Producer Company Registration
A producer company is a company registered under the companies act, 2013. It is treated as a private limited company. Producer companies are formed with a motive to improve the standard of living and to ensure good status and support to farmers. The producer company can never be converted into a public company.
Why register for a producer company
Agriculture is the pillar of our economy. The farmers and the producers have to struggle very much in order to earn profits. Keeping this profit in mind, the government of India has come up with the concept of producer companies.
In the year 2002, the government constructed a committee to look into this matter. The committee is still working for the welfare of farmers and producers.
The producer companies registered under the companies act 2013 enjoys various tax exemptions under the income tax act, 1961 since the agriculture income is fully exempted in India. Though the production of green tea is not fully exempted it is also 60% exempted as per the provisions.
To form a producer company there is a requirement of 5 directors and 10 members.
Therefore the registration of a producer company is very beneficial for the farmers as they can avail themselves of some better credit facilities, thus resulting in more profits for their agriculture production.
To register the producer company the minimum paid-up certified capital is required which is ₹5,00,000 lac (Five lakhs rupees). Producer companies are formed with limited liability and liability is limited by the share capital. The maximum number of members in the producer company can be unlimited. Though the producer company cannot be converted to a public company it can be converted to a multi-state cooperative society.
The registration process of a producer company is similar to that of a private limited company. The name of the producer company must end with the words, “producer limited company”
Benefits of a producer company
- Benefits to the members: Members would receive bonus shares in proportion to shares held by them. The surplus which is left in the company may be given to the members in the form of a patronage bonus.
- Tax benefits: Under the income tax act, 1961, agriculture income in India is exempt under section 10 (1) of the act. However, it is to be kept in mind that the act doesn’t provide special advantages to the producer companies but on agriculture activities tax benefits can be availed.
- Investment and loans: A producer company is allowed to provide financial assistance to its members by way of credit facility, loans and advances, NABARD (National Bank for Agriculture and Rural Development) loan also supports the producer companies.
- Limited liability: The variety of members of a producer company is limited. In case of failure by the company to pay its debts, the members are not liable personally to bring their personal assets to pay the same.
- Separate entity: A producer company is treated distinctly from its member. It has its own identity which is separate from its members.
- Can own property: A registered producer company has the right to own the property in its own name. Moreover, a registered producer company can provide loans to its members at very reasonable rates.
- Easy formation and good management: A producer company can be easily incorporated. Such a company can make changes in its management or board by submitting prescribed forms to ROC.
- Offers credibility: A producer company offers more and more credibility to the farmers. Farmers can avail themselves of the credibility benefits easily.
- Finer facilities: Farmers can enjoy better facilities that they cannot get from other platforms. Members of producer companies can get access to the services of government like scholarships, pensions, and more.
- Better governance: The producer companies enjoys government support. The government provides support to producer companies for the interest of farmers.
About producer company registration
A producer company is a company registered under the companies act, 2013. The producer company performs various activities such as:
- Exporting the main produce
- Importing the goods and services for their own benefits
The main motive of a producer company is to provide ease in the formation of cooperative businesses as companies.
The producer also performs processing activities such as preserving, canning and packaging of produce. The producer company can provide education to the producer members on the mutual assistance principles.
Producer companies are allowed to render technical as well as consultancy services, training, research & development, and other activities that promote the interest of producer members. Such companies can perform any other activity that promotes mutual assistance amongst the producer members.
Requirement for a producer company registration
- Such companies can be registered with a minimum of 5 directors and 10 members.
- Such companies must have a paid-up share capital of ₹5,00,000 lacs (Five lakh rupees) or more to register as a producer company.
- Moreover, such companies can never be incorporated as public limited companies.
- There is no upper cap on the maximum number of members in a producer company.
- Such companies can have equity share capital only.
- The registered producer company must carry four board meetings every year and should hold them thereafter every three months.
- The company so registered shall be deemed as a private limited company in accordance with the provisions of the companies act, 2013.
- The members of the producer company shall have limited liability.
- Only members that are involved in the production of primary produce can enjoy the ownership of the producer company.
- There are various types of producer companies. A producer company can be related to the production business, marketing business, technical service business, infrastructure business and can be related to the financing business.
Producer to register a Producer Company
- The first step to register the producer company is to obtain DIN and DSC, i.e., director identification number and digital signature certificate respectively. Since the registration is done online, directors can apply for DIN in the SPICe form.
- The second step is the approval of the name of the company. After obtaining the DSC and DIN, the company shall require to approve its name from the registrar of companies (ROC). For this, the application is required to be filled by the company in the prescribed form accompanied by the prescribed fees.
- After receiving the approval from the ROC regarding the name approval, an incorporation application is required to be filled in the prescribed form for registering the producer company.
- If the registrar is satisfied with all the formalities of the company regarding application and documentation, then the registrar will issue the certificate of incorporation.
Documents required for a producer company
- For shareholders and directors:
- PAN Card copy
- VoterID/PassportDriver’s license copy
- Latest bank statement
- Passport size photographs
- For the registered office:
- Bank statement
- Electricity bill/Gas bill
- A rental agreement signed by the landlord
- NOC from the owner of the property
- Sale deed/Property deed.