Producer Company – TaxGrace

Producer Company Registration

A Company that is registered with the Ministry of Corporate Affairs (MCA), for the purpose of agricultural production and processing activities, is called a Producer Company. It comprises a committee of a minimum of 10 people and 2 institutions.

How To Register A Producer Company

Vakilsearch assists you in Producer Company Registration at every stage until the MCA issues you a certificate of incorporation.

Name Reservation

We help you with your company’s name reservation. We ensure the name should have the words ‘PRODUCER COMPANY’ at the end.

Step 1

DSCs & DIN

We help you get 5 DSCs and 1 DIN.

Step 2

Drafting & Filing

We draft and file the documents required for your company registration (MoA, AoA, PAN & TAN).

Step 3

What is Producer Company Registration?

A Producer Company was introduced in India with the Companies Act, 2013. It gives persons engaged in activities related to producing (what has been grown or produced, particularly by farming) the opportunity to form a company. A producer company can be formed by 10 or more producers (persons involved in, or in activities related to, produce or growth), two or more producer institutions or a combination of 10 or more producers and producer institutions. Such a company can only have equity capital, require a minimum of five directors and an authorised capital of Rs. 5 lakh. The procedure for forming a Producer company is similar to the one for forming a private limited company.

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Types of Producer Companies

Production Businesses

The main functions of producer companies are production, procurement or manufacture of any primary produce for its members (for further sale) and to others.

Marketing Businesses

Even a business involved in the marketing or promotion of primary produce or provision of educational services to members and others can constitute itself as a producer company.

Technical Service Businesses

Any business offering technical assistance to producers, providing training and educational services or conducting research and development can register as a producer company.

Financing Businesses

Any business financing producer activities, be it in the production, marketing or development domain, can register itself as a producer company.

Infrastructure Businesses

Businesses involved in providing infrastructure to producers, whether in the form of electricity, water resources, irrigation techniques, land utilisation, or consultation with regard to the same, may constitute themselves as a producer company.

Documents Required for Producer Company Registration

TO BE SUBMITTED BY DIRECTORS & SHAREHOLDERS

Scanned copy of PAN Card or Passport (Foreign Nationals & NRIs)
Scanned copy of Voter’s ID/Passport/Driver’s License
Scanned copy of Latest Bank Statement/Telephone or Mobile Bill/Electricity or Gas Bill
Passport-size Photograph
Specimen signature (blank document with signature [directors only])

Note: Any one of the directors must self-attest the first three documents. In case of foreign nationals and NRIs, all the documents must be notarised (if currently in India or a non-Commonwealth country) or apostilled (if in a Commonwealth country).

FOR THE REGISTERED OFFICE

Scanned copy of Latest Bank Statement/Telephone or Mobile Bill/Electricity or Gas Bill
Scanned copy of Notarised Rental Agreement in English
Scanned copy of No-objection Certificate from property owner
Scanned copy of Sale Deed/Property Deed in English (in case of owned property)

Note: Your registered office need not be a commercial space; it can be your residence, too.

Advantages of a Producer Company

Limited Liability

All businesses can run the risk of not being able to repay their liabilities. It is a necessary evil. In this event, a sole proprietor (or individual producer) would be personally liable for all the debts of the business. The members of a producer company, on the other hand, have unlimited liability as the company is an entity in itself. Therefore, only the amount invested in the business would be lost; the personal property of the directors would be safe.

Economies Of Scale

Only 15% of India’s farmers own over two acres of land. The majority of farmers are, therefore, unable to safely unlock the advantages that come with economies of scale. With a producer company, multiple farmers can work as a collective and lower costs, reduce risk and even get access to better credit facilities. This enables better planning and bargaining power with buyers.

Better Management

Rather than a single farmer managing the entire business, work within a producer company can be divided between its directors. The entity is managed by the Board of Management, which has a tenure of five years. Also, a Producer company has a separate legal existence, which means that it isn’t affected by the death of any of its members