Producer Company Registration for Farmers Online in India

A Producer Company is a hybrid legal entity, blending characteristics of both a private limited company and a cooperative society, specifically created for farmers and producers. It's a company incorporated under the Companies Act, predominantly centered on the production, harvesting, marketing, and export of its members' primary produce.

This framework enables farmers to collaborate on diverse activities linked to their produce, enhancing their income and overall economic prosperity.

How is a Producer Company Different from a Cooperative Society?

A Producer Company and a Cooperative Society are both people-centric organizations in India aimed at collective upliftment, but they differ significantly in their legal structure, operational framework, and governance.

Here's a comparison between a Producer Company and a Cooperative Society in India:

Producer Company Governing Laws - Companies Act, 2013

A Producer Company in India is governed by Part IXA of the Companies Act, 2013, which essentially carries over provisions from the former Companies Act, 1956. This implies that even though producer companies are registered under the 2013 Act, the specific regulations dictating their establishment, administration, and functioning are largely derived from the previous legislation.

• Formation: Producer companies can be formed by 10 or more individuals, 2 or more producer institutions, or a combination of both.
• Objects: Their primary objective is to advance the interests of their members, who are involved in producing primary agricultural produce.
• Activities: Producer companies are authorized to engage in various activities such as the production, harvesting, processing, marketing, and export of primary produce, along with offering technical and other support services to their members.
• Membership: Membership is restricted to active producers, with a minimum of two-thirds of the members actively involved in primary production activities.
• Management: They are managed by a board of directors elected by the members, ensuring a democratic governance structure.
• Limited Liability: Members' liability is limited to the amount unpaid on the shares they hold.
• Conversion: Existing cooperative societies have the option to convert into producer companies.

Producer Company registration offers numerous significant benefits for Indian farmers, empowering them to overcome common challenges and improve their economic well-being.

1. Enhanced Bargaining Power: By pooling their produce and resources through a Producer Company, farmers can collectively negotiate better prices for their inputs (like seeds, fertilizers, and machinery). They can also achieve higher prices for their output by directly accessing larger markets.
2. Access to Larger Markets and Supply Chain Optimization: Producer Companies enable farmers to bypass multiple layers of intermediaries, directly connecting with wholesalers, retailers, food processors, and even exporters.

This streamlines the supply chain, reduces wastage, lowers transaction costs, and ensures a larger share of the consumer price reaches the farmers. They can also meet the volume and quality demands of large buyers.

3. Improved Access to Finance and Credit: Producer Companies have greater credibility and better creditworthiness compared to individual farmers. This makes it easier for them to secure loans, grants, and subsidies. They can get these from banks (including priority sector lending), financial institutions, and government schemes like those from NABARD and SFAC.
4. Professional Management and Governance: Operating under the Companies Act, Producer Companies benefit from a structured and professional management framework with a democratically elected Board of Directors.

This ensures efficient operations, transparent accounting, and adherence to statutory compliance, leading to better decision-making and sustainable growth.

5. Economies of Scale and Cost Efficiency: By aggregating demand for inputs, farmers can achieve bulk purchasing discounts. Similarly, by consolidating logistics, packaging, and marketing efforts, they can significantly reduce per-unit costs for their produce.

This allows for investment in shared infrastructure like warehouses, cold storage, and processing units, which would be unaffordable for individual farmers.

6. Value Addition and Diversification: Producer Companies can engage in activities like grading, processing, packaging, and even branding of agricultural produce.

This adds value to the raw produce, allowing farmers to sell finished or semi-processed goods at higher prices and diversify their income streams.

7. Limited Liability Protection: As a separate legal entity, a Producer Company provides limited liability to its members. This means that the personal assets of the farmers are protected from the company's debts or losses, mitigating financial risk.
8. Access to Technology and Training: Producer Companies can facilitate access to modern farming techniques, improved seeds, and new technologies.

They can also organize training programs and workshops for members on various aspects of agriculture, business management, and market dynamics, enhancing their skills and productivity.

9. Government Support and Incentives: The Indian government actively promotes Producer Companies through various schemes, financial assistance, and tax benefits. Agricultural income derived by Producer Companies is often exempt from income tax under Section 10(1) of the Income Tax Act, 1961, though specific exemptions can vary based on the agricultural activity.
10. Perpetual Succession: Like other companies, a Producer Company has perpetual succession, meaning its existence is not affected by the death, retirement, or insolvency of its members. This ensures long-term stability and continuity of operations.

The primary goal of a Farmer Producer Company is to bring farmers together to collectively operate their businesses as registered companies. It also empowers existing cooperative societies to transform into companies if they choose to do so.

As per the Companies Act, a Producer Company may engage in one or more of the following activities:

• Farming activities: Cultivating, harvesting, collecting, sorting, storing, selling, marketing, and exporting agricultural produce of its members, or importing goods and services for their advantage. These tasks can be carried out by the company directly or through a third party.
• Processing: Activities such as preserving, drying, distilling, brewing, canning, packaging, and other methods of processing agricultural products.
• Supplying equipment: Manufacturing, selling, or distributing machinery, equipment, or materials primarily to its members.
• Education: Educating members and others about collaboration and mutual support through training and awareness.
• Support services: Delivering expert consultations, training, technical assistance, and research to benefit the members.
• Power and resources: Generating and supplying electricity, improving land and water usage, and facilitating communication-related to agricultural activities.
• Insurance: Providing insurance coverage for farmers and their agricultural produce under relevant insurance schemes.
• Teamwork and cooperation: Encouraging collaboration, joint effort, and mutual assistance among members.
• Welfare: Offering welfare facilities and benefits to members as approved by the board of the company.
• Related activities: Undertaking additional activities that align with the above objectives or promote cooperation and mutual benefit among members.
• Finance: Providing funds or credit support for purchasing, marketing, processing, or selling produce, or any other related business activity mentioned above.

The structure of a Producer Company in India is a unique hybrid, blending the democratic principles and member-centric focus of a cooperative with the professional management and legal framework of a private limited company under the Companies Act. This governance structure effectively combines the democratic principles of cooperatives with the professional management practices of a private limited company.

1. Board of Directors (BoD):

• • The company is managed by a Board of Directors, which is elected by the members in their General Meeting.
  • The minimum number of directors is 5, and the maximum is 15.
  • Producer Companies are not generally required to have independent directors, unlike listed public companies.
  • Directors hold office for a term not exceeding five years but are eligible for re-appointment.
  • The Board is responsible for the overall strategic direction, policy-making, and oversight of the company's operations.

2. Chief Executive Officer (CEO):

• • The Board often appoints a Chief Executive Officer (CEO), who is generally not a member of the company.
  • The CEO is responsible for the day-to-day management and operations of the company, reporting directly to the Board. This professional management ensures efficiency and expertise in business operations.

General Meeting of Members:

• The ultimate authority rests with the members in their General Meetings (Annual General Meeting and Extra-ordinary General Meetings).
• Key decisions, such as the election of directors, approval of financial statements, amendments to the Articles of Association, and significant strategic moves, are made by the members through resolutions.
• The "one member, one vote" principle typically applies in these meetings.

Internal Control and Audit:

• Producer Companies are required to maintain proper books of accounts and undergo annual statutory audits, similar to other companies under the Companies Act.
• This ensures transparency and accountability in financial management.

Statutory Compliance:

• Being registered under the Companies Act, Producer Companies must comply with various statutory requirements, including filing annual returns, financial statements, and other documents with the Registrar of Companies (RoC).
• This compliance framework provides a robust regulatory environment, fostering trust and credibility.

Only certain types of primary producers can start a Producer Company in India. This is to make sure these companies truly help them grow stronger together financially.

Who Can Be a Member? (The Producers)

Membership in a Producer Company is strictly defined to ensure that the entity primarily serves its intended beneficiaries – the producers themselves.

Individuals: Any person engaged in activities related to "primary produce" can become a member. "Primary produce" broadly encompasses produce derived from agriculture, horticulture, animal husbandry, floriculture, pisciculture (fisheries), viticulture, forestry, forest products, retting, drying, curing, processing, pickling, and similar activities.

Producer Institutions: Existing organizations or bodies primarily formed by primary producers (such as other farmer cooperatives or associations) can also be members.

Minimum Numbers: A Producer Company must be formed by:

• A minimum of 10 or more individual producers, OR
• A minimum of 2 or more producer institutions, OR
• A combination of 10 or more individuals and producer institutions.

Active Participation: At least two-thirds of the members must be actively involved in the primary production activities relevant to the company's objectives.

Who Can Be a Director? (The Management)

The management of a Producer Company is entrusted to a Board of Directors, elected by its members, ensuring a democratic governance structure.

• Eligibility: Directors must be individuals. While generally, members can be directors, the Companies Act does not strictly mandate that all directors must be members. However, the spirit of a Producer Company implies that the management represents the interests of the producers.
• Minimum and Maximum Numbers: A Producer Company must have a minimum of 5 directors. The maximum number of directors allowed is typically 15.
• Term of Office: Directors hold office for a term not exceeding five years but are eligible for re-appointment after their term expires.
• Independent Directors: Independent directors are not statutorily mandated for Producer Companies, unlike for certain other company types.

How Much Money Is Needed to Start? (Capital Requirements)

While the Companies Act, 2013, doesn't mandate a minimum capital for Producer Companies, there are common recommendations and practical figures to consider for incorporation:

• Authorized Share Capital: It is generally recommended to have a minimum authorized share capital of Rs. 5,00,000 (Rupees Five Lakhs). This provides a baseline for the company's financial capacity and future growth.
• Paid-up Share Capital: A minimum paid-up capital of Rs. 1,00,000 (Rupees One Lakh) is often suggested or expected for initial incorporation. This amount is contributed by the members by subscribing to the company's shares.
• Type of Capital: Producer Companies can only have equity share capital. They are not permitted to issue preference shares but can issue debentures.
• Member Contributions: Members contribute to the capital by purchasing shares. The value of shares can be decided by the company in its Articles of Association, often set at an affordable rate to encourage broad membership among producers.

Producer Companies can be classified based on the specific sectors they operate in.

1. Agricultural Producer Company

This type of company is formed by farmers, growers, or individuals involved in agricultural activities like crop cultivation, dairy, or poultry farming. The primary aim of an agricultural producer company is to enhance members’ income and promote better farming techniques and practices.

2. Horticultural Producer Company

Horticultural Producer Companies bring together cultivators of fruits, vegetables, and flowers to improve product quality and create better marketing avenues.

3. Sericulture Producer Company

Formed by people working in the silk industry including silk farmers, reelers, and weavers this company aims to enhance the quality and availability of silk while ensuring improved market access and fair prices for members.

4. Handloom Producer Company

Handloom weavers and fabric producers form these companies to uplift their economic condition and expand sales opportunities.

5. Forest Producer Company

These companies focus on the sustainable management and utilization of forest produce. This can include non-timber forest produce (NTFPs) like medicinal plants, honey, lac, and tendu leaves, as well as activities related to afforestation and forest conservation.

6. Livestock Producer Company

These companies are formed by individuals involved in animal husbandry. Their activities can include dairy farming, poultry farming, goat rearing, sheep rearing, and other livestock-related activities, focusing on the production, processing, and marketing of milk, meat, eggs, wool, etc.

7. Service-Oriented Producer Companies

While not a distinct type in terms of primary produce, this category refers to Producer Companies that primarily offer services to their members who are primary producers. These services can include:

• Input Supply: Providing agricultural inputs like seeds, fertilizers, pesticides, and farming equipment.
• Technical Services: Offering technical know-how, training, and advisory services related to production techniques, quality control, and post-harvest management.
• Marketing and Sales Services: Facilitating the collective marketing and sale of members' produce, including storage, transportation, and direct market linkages.
• Financial Services: Providing credit facilities, insurance, or other financial support to members for their production activities.
• Processing and Value Addition: Establishing facilities for processing raw produce into value-added products (e.g., fruit juices, jams, spices, dairy products).

Registering a Producer Company in India requires a comprehensive set of documents from both the prospective directors and members, as well as details about the company's registered office.

It's crucial to have all documentation to ensure a smooth and efficient registration process with the Registrar of Companies (RoC).

Documents from All Directors and Members

For each proposed Director and Member (who is an individual), the following documents are typically required:

Identity Proof:

• PAN Card (Mandatory for Indian Nationals): A self-attested copy of the Permanent Account Number (PAN) card is essential for all Indian directors and members.
• Aadhaar Card: A self-attested copy of the Aadhaar card is also a common requirement for Indian nationals.
• Passport: For foreign nationals, a copy of the passport is mandatory.

Address Proof: (Any one of the following, not older than 2 months from the date of application)

• Voter's ID Card
• Driving License
• Utility Bills (Electricity Bill, Telephone Bill, Mobile Bill, Gas Bill)
• Bank Statement / Passbook
• Rental Agreement (if applicable, with utility bill of the landlord)

Photographs: Recent passport-sized photographs of all directors and members.

Digital Signature Certificate (DSC): A valid Digital Signature Certificate is required for at least one proposed director to sign the electronic forms for registration.

Director Identification Number (DIN): Each proposed director must have a DIN. If a director does not have one, it can be applied for along with the company registration application.

Consent to Act as Director (DIR-2): A signed declaration from each proposed director expressing their consent to act as a director of the company.

Declaration of not being disqualified (DIR-8): A declaration from each director stating that they are not disqualified from being a director under the Companies Act.

Documents for the Company's Registered Office Address

The Producer Company must have a registered office address within India from the date of its incorporation. The following documents are required for this purpose:

Proof of Address Ownership:

• Sale Deed/Property Deed: If the premises are owned by a director or a relative.
• Latest Electricity Bill/Gas Bill/Water Bill/Telephone Bill: Must be in the name of the owner of the premises, not older than 2 months.

No Objection Certificate (NOC): If the premises are rented or owned by someone other than the director, a No Objection Certificate (NOC) from the owner of the premises is required, allowing the company to use the address as its registered office. This NOC should clearly state that the owner has no objection to the company being registered at that address.

Rent Agreement/Lease Deed: If the premises are rented, a copy of the valid Rent Agreement or Lease Deed is necessary.

Farmer Certificate

While no single "Farmer Certificate" exists, members must declare they are producers. They may also be asked to provide supporting evidence, such as land records or lease agreements.

Declaration of being a Producer: Each member is required to provide a declaration stating that they are a "producer" as defined by the Companies Act, i.e., engaged in activities related to primary produce.

Supporting Evidence (Optional but Recommended): While not always strictly mandated at the time of incorporation for every single member, it is good practice, and regulatory bodies might request evidence to support the claim of being a producer. This could include:

• Land Ownership Documents: Copies of land records (e.g., Khasra, Khatauni) if the member owns agricultural land.
• Lease Agreements: If farming on leased land.
• Proof of Agricultural Income: While sensitive, sometimes income certificates or bank statements showing transactions related to agricultural produce can serve as supplementary evidence.

Registering a Producer Company is a streamlined, fully digital process governed by the Companies Act, 2013. It involves several key steps to legally incorporate a business entity that empowers farmers and producers to operate collectively with legal recognition and financial benefits.

Step 1. Apply for a Digital Signature Certificate (DSC)

Since Producer Company registration is entirely digital, obtaining a Digital Signature Certificate is a mandatory step. All directors and subscribers to the Memorandum of Association must acquire DSCs from authorized agencies. The process is completely online and typically completed within 24 hours. It includes three levels of verification: document check, video verification, and mobile verification.

Step 2. Submit Application for Name Reservation

To reserve a company name, applicants must file the SPICe RUN form, which is part of the SPICe+ framework. While submitting the name request, the business activity code and the company’s objective must be clearly defined.

Note: Ensure the proposed name is unique and does not resemble the name of any existing company. It must also comply with the Emblems and Names (Prevention of Improper Use) Act, 1950.

Step 3. File the SPICe+ Form (INC-32)

Once the name is approved, the SPICe+ form must be filled out with key details to register the company. This is a streamlined form used for incorporation, and includes:

1. Company details
2. Member and subscriber information
3. DIN application for directors
4. PAN and TAN application
5. Director and subscriber declarations
6. Certification and declarations by a practicing professional

Step 4. Submit e-MoA (INC-33) and e-AoA (INC-34)

Alongside the SPICe+ form, you must also submit the electronic Memorandum of Association (e-MoA) and Articles of Association (e-AoA).

• The MoA (as per Section 2(56) of the Companies Act, 2013) outlines the constitution, objectives, and scope of the company.
• The AoA (as per Section 2(5)) details the internal rules and management framework of the company.

Step 5. Receive PAN, TAN & Incorporation Certificate

Once the documents are verified and approved by the Ministry of Corporate Affairs, your PAN, TAN, and Certificate of Incorporation are issued. With these in hand, you can now proceed to open a current account in the company’s name. For help with bank account setup, feel free to reach out to our team.

The overall cost for registering a Producer Company in India, including both government charges and professional services, begins at ₹24,999 and typically takes 14 to 21 working days to complete.

The Certificate of Incorporation (COI) is the official document issued by the Registrar of Companies (RoC) under the Ministry of Corporate Affairs (MCA) in India, confirming the successful registration of a company, including a Producer Company.

How to Download the Producer Company Registration Certificate?

Once your Producer Company is successfully incorporated, you can typically download the Certificate of Incorporation from the MCA portal. Here's a general step-by-step process:

1. Visit the Official MCA Portal: Go to the official website of the Ministry of Corporate Affairs at mca.gov.in.
2. Log in to Your Account: You need to have registered user credentials on the MCA portal. Log in using your user ID and password.
3. Navigate to 'MCA Services': Look for the "MCA Services" tab on the homepage.
4. Select 'Get Certified Copies' or 'View Public Documents': Depending on the MCA portal's current interface, you might find an option like "Get Certified Copies" or "View Public Documents" under the "MCA Services" menu.
5. Search for Your Company: Enter your Company Identification Number (CIN) or the name of your Producer Company in the search box.
6. Select the Incorporation Certificate: From the list of documents related to your company, find and select the "Certificate of Incorporation" or "Company Incorporation Certificate."
7. Pay the Fee (If Applicable): In some cases, there might be a small fee to download certified copies of documents. Make the payment if prompted.
8. Download and Save: Once the document is accessible, click the download button to save the certificate to your device.

How to Check the Status of Producer Company Registration Certificate?

You can check the registration status of your Producer Company (or any other company registered in India) on the MCA portal. Here's how:

1. Visit the Official MCA Portal: Go to mca.gov.in.

2. Go to 'MCA Services': On the homepage, find and click on the "MCA Services" tab.

3. Select 'View Company/LLP Master Data': From the dropdown menu, choose this option.

4. Enter Company CIN or Name:

• • If you have the CIN: Enter the 21-digit Corporate Identification Number (CIN) of your Producer Company.
  • If you don't have the CIN: You can search by entering the company's name. You might need to use the search icon next to the "Company/LLP Name" field to find the CIN first.

5. Complete the Captcha: Enter the displayed captcha code for verification.

6. Click 'Submit': The system will display the company's master data, including its registration status, date of incorporation, registered address, and director details.

Once a Producer Company is successfully registered, the journey doesn't end. There are several crucial compliances, both immediate and ongoing, that must be adhered to to maintain its legal status and operational integrity.

What to Do Immediately After Getting Your Certificate

After receiving the Certificate of Incorporation from the Registrar of Companies (RoC), the following immediate steps are essential:

1. Open a Bank Account: The very first step is to open a current bank account in the name of the newly registered Producer Company. This is critical for all financial transactions.
2. Deposit Subscribed Capital: Ensure that the amount of subscribed capital (the money promised by the initial members for their shares) is deposited into the company's bank account.
3. Issue Share Certificates: Prepare and issue physical or digital share certificates to all subscribers (members) for the shares they have subscribed to.
4. Apply for Licenses and Registrations:

• • Goods and Services Tax (GST) Registration: If the company's projected turnover exceeds the threshold or if it plans to engage in an interstate supply of goods/services, GST registration is mandatory.
  • Professional Tax Registration: If applicable in the state where the company's office is located, registration for Professional Tax for the company and its employees might be required.
  • Other Business-Specific Licenses: Depending on the nature of the primary produce and activities (e.g., food processing, export, specific agricultural inputs), obtain any sector-specific licenses or permits from relevant authorities.

5. Appoint First Auditors: The Board of Directors must appoint the first auditors of the company within 30 days of incorporation. These auditors will hold office until the conclusion of the first Annual General Meeting (AGM).
6. Statutory Registers: Establish and maintain various statutory registers at the registered office, such as the Register of Members, Register of Directors, Register of Charges, etc., as per the Companies Act.
7. Common Seal (Optional): While no longer mandatory, some companies choose to have a common seal for specific documents.

Annual Compliances

Producer Companies, being registered under the Companies Act, are subject to a range of annual compliances to ensure transparency and regulatory adherence.

1. Annual General Meeting (AGM): A Producer Company must hold its Annual General Meeting (AGM) within six months from the closing of the financial year. The first AGM must be held within nine months from the close of the first financial year.
2. Annual Filings with RoC (MCA):

• • Form MGT-7A (Annual Return - for small companies/OPCs) / MGT-7 (Annual Return): A Producer Company will file Form MGT-7. Form MGT-7A is for OPCs and Small Companies, a category that a Producer Company typically does not fall into due to its membership and capital structure. This form provides details of the company's shareholding structure, indebtedness, directors, members, etc.
  • Form AOC-4 (Financial Statements): This form is for filing the company's audited financial statements (Balance Sheet, Profit & Loss Account, etc.).

3. Income Tax Filings:

• • Income Tax Return (ITR): File the company's Income Tax Return annually, generally by September 30th (if audit is applicable) or October 31st for audited companies for the financial year ending March 31st. Agricultural income for Producer Companies is often exempt under Section 10(1) of the Income Tax Act, but the return still needs to be filed.
  • Tax Audit Report (Form 3CD): If the company's turnover exceeds the prescribed limits (currently INR 10 crore for businesses unless exceptions apply), a tax audit report is required.

4. GST Annual Return (GSTR-9/9C): If GST is registered, file the annual GST return.
5. Director's Report: The Board of Directors must prepare a Director's Report, which includes details about the company's performance, future outlook, and other mandatory disclosures.
6. Board Meetings: Conduct a minimum of four Board Meetings in a financial year, with a gap of not more than 120 days between two consecutive meetings.
7. Statutory Audit: Get the company's financial statements audited by a qualified Chartered Accountant.

Keeping Good Records

Maintaining meticulous records is not just a compliance requirement but also a crucial practice for the efficient and transparent functioning of a Producer Company.

1. Financial Records: Maintain accurate and complete books of accounts, including ledgers, cash books, bank statements, invoices, receipts, and vouchers. These records are essential for audits, tax filings, and financial analysis.
2. Statutory Registers: As mentioned, maintain updated statutory registers at the registered office. These include:

• • Register of Members (with details of shares held, transfers, etc.)
  • Register of Directors and Key Managerial Personnel
  • Register of Charges
  • Minutes Books (for Board Meetings and General Meetings)

3. Records of Resolutions: Keep proper records of all resolutions passed by the Board of Directors and members in their respective meetings.
4. Operational Records: Maintain records related to primary produce procurement, processing, sales, inventory, quality control, and member transactions (e.g., patronage bonus distribution).
5. Human Resources Records: If the company has employees, maintain records of their employment contracts, payroll, attendance, and statutory deductions (PF, ESI, etc.).
6. Compliance Filings: Keep copies of all forms and documents filed with the RoC, MCA, Income Tax Department, GST authorities, and any other regulatory bodies.