A producer company can be defined as a legally recognized body of farmers/ agriculturists with the aim to improve the standard of their living and ensure a good status of their available support, incomes and profitability. Under Companies Act 1956, a Producer Company can be formed by 10 individuals (or more) or 2 institutions (or more) or by a combination of both (10 individuals and 2 institutions) having their business objective as one of the following:
Of the primary produce of the Members or import of goods or services for their benefit.
The main objective of the producer company is to facilitate the formation of co-operative business as companies and to make it possible to convert the existing co-operative business into companies.
The objects of the Producer Company shall relate to all or any of the following matters, namely: (as given in the law)
Any other activity, ancillary or incidental to any of the activities referred to in clauses (a) to (i) or other activities which may promote the principles of mutuality and mutual assistance amongst the Members in any other manner.
Financing of procurement, processing, marketing or other activities specified in clauses (a) to (j) which include extending of credit facilities or any other financial services to its Members.
The Producer Company is required to deal with the produce of its members and is authorized to carry on any of the following activities:
Note: Primary produce has been defined under the Companies Act 1956 as produce arising from agriculture by a farmer which includes animal husbandry, floriculture, horticulture, viticulture, pisciculture, re-vegetation, bee raising, forestry, forest products and farming plantation products, produce of hand-loom, handicraft and other cottage industries.
The process of registering a Producer Company is similar to that of a Private Limited Company. Digital Signature (DSC) and Director Identification Number (DIN) must be obtained first for the proposed first Directors of the company. Once, Digital Signature (DSC) and Director Identification Number (DIN) are obtained, an application for name reservation is to be filed with the relevant Registrar of Companies (ROC).
There is a requirement under the Act that the name of a producer company must end with the words “Producer Limited Company”. Once, the suggested name is approved by the Registrar of Companies (ROC), an application for incorporation is to be filed in the prescribed format for the incorporation of the Producer Company. Once the Registrar is satisfied with the application and the required documents filed for incorporation of Producer Company, he will approve the same and issue Certificate of Incorporation.
Procedure and Documentation Required to Incorporate a Producer Company
The first step is to obtain a Digital Signature Certificate (DSC) from all the directors. Documents required to obtain a DSC are:
After obtaining the DSC, the next step is to obtain the Director Identification Number (DIN) by filing form DIR – 3 along with a self-attested Identity proof, address proof, and a photo.
Then the name of the production company is to be finalized. For that, Form INC – 1 to the Registrar of Companies (ROC) is to be filed by giving 6 names in the order of preference along with the significance of the names. The name shall have the words PRODUCER COMPANY at the end.
After the name is approved by the ROC, the following documents are to be prepared:
All the drafted documents will be attached to Form INC – 7, INC – 22 and DIR – 12 and uploaded to the ROC website. On proper verification, the ROC will issue a Certificate of Incorporation and the company can start its business operations.
This form of establishment promotes the primary producer who is in a low-income group to optimize their income with collective bargaining and by selling the products directly to consumers.
The following are the benefits enjoyed by a Producer Company: