What is a Producer Company 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.

BENEFITS OF A PRODUCER COMPANY

REQUIREMENTS FOR PRODUCER COMPANY REGISTRATION

Before starting the Farmer producer company registration process, following points must be kept in mind to ensure a smooth and efficient incorporation of producer company online:

a) A minimum of 10 members (producers or farmers) can join together for farmer producer company registration process. There is no upper limit on the number of individuals that can join a producer company as a member.

b) A minimum of 2 or more producer institutions can take part in producer company incorporation process online.

c) A combination of above two points are also valid.

d) For Producer Company Registration online, a minimum authorised capital of Rs. 5,00,000 is mandatory.

e) A minimum of 5 directors and a maximum of 15 directors are required for producer company registration process.

Note: A producer company registration can be converted into a Multi-State Co-Operative Society at a later stage but it can never be converted into a Public Limited Company. 

f) Atleast four board meetings must be held each year in a producer company. It is important to note that the meetings must be held once every three months.

g) A full-time Chief Operating Officer (CEO) must be appointed by the board in a farmer producer company registration.

DOCUMENTS REQUIRED

BELOW IS THE LIST OF DOCUMENTS REQUIRED FOR THE REGISTRATION OF PRODUCER COMPANY:

FROM ALL DIRECTORS AND SHAREHOLDERS

  • PAN Card or Passport or Voter ID Card
  • Latest Bank Statement/Telephone or Mobile Bill
  • Voter's ID/Passport/Driver's License
  • Passport-sized photograph of all directors and shareholders

FOR PROPOSED REGISTERED OFFICE (RESIDENTIAL OR COMMERCIAL)

  • Copy of any Utility bill
  • Scan copy of Rent agreement with NOC from the owner

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 Company Registration Fees

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.

 Steps Cost (Rs.)
Digital Signature Certificate₹15,000 (For the minimum required directors and potentially all initial subscriber members (e.g., 10-15 DSCs).
Government Fees₹6,000
Professional Charges₹3,999
Total Estimated Cost

₹24,999




HOW TO REGISTER A PRODUCER COMPANY IN INDIA

     

Producer Company Registration Certificate

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.


Post-Registration Compliances

After receiving the Certificate of Incorporation from the Registrar of Companies (RoC), the following immediate steps are essential:
What to Do Immediately After Getting Your Certificate

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.



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.

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.