurs to come together and pool their resources, knowledge, and efforts. This collective strength enables them to access better markets, negotiate favorable terms, and achieve economies of scale.
IMPROVED INCOME AND LIVELIHOODS
By engaging in joint production, procurement, and marketing activities, members of a producer company can enhance their income and livelihoods. They can obtain better prices for their produce, eliminate middlemen, and benefit from shared infrastructure and resources.
LIMITED LIABILITY
Members of a producer company have limited liability, meaning their personal assets are protected in case the company incurs debts or liabilities. This feature provides a sense of security and safeguards their individual financial well-being.
PROFESSIONAL MANAGEMENT
Producer companies are required to have a board of directors, which brings in professional management and expertise. This helps in efficient decision-making, planning, and implementation of strategies for the benefit of the members.
ACCESS TO FINANCE AND CREDIT
Producer companies can avail themselves of various financial services and credit facilities. They can obtain loans, grants, or subsidies from government agencies, financial institutions, or other funding sources. This access to finance enables them to invest in better infrastructure, technology, and training.
TAX BENEFITS
Producer companies enjoy certain tax benefits and exemptions provided by the government to promote agricultural and rural development. These benefits may include income tax exemptions, reduced tax rates, or exemptions from certain indirect taxes.
REPRESENTATION AND EMPOWERMENT
Producer companies provide a platform for members to voice their concerns, participate in decision-making, and collectively address issues affecting their interests. It empowers them by giving them a stronger bargaining position and a say in the management of their own affairs.
SOCIAL AND COMMUNITY DEVELOPMENT
Producer companies often undertake welfare and development activities for the benefit of their members and the local community. This may include initiatives related to education, healthcare, infrastructure development, environmental conservation, or skill development.
STEPS TO REGISTER
The steps to register a producer company in India are as follows:
- MINIMUM REQUIREMENTS Ensure that you meet the minimum requirements for registering a producer company. These include having at least five members (individuals or organizations), a registered office address, and a proposed name for the company.
- DIRECTORS AND MEMBERS:Identify the individuals or organizations who will be the directors and members of the producer company. The directors must have valid Director Identification Numbers (DINs) issued by the Ministry of Corporate Affairs (MCA).
- NAME APPROVAL: Choose a unique name for your producer company and submit it to the Registrar of Companies (ROC) for approval. The name should comply with the naming guidelines prescribed by the MCA.
- MEMORANDUM OF ASSOCIATION (MOA) AND ARTICLES OF ASSOCIATION (AOA): Prepare the Memorandum of Association (MOA) and Articles of Association (AOA) for the producer company. These documents outline the objectives, rules, and regulations of the company. They need to be drafted and signed by the proposed members and directors.
- APPLICATION SUBMISSION: Prepare and submit the required documents to the ROC. This includes the MOA, AOA, and other necessary forms such as Form INC-7 (for incorporation) and Form INC-22 (for registered office address verification). Ensure that the forms are duly filled, signed, and accompanied by the required fees.
- CERTIFICATE OF INCORPORATION: Upon verification of the documents, if everything is in order, the ROC will issue a Certificate of Incorporation. This certificate signifies the official registration of the producer company.
- PAN AND TAN APPLICATION: Apply for Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) for the producer company. These are essential for tax-related purposes.
- BANK ACCOUNT AND STATUTORY COMPLIANCE: Open a bank account in the name of the producer company and complete other post-incorporation formalities such as obtaining the Goods and Services Tax (GST) registration, complying with labor and employment laws, maintaining proper accounting records, and fulfilling other statutory requirements.
DOCUMENTS REQUIRED FOR PRODUCER COMPANY
- Director/Member Documents: Identity proof, address proof, and photographs of proposed directors/members.
- Registered Office Documents: Address proof and NOC (if applicable) for the registered office.
- Declaration and Consent of proposed directors/members.
- Memorandum of Association (MOA) and Articles of Association (AOA).
- Director Identification Number (DIN) for directors.
- Name Approval Application.
- Forms: INC-7 (for incorporation) and INC-22 (for registered office address verification).
- Other Supporting Documents as required by the Registrar of Companies.
REGISTERATION COMPLIANCES
Once a Producer Company is registered in India, it needs to comply with various legal and regulatory requirements. Here are some key compliance obligations for a producer company:
- BOARD MEETINGS: Hold board meetings at least once every quarter (four times a year) with a maximum gap of 120 days between two consecutive meetings. Maintain proper minutes of the meetings.
- ANNUAL GENERAL MEETING (AGM): Conduct an AGM within six months from the end of the financial year. Present audited financial statements, appoint auditors, and discuss company matters with the members.
- FINANCIAL STATEMENTS: Prepare and file financial statements, including the balance sheet, profit and loss statement, and cash flow statement, annually with the Registrar of Companies.
- AUDIT: Get the financial statements audited by a qualified auditor. The auditor should be appointed by the members at the AGM.
- INCOME TAX RETURN: File the income tax return for the producer company before the due date, which is typically July 31st of the assessment year.
- TDS AND GST COMPLIANCE: If applicable, deduct and deposit tax deducted at source (TDS) and comply with Goods and Services Tax (GST) regulations, including filing GST returns and payment of GST dues.
- STATUTORY REGISTERS AND RECORDS: Maintain various statutory registers and records, such as the register of members, register of directors, register of contracts, minutes of meetings, etc.
- COMPLIANCE WITH COMPANY LAW: Comply with the provisions of the Companies Act, 2013, and related regulations, including submitting required forms and filings to the Registrar of Companies within the specified time frames.
- ANNUAL FILING: File annual returns and other necessary forms, such as Form MGT-7 (annual return) and Form AOC-4 (financial statements), with the Registrar of Companies.
- REGULATORY REPORTING: Comply with any additional reporting or compliance requirements imposed by sector-specific regulators or government authorities, if applicable to the activities of the producer company.
FAQs
A producer company is a corporate entity formed under the Companies Act, 2013, specifically for farmers, agricultural producers, and rural entrepreneurs engaged in primary produce production, procurement, and marketing.
A minimum of five members is required to form a producer company in India.
Yes, both individuals and organizations can be members of a producer company.
Some benefits include collective strength, improved income and livelihoods, limited liability, access to finance and credit, tax benefits, and representation and empowerment.
The process involves obtaining the necessary documents, including director/member documents, registered office documents, MOA and AOA, applying for name approval, submitting forms to the Registrar of Companies, and completing post-incorporation formalities.
The registration process typically takes around 15-20 business days, subject to the timely submission of documents and approval from the Registrar of Companies.
No, a producer company is primarily meant for activities related to primary produce production, procurement, and marketing.
No, a producer company cannot raise funds from the public through initial public offerings (IPOs). Funding primarily comes from its members and financial institutions.
Members of a producer company have limited liability. Their liability is limited to the extent of their shareholding in the company.
No, a producer company can only convert into a multi-state cooperative society or vice versa, subject to certain conditions and regulatory approvals.
Yes, producer companies enjoy certain tax benefits and exemptions provided by the government, such as income tax exemptions and reduced tax rates.
No, a producer company is restricted to operating within India and cannot have branches or operations outside the country.
No, it is not mandatory to appoint a company secretary for a producer company unless it falls under certain specified criteria, such as having a paid-up share capital of INR 10 million or more.
Yes, a producer company can be converted into a regular private limited company if it meets the necessary criteria and obtains the required approvals.
Compliance requirements include holding board meetings, conducting annual general meetings, preparing financial statements, filing income tax returns, complying with TDS and GST regulations, maintaining statutory registers, and fulfilling obligations under the Companies Act and related regulations.
