Producer Company Registration in India - Online Procedure, Benefits and Requirements

India has long been well-recognized as an agro-based economy owing to its strategic location and abundance of natural resources to facilitate the production of natural crops. Even after years of attaining independence, around 60% of the total population still relies on agriculture as their primary means of living. Still, problems such as lack of organization and corrupt intermediaries have continuously manipulated poor farmers, deceiving them by giving them poor returns and no benefits from government schemes. To address this issue, the Government of India introduced the concept of a Producer Company in 2002, intending to uplift the status of producers in accordance with the new entity structure. Get to know about the registration procedure, benefits, documents required and time involved related to the producer company.

What is Producer Company Registration in India

Section 378C of the Companies Act 2013 (581B of the Companies Act 1956) defines a producer company as a legally authorized body of individuals (who are either farmers or agriculturists by profession) coming together with the primary purpose of affording assistance related to production, marketing or sales activities and export of the products which will help them to promote sustainable development, improve their income levels and enhance their standard of living.

Section 581B of the Companies Act of 1956 has set out the objectives of the proposed Producer Company Registration in India, which shall be:

• Facilitation of gains generated through activities like harvesting, production, grading, pooling, marketing, procurement, and selling the agricultural yield.
• It offers financial aid to its members, such as insurance, and even extends its credit facilities.
• Ensure technical and educational services are provided to these members to aid them in functioning.
• Ensure facilitation of harmony, cooperation, and mutual assistance between its members.
• To identify and consider other perspectives and ways the agricultural sector could benefit.

Farmer Producer Company Registration Benefits

1. Benefit of Limited Liability for Members: Like any other registered legal entity, the members of a producer company have limited liability for their contribution and cannot be held liable personally for the liabilities held by the company.
2. Eligibility to Receive Government Grants: Registered producer companies can receive government assistance to further their business objectives. Financial aid can be applied to expand the organization and establish its position in the market. Members of a Producer Company are eligible to receive benefits under various government schemes.
3. Simple Management Structure: The Management Board of a registered producer company plays a key role in managing its business affairs. Its simple management structure allows it to alter its basic structure with the ROC.
4. Taxation Benefits: Producer Company Registration allows the company to avail tax benefits through their business activities—registered Producer companies with an annual turnover of ₹100 crores are eligible for a 100% deduction, and companies deriving profits from such turnovers are exempt from paying taxes. Such incentives have been placed to encourage farmer-producer companies.
5. Access to Credit Facilities: Producer companies enjoy more accessible access to credit from various financial institutions like SFAC (Small Farmers' Agri-Business Consortium), NABARD (National Bank for Agriculture and Rural Development), government departments, corporate bodies, and domestic and international aid offices, among others.
6. Access to Market: Acquiring registration of the producer company allows the entity to gain legitimacy and credibility to gain market outreach, enabling it to earn quick profits and expand its businesses.

Farmer Producer Company Registration Pre-Requisites

• There shall be at least ten members required to incorporate a Producer Company.
• The members shall also be producers and linked with producing goods or services.
• The members of the producer company shall hold a minimum contribution of ₹5 lakhs to the capital.
• The Management Board of the proposed company shall include at least five members who shall also be producers.
• Such a proposed company shall be authorized to have only equity share capital.

Farmer Producer Company Registration Documents Required

• Self-certified copy of PAN and Aadhar Card for each proposed director and member.
• Recent passport-sized photographs of the proposed Director and Members.
• Proof of registered official address is provided through utility bills like gas bills/electricity, telephone bills, etc.
• No Objection Certificate from the property owner where the registered office is situated (where applicable).
• The District Horticulture officer granted a copy of the producer certificate.

Producer Company Registration Eligibility Criteria

Farmers or Agriculturists engaged in agro-based activities are eligible to start a “Producer Company.” A producer company could be incorporated by:

• Ten or more individuals.
• Two or more organizations.
• A combination of the above.

No limit has been specified for the maximum number of members that could be accepted into a producer company.

Farmer Producer Company Registration Process

Step 1: Choosing the Name of the Proposed Company

Farmers or producers who wish to incorporate a producer company shall start the process of registration by proposing at least two names and entity types. It is necessary to suggest at least two unique names in accordance with the objectives of the business ending with "Producer Company".

Step 2: Preparation of Documentation

In the next step, the applicant needs to prepare certain documents such as MOA and AOA, Affidavits, proof of registered address of the entity and power of attorney, etc., and collect other documents such as passport-size photographs, proof of identification, and address proof of the directors and members of the proposed company.

Step 3: Create Login Credentials on the MCA Portal

Go to the online portal of Ministry of Corporate Affairs and start user registration by feeding information such as mobile number and registered email address, after which an OTP will be generated.

Step 4: Make an Application to Obtain a DSC

Make an application for a grant of a Digital Signature Certificate (DSC) issued by the Certifying Authority, which is mandatorily required to attach signatures to the incorporation form.

Step 5: Fill in Parts A and B for Producer Company Incorporation

Once you log in to the portal with the login credentials generated, start by filling in Part A for name reservation by recommending at least two new names while adding words that specify its key objectives. Next, fill out Part B of the SPICe+ to accomplish other requirements for incorporation, such as:

• Incorporation of a Producer Company.
• Request for issue of DIN.
• Request for PAN and TAN registration.
• Request for PF and ESI Registration.
• Applying for a Bank account for the business.

Step 6: Grant of Certificate of Incorporation (COI)

Upon receiving the application, the application shall be scrutinized and if the ROC is satisfied that all the requirements with respect to the producer company have been fulfilled, it may allow the registration by issuing a certificate of incorporation to the producer company.

Farmer Producer Company Registration Time Involved

Farmer Producer Company Registration Fee

Farmer Producer Company Registration Post-Registration Compliances

• It shall conduct the Annual General Meeting annually, presenting its finances and audit reports and simultaneously submitting a copy to the concerned ROC.
• The company shall also file a copy of annual returns to the registrar of companies specifying details of the business finances and operational management.
• Obtain NABARD registration to be eligible to receive financial and technical support for agro-based activities.
• Such a company shall conduct a minimum of four or more board meetings with a valid quorum.
• Post-Registration authorized capital shall be at least Rs. Five lakhs, whereas the bare minimum paid-up capital shall be Rs. One Lakh. Failure to fulfill basic requirements will lead to the dissolution of the company.
• Only 20% of the total profits are permissible for distribution as dividends based on the stake held by each member.

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• Expert Team of Professionals to guide and assist you with end–to–end support from Registration to completion of legal processes.
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Therefore, once a producer company gets incorporated, it is eligible to receive all the benefits applicable to a registered company in India apart from tax exemption (up to 100% in some cases) and more accessible credit facilities for the producers. If you have any questions about producer company registration or need any assistance with document preparation or filling, connect to BizFoc, which has years of experience and knowledge of dealing with the same.

Conclusion

Therefore, once a producer company gets incorporated, it is eligible to receive all the benefits applicable to a registered company in India apart from tax exemption (up to 100% in some cases) and more accessible credit facilities for the producers. If you have any questions about producer company registration or need any assistance with document preparation or filling, connect to BizFoc, which has years of experience and knowledge of dealing with the same.

FAQs on Producer Company Registration