INCORPORATION OF A PRODUCER COMPANY

A producer under Companies Act 2103, has been defined as a special vehicle type having features of both a private company and a cooperative society. As the name indicates, a producer company is body type for those engaged in production units. It is quintessentially suitable for those entrepreneurs who choose to undertake business prospects as following:

Harvesting, production, procurement, pooling, marketing of primary produce of its members.
Rendering technical services, training & education, R&D of other activities & interest of te members.
Generation and distribution of power, land and water resources related to primary goods so produced.
Promotion of mutual assistance, welfare and insurance of producers under the Act.

To understand what a producer company does, it is imperative to know what ‘primary produce’ actually means. Primary produce depicts:

Produce of farmers engaged in the business of vegetation including animal husbandry, pisciculture, floriculture, bee raising, viticulture, and forestry.
Produce of persons engaged in handloom, handicraft and cottage industries.
By-products resulting from above activities.
Any activity taken up to increase the production of aforesaid activities.

Salient Features of a Producer Company:

Only persons/individuals/producers/institutions engaged in primary production can form a producer company.
It shall be incorporated as a private limited company only with name ending with words ‘Producer Company Limited’.
It shall comply with provisions of Part IXA.
The minimum number of director shall be 5 with a maximum of 15.
No limit as to maximum members.
It cannot be publicly be traded.
Share capital will only consist of equity shares.
Appointment of a full-time CEO is mandatory.
Maintenance of a general reserve every financial year, failing which the shortfall in funds has to be made up through members’ contributions.

Minimum Requirements & Documents Checklist

Minimum Requirements:

Minimum ten producers or two or more producer institutions or a combination of both of these (10+2).
Minimum paid-up capital of 5 lac.
Minimum 5 directors.
Designated Partner Identification number for all directors
DSC to be obtained for both the directors.

Documents Required:

Directors’ PAN card
Passport size photo of all directors.
Copy of Rent Agreement for purpose of Registered office (in English)
Property proofs (if owned)
Utility Bills of the business premises
No objection certificate to carry business in rented premised, in case rented.

Process of Incorporation

The process of getting a producer company incorporated is more or less like a private company only. Let’s take a look at detailed procedure.

Step 1: With minimum requirement of producers and directors I place, the first step would be to obtain DIN for all the directors & digital signatures.

Step 2: Searching and applying for name in INC-1 to registrar of companies indicating the type of production activity undertaken by the promoters. Six proposed names can be given ending with suffix ‘Producer Company Limited’. The name available for use for a period of 60 days within which application for incorporation should be well submitted to the registrar of company.

Step-3: Drafting MOA and AOA of the company and the same should correspond to the name so selected and approved. The MOA & AOA should be signed by subscribers mentioning their name, address, occupation & photos.

Step 4: An application for incorporation of a producer company has to be given in e-Form INC-7 with DIR-12 (for appointments of first directors) and INC-22 (for notifying situation of registered officer of the producer company)

After all the documents and application have been submitted to the registrar, a certificate of incorporation shall be issued by the ROC post which the company start its operations.

It is a well-established fact that India is a agro economy with more than 60% of its population engaged in farming activities. Producer companies provide this sector to cover themselves under the ambit of law a legally carry out their business to earn profitable avenues while cumulating to India’s GDP.