Producer Company

The Companies (Amendment) Act 2002 vides notification no. S.O. 135 (E) inserted part IX – A of the Companies Act, 1956 and introduced the concept of Producer Company. In the year 2002 an expert committee led by noted economist Y.K Alagh framed legislation for incorporation of a producer company, and conversion of inter- state cooperative society into a producer company and its reconversion into cooperative society.

Producer Company means a corporate body having objects or activities as specified under the Act. It consists of a group of people involved in the production of primary produce or having one or more objectives relating to primary produce. In a producer company, you can appoint agriculturist members and accept deposits in the form of RD/FD and provide them maturity as well as distribute loans to your farmer members and charge interest from them.

ACTIVITIES

Only ‘primary producers’ or ‘producer institution’ can form a producer company and participate in the ownership of such companies. The ‘Primary Producers’ means people engaged in the process of Primary Produce. Primary produce means produce of farmers arising from agriculture including animal husbandry, horticulture, floriculture, viticulture, forestry, forest products, re-vegetation, bee keeping and farming plantation products. It can also include produce of persons engaged in handloom, handicraft and other cottage industries, by-products of such products, and products arising out of ancillary industries.

A Producer Company shall carry on or relate to any of following activities classified broadly:-

  • Production, harvesting, processing, procurement, grading, pooling, handling, marketing, selling, export of primary produce of the Members or import of goods or services for their benefit
  • Rendering technical services, consultancy services, training, education, research and development and all other activities for the promotion of the interests of its Members;
  • Generation, transmission and distribution of power, revitalization of land and water resources, their use, conservation and communications relatable to primary produce;
  • Promoting mutual assistance, welfare measures, financial services, insurance of producers or their primary produce;

COMPOSTION

Any of the following combination of producers can incorporate a producer company:

  • ten or more producers (individuals); or
  • two or more producer institutions; or
  • Combination of the above two (10+2).
  • In a Producer Company, only persons engaged in an activity connected with, or related to, primary produce can participate in the ownership.
  • The members have necessarily to be primary producers.
  • These companies shall be termed as “Companies with Limited Liability” and the liability of the members will be limited to the amount, if any, unpaid on the shares.
  • The name of the company shall end with the words “Producer Company Limited”
  • On registration, the producer company shall become as if it is a private limited company for the purpose of application of law and administration of the company (however it shall comply with the specific provisions of part IXA).
  • The maximum number of 50 members is not applicable to these companies.

Analysis

The share capital of a Producer Company shall consist of equity shares only.

  • Minimum share capital requirements of a Producer Company is Rs.1,00,000/-
  • Members’ equity cannot be publicly traded but only transferred.
  • Minimum number of Directors shall be 5.

Producer Company

Obtain help of Professionals & Subject matter experts at CFO Affairs to understand the intricacies involved in the registration. We are more than happy to educate you and make your entity registration a hassle free process.

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