Between a Private and a Public Company there is a company called Producer Company. These companies exhibit cooperative society traits. To incorporate and take part in the ownership of Producer Companies, one must be a “Principal Producer” or a “Producer Institution.” It is a collection of farmers and agriculturalists with legal standing whose objectives are to improve their standard of life and guarantee that their access to aid, revenues, and profitability are in good standing. It can be established with one of the following business goals, such as marketing, grading, export, selling, and other enterprises, by ten people (or more), two institutions (or more), or a combination of both (10 people and two institutions). 

Benefits of a Producer Company

Following are the benefits of the above-mentioned company in India- 

1. Principal Producers and Producer Institutions are the only permitted owners and members of the above-mentioned company and member equity cannot be transferred. No one can take over the company or deprive the primary producers of their means of subsistence as a result.
2. It must have a minimum of ten producers to be formed, but it can have an unlimited number of members and increase its membership as necessary. This makes forming a producer firm for even ten persons simple.
3. The provisions of the Private Limited Company Act will apply to producer firms, except the provisions mentioned in the Producer Company Act from Sections 581-A to 581-ZL that set it apart from a conventional private or limited company (refer to the  above-mentioned act for details). A production firm now has a formal structure.
4. The unpaid balance of the members’ shares is the only sum for which they are liable. The members’ assets are thereby shielded from losses in the firm.

Tax Benefits of a Registered Company 

The Revenue Tax Act of 1961’s section 10(1) exempts agricultural income from taxation for registered producer companies, among other tax benefits. Additionally, the exemption varies depending on the tasks performed by the farmers or agriculturalists; for example, the law exempts 100% of the income from agriculture, but only 60% of the income from tea production.

Objective of a Producer Company

This above discussed company wants to support all small-scale farmers so that they can save more money and have more freedom to choose the most cutting-edge technology for a higher quality of life. The goals or causes described below which led to the formation of a Producer Company-

• Production of agricultural core products.
• Acquiring the main agricultural products.
• Main agricultural produce is harvested and graded.
• Primary agricultural produce handling and poling.
• Main agricultural products are marketed.

Additionally, a Producer Company’s primary goal is to make it easier to establish a cooperative business as a private company and to increase the likelihood that an existing cooperative firm can be converted to a private company.

Features of a Producer Company under the 2013 Companies Act

Following are the features of the above-mentioned company as per the company’s act of 2013- 

• There can be up to 50 people.
• Ten or more “Primary Producers” are required to launch a producer firm. Similar to a private limited corporation, they must be registered by at least two people.
• A minimum of INR 5 lakh in authorized and paid-up capital is needed.
• There can be a maximum of five directors.
• The profit share will be based on the sum of the firm’s investment and its financial contribution.
• It will never become a company with a stock market valuation.
• The unpaid balance of the members’ shares is the only sum for which they are liable.

Documents Required for Producer Company

Following is the list of the documents required for above-discussed company- 

• Each director’s and shareholder’s PAN card, passport, or election ID card;
• Most recent bank statement
• Voter identification, a driver’s license, or a passport for each director and shareholder;
• Passport-sized images of each shareholder and director;
• Utility bill copy used as home evidence;
• A scan of the lease agreement and the owner’s no-objection certificate in the event of rented property;
• A copy of the property papers in the case of owned property.

Registration Process of a Producer Company

The steps involved in the process of registering a Producer Company are as follows-

1. Name Approval

The applicant must first select a suitable name and legalize the suggested name using the SPICe+ form.

2. Obtain DSC and DIN

Obtaining DSC (Digital Signature Certificate) and DIN is the following step in the process (Director Identification Number). Furthermore, DSC is issued by the Certifying Authority and is required to sign papers electronically or digitally. Additionally, all prospective company directors must have a DIN. Additionally, the same can be obtained by simply submitting the SPICe+ form; a separate Form is not required.

3. Drafting of the Memorandum of Association and the Articles of Association

After obtaining the DSC & DIN, an application for incorporation must be submitted in SPICe+ form with all required documents, including the MOA (Memorandum of Association), AOA (Article of Association)^[1], an affidavit signed by all members, and the declaration regarding the capability to act as the company’s legal subscribers (Registrar of Companies).

4. Certificate of Incorporation

The ROC issues a Certificate of Incorporation (COI) after verifying the submitted paperwork and incorporation application.

Conclusion

The Producer Company concept will not only guarantee that the necessary regulations are followed, but it will also guarantee that the farmers and other organizations will make the most profit possible. As a result, it is also a positive development for India’s agriculture industry. Seek professional help to form a Producer Company in India. You can also directly connect with Bizadvisors.io they have a very good team of experts, who can guide you while forming the above-mentioned company.

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