Producer Company in India

Understand the meaning of a Producer Company in India and learn about the company registration process.
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4 min
16-May-2024

What is the meaning of a Producer Company?

A Producer Company is a corporate entity designed for farmers and producers, primarily involved in agriculture and related activities. Key characteristics include:

  • Legal entity: Recognised as a company under the Companies Act, facilitating more accessible credit, and better post-harvest management.
  • Member benefits: Provides its members with economies of scale by pooling resources and sharing profits.
  • Governance: Managed by a board of directors elected by the members.
  • Objective: Focuses on production, harvesting, procurement, grading, pooling, handling, marketing, selling, and export of members' products.

Key decisions to be taken before starting a Producer Company

Before starting a Producer Company, several crucial decisions must be made:

  • Business objectives: Clearly define the scope and objectives of the company.
  • Membership rules: Decide on the eligibility and terms for membership.
  • Management structure: Determine the composition and responsibilities of the board of directors.
  • Capital requirements: Assess the financial requirements and decide on the share capital structure.
  • Legal compliance: Understand and plan for compliance with regulatory requirements. Review the detailed guide on how to register a company in india for better clarity.
  • Marketing strategy: Develop strategies for marketing and selling the company’s products.

Producer Company incorporation checklist

To incorporate a Producer Company, follow this checklist:

  • Documentation: Gather necessary documents such as identity and address proofs of directors.
  • Director Identification Number (DIN): Ensure that all directors have their DIN.
  • Digital Signature Certificate (DSC): Obtain DSC for all the directors.
  • Name approval: Reserve the company name through the MCA portal. Learn more about the steps and tools involved in the limited liability company formation process.
  • SPICe+ form: Prepare and file the SPICe+ form along with the required attachments.
  • Memorandum and articles of association: Draft and attach the MoA and AoA of the company.

Producer Company registration

Registering a Producer Company involves:

  • Document submission: Submit the necessary forms and documents to the Ministry of Corporate Affairs to initiate the process of company registration.
  • Statutory compliance: Comply with legal requirements pertinent to company formation.
  • Financial planning: Set up accounting and financial management systems.
  • Operational setup: Establish operational protocols and procedures for daily activities.
  • Initial meeting: Conduct the first board meeting to formalise the operational structure and roles.

Procedure for incorporation of Producer Company

Incorporating a Producer Company involves a systematic process that adheres to regulatory requirements to ensure legal compliance and operational functionality. Here is a breakdown of the steps involved:

  • Documentation: Collect necessary personal identification and address proof of all proposed directors and shareholders. Ensure that all potential directors have their Digital Signature Certificates (DSC) and Director Identification Numbers (DIN).
  • Name selection: Choose a unique and relevant name for the Producer Company that reflects its agricultural or production focus, ensuring it is not similar to any existing company names.
  • Name approval and reservation: Apply for the name approval through the Reserve Unique Name (RUN) service on the Ministry of Corporate Affairs (MCA) website. This step ensures that the name does not conflict with existing trademarks or company names.
  • Filing of SPICe+ application: Fill out the SPICe+ form (Simplified Proforma for Incorporating Company Electronically Plus), which is a comprehensive form covering company incorporation, DIN, mandatory issue of PAN, TAN, GSTIN, EPFO, ESIC, Profession Tax (Maharashtra), and Opening of Bank Account.
  • Issue of certificate of incorporation: After the successful submission and verification of the SPICe+ form and attachments, the Registrar of Companies (RoC) will issue a Certificate of Incorporation, signifying the legal creation of the company.

Step 1 – Documentation

Gather essential documents for all members and directors:

  • Personal identification: PAN card for Indian nationals, passport for foreign nationals.
  • Address proof: Recent utility bills or bank statements.
  • DIN: Director Identification Number (DIN) for all directors.
  • DSC: Digital Signature Certificates (DSC) for signing electronic documents.

Step 2 – Name selection

Choosing the right name involves being mindful of the below points:

  • Reflective of business: The name should clearly indicate the company's business nature.
  • Unique: Ensure that the name is not already in use or trademarked by performing a thorough search on the MCA portal.

Step 3 – Name approval and reservation

To secure the company name:

  • RUN service: Use the RUN (Reserve Unique Name) facility on the MCA portal for the initial approval.
  • Check availability: Ensure that the chosen name is not similar to any existing company names or trademarks to avoid rejection.

Step 4 – Filing of SPICe+ application

Completing the SPICe+ form requires:

  • Attachments: Attach mandatory supporting documents including the Memorandum of Association (MoA) and Articles of Association (AoA).
  • Compliance: Ensure compliance with all necessary regulatory requirements for registration.

Step 5 – Issue of certificate of incorporation

Finalising the incorporation:

  • Receive the certificate: This document is proof of the company’s legal existence and includes the company’s CIN (Corporate Identification Number).
  • Commence business: With the certificate, the company can now begin operations, open bank accounts, and enter into legal contracts.

Difference between Producer Company and Farmer Producer Company

While both types of companies aim to support their members through collective efforts, there are distinct differences:

  • Scope of membership: A Producer Company can be formed by any group of producers, which may include farmers, artisans, and craftspeople, who wish to improve their income through joint business activities. In contrast, a Farmer Producer Company specifically targets agriculturalists and focuses exclusively on agricultural production and related activities.
  • Type of activities: Producer Companies might engage in a broader range of activities, including production, marketing, and technical support across various sectors. Farmer Producer Companies, however, are strictly involved with activities related to agriculture, such as the cultivation of crops, horticulture, animal husbandry, aquaculture, pisciculture, viticulture, forestry, reforestation, and other farming activities.
  • Regulatory framework: Both types of companies are governed under the Companies Act, 2013, but Farmer Producer Companies often receive more targeted support and subsidies from the government, designed to enhance agricultural productivity and benefit individual farmers directly.
  • Objectives and goals: The goals of Farmer Producer Companies are usually more aligned with enhancing agricultural output and improving the livelihoods of farmers, while Producer Companies might have broader objectives including improving market access and profitability for all types of producers.

For entities looking to scale, understanding the process of converting private company to public limited company may also be beneficial.

Understanding these distinctions helps clarify the purpose and potential benefits of each type of company, allowing potential members to choose the best structure to meet their needs.

Conclusion

Producer Companies, whether general or focused on farming, play a crucial role in enhancing the economic strength and operational efficiency of their members through collective efforts. By facilitating access to larger markets, leveraging economies of scale, and enabling better negotiation power for inputs and outputs, these companies significantly boost the viability and profitability of individual producers. For those looking to start or expand such a venture, securing a business loan can provide the necessary capital to improve infrastructure, invest in technology, and meet operational expenses. Thus, supporting sustainable growth and development in this vital sector.

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Frequently asked questions

What is a Producer Company with an example?
A Producer Company is a legally recognised group of farmers or producers that aim to improve their incomes by pooling their resources and collectively managing activities such as procurement, production, and marketing. For example, a group of dairy farmers might form a Producer Company to process and sell dairy products under a common brand.
What is the purpose of a Producer Company?
The purpose of a Producer Company is to enable producers, especially farmers, to exploit economies of scale, obtain better market access, and increase their bargaining power in purchasing resources and selling products. It seeks to improve the profitability and efficiency of its members by leveraging collective capabilities.
Who can form a Producer Company?
Any ten or more producers (individuals or producer institutions) can form a Producer Company; they must be desiring to deal primarily with the produce of their members or import goods or services for their benefit. The formation allows them to access innovations, better marketing, and public services more efficiently and economically.
What are the types of Producer Company?

The type of Producer Company generally depends on the activities that it undertakes, such as production, marketing, or technical service provision. Commonly, these include companies focused on production, harvesting, procurement, grading, pooling, handling, marketing, selling, export, and import of primary produce or services for the benefit of the members.

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