Producer Company

As per Companies Act, 2013; Producer Company is a company which deals only in primary production of goods and services, carrying out the objectives related to agriculture activities like-

At least 10 members are required to form a Producer Company, which includes 10 or more individuals, each of them being a producer or any two or more producer institutions, each of them should be desirous to work in accordance with the above stated activities only.

The main motive of the incorporation of the Producer Company is to provide the benefit to its members who are basically the farmers by import of goods and services to improve their standard of living.

Under Companies Act, 2013; Producer Company is always made or deemed as a Private Company Limited by Shares without any limit on the number of members.

Eligibility Criteria:


  • Separate legal entity
  • Greater credibility
  • Easy management owning property
  • Limited Liability
  • Tax benefit under Income Tax, 1961
  • Deposit Acceptance from its members.
  • Providing loan to its members at reasonable rate of interest as comparison to others

Benefits to Members of the Producer Company:

  • Members will receive only that value which they will produce and supply as is determined by the Board of Directors of the Producer Company.
  • Companies can also issue equity shares and bonus shares with the approval of Board of Directors for the price which is due and payable to the members for the supply of goods to the Producer Company.
  • Members of the Producer Company will get the bonus shares in the same proportion to the equity shares they hold in the company.
  • The remaining amount left after providing provision/reservation for payment of limited return and reserves may be distributed among members as a patronage bonus. The amount will be distributed in respect with their participation in the activities of business.

Memorandum :

Documents required for Registration of Producer Company:

  • Address proof i.e. Copy of Aadhar/Voter’s ID/Driver’s License/passport and Identity proof i.e. Copy of PAN / Passport/ Election ID Card is required to be provided of all the directors and shareholders.
  • Bank Statements and or any other utility bill(electricity/Gas/Water bill)are required to be provided and it should not be older than 2 months.
  • Passport-sized photographs of all directors and shareholders.
  • Copy of Utility bill.
  • Rent or lease agreement in case of the property is taken on rent/ lease respectively.
  • NOC from the owner of the property.

Procedural Aspect:

Facility of Loans and Investments for the Producer Company to its members:

The Producer Company is only for those who are the primary producers hence require financial support from time to time. So, Producer Company can be the financial assistance to the its members or the to the Producer Members by the special provision under Companies Act, 2013; by way of –

  • Credit Facility– provided to the members of Producer Company, who are such for the period of more than 6 months.
  • Loans and Advances – Provided to themembers of Producer Company against a security, must be repayable in more than 3 months but not later than 7years from the date of disbursement of such loan or advances.
  • A Producer Company can acquire the shares of another producer Company for the promotion of its objective.

Tax Rate and Benefits

Striking Off Name of Producer Company:

A Producer Company Name can be Strike Off by the registrar if he founds following reasons while inquiry-

  • Failed to commence its business within one year of registration.
  • Ceases to transact its business
  • Is no longer carrying its objectives.

Frequently Asked Question related to Producer Company:

  1. What was the main reason to insert the concept of Producer Company in prior Companies Act and in Companies Act, 2013?

As India, its people deal more in primary produce only like Farming was the main business of Indian people to earn for living. So, the rural producers were at a disadvantage to their assets, education and technology. To help and upgrade the farming the concept of Producer Company was introduced.

2. How many members are required to form a producer company?

At least ten (10) members are required to form a producer company.

3. Who is eligible to form a Producer Company in India?

More than 10 (ten) individuals, each of them being a producer/farmer or any two or more producer institutions are eligible to form Producer Company in India.

4. How long does it take to register a Producer Company?

It approximately takes 10 – 15 working days to register a Company (if documents are received timely from the Clients).

5. What type of a Producer Company in accordance with the nature of Liability?

A Producer Company is always made as a Private Company Limited by the Shares.

6. What is the prerequisite to select the name of a Producer Company?

The name should satisfy the following conditions

7. How a Company will be identical with its name only that such company is a Producer Company?

A producer Company will always carry the words “Producer Company Limited”. For example XYZ is a Producer Company, now the full correct name of the Company will be ‘XYZ Producer Company Limited’.

8. Is it Possible to Convert a Producer Company into a Public Company?

A Producer company cannot convert itself into a Public Company. But it can be later converted into a multi-state co-operative society by following prescribed procedures.

9. What is the Difference between Other Companies and Producer Companies?

Other Companies– is a company which can have all objectives but should work towards that specified objective only.

Producer Company– is a company which can only deal or have objectives in a specified field of primary produce only.

10. What type of shares can be issued by a Producer Company for its members?

A Producer Company can only issue Equity shares and bonus shares.

11. Can a minor become a director of Producer Company?

A minor cannot be appointed as a director in the Producer Company.


In today’ s developing era , in India, most of the people are engaged in primary produce only like farming and earn their livelihood, to ensure more benefits to them, the concept of Producer Company was introduced. It is compulsory for them to get registered under Companies Act, 2013; to avail the advantages of Producer Company. However, it shall be kept in mind that it is regulated by the Companies Act, 2013; not by any other State Acts.

How to start a process to incorporate Producer Company:

We SmartBizGuru also helps in various other Compliances along with the post compliance of the Company like appointment of Auditors, Preparing Financial of the Company, Filing of GST Returns and Other Returns to Govt Authority, ROC Compliances, Consultation on Digital Market solutions. You are just a call away to take our services. Connect us at 9599561517 for more information in detail.

Leave a Reply

Message Us on WhatsApp