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Producer Company Registration

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    Producer Company Registration in India

    A Producer Company Registration is a type of organization where a group of primary producers — such as farmers or non-farmers — come together with the purpose of trading their products both locally and internationally. It is registered as a private company and is designed to help members collaborate in various business activities.

    The key functions of a Producer Company include procurement, harvesting, grading, production, pooling, marketing, export, and import of goods. Producer Companies operate under the supervision of the Ministry of Corporate Affairs and are governed by the provisions of the Companies Act, 2013.

    Features of the Producer Company Registration.

    • The liability of a producer company is limited to the number of unpaid shares.
    • The company’s share capital consists solely of equity shares, which can be easily transferred but are not publicly traded.
    • The company name must end with “Producer Company Limited”.
    • Every member of the company has voting rights.
    • The producer company is required to hold an Annual General Meeting (AGM) each year.
    • The company must have a minimum of 5 directors and a maximum of 15.
    • Members should appoint a full-time CEO to manage day-to-day operations.
    • The company must conduct board meetings every 3 months, with at least 4 meetings annually.
    • A general reserve must be maintained by the company every year.

    Business Setup in India

    Benefits of the Producer Company Registration

    • Producer companies provide dedicated support to farmers.
    • Members receive value for their products in the form of cash, kind, or shares.
    • Additionally, members may receive bonus shares based on the shares they hold.
    • Surplus earnings can be distributed as a patronage bonus, which rewards members according to their active participation in the company’s business and use of its services.
    • Members can access short-term credit facilities for business purposes, typically for a period not exceeding 6 months.
    • Obtaining long-term loans and advances is simplified for farmers, usually for periods not exceeding 7 years from the date of borrowing.
    • Financial support for producer companies is provided by organizations such as SFAC, NABARD, government departments, and domestic aid agencies. For instance, NABARD has established a ₹50-crore Producer Organization Development Fund (PODF) to benefit farmers.

    How to Register a Producer Company

    • Step 1: Requirements to start a Producer Company Registration.
    • Step 2: A minimum of 10 individual producers or at least 2 institutions are needed.
    • Step 3: The company can be started with a minimum capital of ₹5 lakhs.
    • Step 4: The company must have a minimum of 5 directors and a maximum of 15.
    • Step 5: A producer company cannot be converted into a public company but can be converted into a multi-state co-operative society.

    Process of Producer Company Registration

    To avail of certain benefits, registering your company is essential. The registration process of a Producer Company is similar to that of a private company. If you wish to start a producer company, follow the simple steps outlined below for a smooth and efficient registration process.

    Steps to Process of Producer Company Registration

    • Step 1: Obtain a Digital Signature Certificate (DSC) for all proposed directors. Required documents include:
      • PAN card of the directors
      • Aadhaar card of the directors
      • Email address
      • Photograph
      • Contact number
    • Step 2: Obtain a Director Identification Number (DIN). To apply, fill out Form DIR-3 and attach a photograph, identity proof, and address proof.
    • Step 3: Apply for the company name. Submit Form INC-1 to the Registrar of Companies (ROC) with six proposed names. The final approved name must end with “Producer Company”.

    After the name approval, you must prepare

    1. Prepare the Memorandum of Association (MOA).
    2. Prepare the Articles of Association (AOA).
    3. Draft a professional declaration using Form INC-8.
    4. All members must sign an affidavit declaring their legal competency to act as subscribers.
    5. Obtain a utility bill and a No Objection Certificate (NOC) from the owner of the registered office. If the office is leased, provide the lease agreement.
    6. Complete Forms DIR-2 and DIR-8.
    7. Attach all required documents to Forms INC-7, INC-22, and DIR-12 and upload them to the ROC website.
    8. After verification, the Registrar of Companies (ROC) will issue the Certificate of Incorporation, allowing the company to commence business operations.

    This completes the procedure for the registration of a Producer Company.

    Benefits for Registration of Producer Company

    A Producer Company is recognized as a separate legal entity, allowing it to own property and conduct business in the company’s name.

    If registered as a Farmer Producer Company, the company can enjoy full tax exemption on annual turnover up to ₹100 crore.

    Registering a producer company also streamlines business management, as the process and procedures are already well-defined.

    Additionally, the government actively supports producer companies by providing access to loans, investments, and other financial assistance.

    Difference between Producer Company and co-operatives.

    What is a Cooperative Society?

    A cooperative society is an independent association of people formed to achieve a common economic goal. Cooperative societies are designed to protect the interests of the underprivileged and promote collective welfare. While a Producer Company is registered as a private company, it shares some characteristics with cooperative societies.

    How a Producer Company Differs from a Cooperative Society

    1. A Producer Company is governed by the Companies Act, 2013, whereas a cooperative society is governed by the Cooperative Societies Act.
    2. Producer Companies can operate anywhere in India, but cooperative societies are restricted to specific regions.
    3. The shares of a cooperative society are non-transferable and non-tradable. Producer Company shares, while non-tradable, can be transferred among members.
    4. Producer Companies can pursue multiple objectives, while a cooperative society is limited to a single objective.
    5. In a cooperative society, the registrar or government holds significant voting power, whereas in a Producer Company, members have the power to vote.
    6. Dividends in a Producer Company are distributed in proportion to the volume of business conducted, whereas in a cooperative society, dividends are given according to the shareholding.
    7. The Government of India plays a major role in cooperative societies, while its role in Producer Companies is limited to minimal statutory requirements.
    8. Creating reserves is mandatory in a Producer Company but not compulsory in a cooperative society.
    9. Any changes in a cooperative society require approval from the registrar. In Producer Companies, changes can be made through decisions taken in general meetings.
    10. The relationship between cooperative societies and other corporate entities is transactional, whereas Producer Companies actively collaborate and transact with other corporate entities.

    Although Producer Companies and cooperative societies share some similarities, their structure and functioning are quite different. This highlights the key differences between a Producer Company and a cooperative society.

    Termination of a producer company

    Termination or Winding Up of a Business refers to the process of ceasing all business operations, collecting remaining assets, and settling liabilities. A business may be wound up for various reasons, including legal or financial obligations.

    Compulsory Winding Up by the Tribunal

    In certain cases, a tribunal may order the compulsory winding up of a company. This can occur under the following circumstances:

    1. If the company has agreed to wind up through a tribunal decision.
    2. If the company has acted in violation of state regulations.
    3. If the company has failed to maintain proper financial records for the last five years.
    4. If the company’s business activities are deemed illegal.
    5. If the tribunal determines that winding up is a fair and just decision.

    Process for winding up of business

    • A creditor must file a petition with the NCLT along with all required documents, verified through an affidavit. After verification, the tribunal will issue an order for winding up within 90 days of filing the petition.
    • The company may file an objection within 30 days of the tribunal’s judgment, with an additional 30 days allowed for special circumstances. Directors must submit audited books of accounts to the tribunal after the order is passed.
    • For the liquidation process, the tribunal appoints a provisional liquidator. The liquidator can be replaced within 7 days if found engaging in fraudulent activity.
    • All relevant information must be communicated to the registrar and published in the gazette office.
    • Within 3 weeks, a committee is appointed to assist the provisional liquidator, and they must submit all required information within 60 days.
    • After verifying the information, the tribunal issues the final order for the dissolution of the company.
    • Voluntary Winding Up of a Company:
    • If a company decides to close its business voluntarily, the process is initiated accordingly.
    • Voluntary winding up is also applicable if the business was established for a specific purpose and that purpose has been fulfilled.

    Procedure for voluntary winding up of company

    1. The directors must pass resolutions for winding up and convene general meetings.
    2. Within 10 days of passing the resolution, a notice for the appointment of a liquidator must be filed with the registrar.
    3. The notification must also be published in the official gazette.
    4. An advertisement regarding the winding up of the business should be published in a newspaper within 14 days of passing the resolution.
    5. Within 30 days of passing an ordinary or special resolution, certified copies of the resolutions passed in the general meeting must be filed.
    6. Close all transactions and submit the company books for audit.
    7. Call for a general meeting and pass a special resolution regarding the disposal of company records.
    8. File a copy of the records and an application to the tribunal for dissolution within 15 days of the final meeting.
    9. After verification, the tribunal issues a declaration within 60 days of receiving the application. The appointed liquidator will submit a copy to the Registrar, who will then notify the official gazette after the dissolution.

    These are the key steps involved in the termination of a Producer Company.

    Documents Required

    Company Details

    1. Two proposed names for the company
    2. Clear definition of the company’s objectives

    Subscribers & Directors’ Documents

    1. PAN Card of all subscribers and directors
    2. Photograph of all subscribers and directors
    3. Aadhaar Card of all subscribers and directors
    4. Mobile number and email address of all subscribers and directors
    5. One government-issued ID: Driving License, Voter ID, or Passport
    6. One proof of address: Bank statement or electricity bill in the name of subscribers or directors

    Proof of Registered Office

    1. Latest utility bill such as electricity, water, or landline bill
    2. If the office is rented, provide a valid rent agreement in the name of the proposed company

    Note: All subscribers must keep a hard copy of their PAN and address proof for video verification when obtaining a Digital Signature Certificate (DSC).

    Frequently Asked Questions