What is a Producer Company ? - Everything

What is a Producer Company ? - Everything

Posted In: Business Law

Posted By: abhishek.ag2000

Tags: Contract, agreement, law, legal, civil law, producer company


What is a Producer Company ? - Everything

Everything about a Producer Company


Agriculture, which hires more than half of India’s total population and contributes nearly 17-18% of its GDP, is the bedrock of the Indian economy.

The idea of “Producer business” was adopted in 2002 in response to the pressing issues faced by farmers and agriculturalists (collectively referred to as “Producers”) in India, such as agricultural labor, technical advances, policy reforms, and the need to strengthen governance and channelize agricultural activities. This blog post will help you learn more about what a producer company is, how to register one, and what advantages a producer company may have.

How is producer company defined in the Companies Act?

Under the Companies Act, a Producer Company requires farmers’ cooperatives to operate as a corporate body.

The Producer Company’s aim, according to the Companies Act of 1956, is to do one or more of the following things:

The manufacturing process which includes:

  • Obtaining or producing


  • Purchasing.


  • Harvesting.


  • Pooling.


  • Taking care after.


  • Promoting.


  • Buying and sale.


  • Exporting.


The Production Company’s representatives may also have to carry out these tasks on their own or by other entities:

  • Preserving, drying, fermentation, distilling, vinting, canning, and packing of products are also examples of manufacturing.


  • Equipment/machinery manufacturing or sales.


  • Educating its representatives and those on the concepts of mutual aid.


  • By providing professional resources, consulting services, teaching, R&D, and all other programs supporting its members’ wishes.


  • Power production, transmission, distribution, and the revitalization of land and water supplies, as well as their utilization, recycling, and connectivity about primary products.


  • Producers’ or their primary produce’s insurance protection.


  • Promoting mutuality and public aid approaches.


  • The Board can vote on welfare programs or facilities for the benefit of Members.


  • Other practices that, in any way, foster the values of mutuality and reciprocal assistance among the Members.


  • Finance sourcing, manufacturing, promotion, or other operations mentioned in clauses (a-j), including providing credit or other financial services to its members.



How is a Producer Company formed and registered?

The following criteria must be met to create and register a Producer Company:

  • Each of whom is a Producer, or a group of ten or more people can form a producer company.


  • Or two or more consumer institutions can form a producer company.


  • A minimum capital of Rs. 5,00,000 is a necessity.


  • A minimum of 5 directors.

The Producer Corporation is expected to carry out the Act’s objectives. After evaluating the specifications, the Registrar will grant the Certificate of Incorporation within 30 days of obtaining the appropriate documentation.

How to register a producer company in 5 easy steps?

The licensing process for a Producer Company is somewhat close to that of a Private Limited Company.

Step 1: Obtain a Digital Signature Certificate (DSC) and Director’s Identification Number (DIN) from each Director, along with self-attested copies of documents such as a PAN card, Aadhaar card, and contact information.

Phase 2: Apply FORM-1A with the proposed business name and the appropriate fee to the RoC of the related state. The ROC notifies the name’s availability until it has become accessible.

Step 3: Draft the required papers, such as the Memorandum of Association (MoA), to incorporate the company’s artifacts, the sum of equity capital to be reported, and the Articles of Association (AoA) to include the company’s bylaws.

Stage 4: Filing other papers, such as a formal statement in Form-1 declaring conformity with all and incidental matters about the establishment of corporations and an affidavit signed by the proposed company’s subscribers. A director’s permission, a utility bill, and a letter of authorization are all necessary.

Step 5: The Certificate will be released, and the Corporation will then become a legal entity, similar to a private limited company. It cannot, in certain conditions, become a public limited company.


How is the management of the Producer company structured?

The preceding are the essential management structures that a Producer Organization should follow:

  • A minimum of five and a maximum of fifteen directors are needed for each Producer Organization.


  • Within 90 days of the company’s registration, the directors must be elected.


  • The Board of directors can nominate or elect the Directors at the Annual General Meeting (AGM).


  • According to the relevant papers, each appointed Director must serve for a minimum of one year and a maximum of five years.


  • The AGM will be held once a year and will be announced via a notification that includes the meeting schedule, MoM (Minutes of Meeting), audited balance sheet, and other details. Between the date of the AGM and the next, the note must be submitted within 15 months.


  • The first annual general meeting (AGM) shall be held within 90 days of the company’s incorporation.


  • Any AGM’s proceedings, as well as the Director’s Summary, audited balance sheet, P&L account, and annual reports, must be submitted with the Registrar within 60 days of the conference.


  • If the Production Business is made up of producer organizations, the Chief Executive’s Chairman shall serve them in the general assembly.


  • Cash balance, expenditures, revenue and purchases of products, assets, and liabilities, cost of labor, benefit and loss statements, and other financial records must be kept in order.


  • A Chartered Accountant must undertake internal auditing at a specific interval and within a particular manner, as prescribed by the Institution of Chartered Accountants Act, 1949, and the company’s articles of incorporation.


What are the benefits of a Producer company?

The following advantages are available to Producer Companies:

  • The Director will assign a rating to each member of the company for the commodity or goods pooled and supplied. The money would be allocated in the form of cash or stock securities. This could be subject to the Board’s terms.


  • Bonus securities are available in relation to the sum owned by members.


  • After making allowances for restricted return and reserves payment, any residual assets will be allocated as a patronage incentive. It would be relative to their financial or stock share interest in company operations.


  • Producer Business participants are also eligible for financial aid in the form of a credit facility for a term of up to 6 months.


  • Loans and advances toward protection, as described in the papers, with the provision that they are repaid within three months and not more than seven years.

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