Producer Company Registration in India
FilingIn provides seamless services for the incorporation of Farmer Producer Organizations (FPOs) under the Companies Act of 2013. A Prod
ucer Company is specifically designed for farmers and agricultural producers to help them efficiently market and sell their produce. The FPO structure offers limited liability for its members, meaning they are not personally responsible for the debts and liabilities of the company.
What is a Producer Company?
A Producer Company, also known as a Farmer Producer Company, is a legally recognized organization formed by farmers or agriculturists. Its key goal is to elevate the livelihoods of its members and ensure sustainable resources, incomes, and profitability. It operates as a hybrid entity, merging the governance of a private limited company with the cooperative structure, ensuring democratic governance, where every member’s voice is valued regardless of shareholding.
Legal Framework of a Farmer Producer Company:
A Producer Company is established under the amended Companies Act of 1956, governed by Section 465 of the Companies Act, 2013. The objectives must align with Section 581B of the Companies Act, 1956, ensuring clear and legally compliant operational activities.
Objectives of a Producer Company:
As per Section 581B of the Companies Act, the primary objectives of a producer company include:
- To benefit members through activities such as production, grading, pooling, marketing, and selling of agricultural produce.
- To provide financial services, including credit and insurance, to members.
- To offer educational and technical services to members to improve agricultural practices.
- To promote mutual assistance and cooperation among its members.
When you register a Farmer Producer Organization (FPO), you unlock various advantages:
- Limited Liability for Members: FPO members are shielded from personal liabilities, ensuring their assets are protected in case the organization faces financial setbacks.
- Access to Government Subsidies: FPOs are eligible for several government grants and subsidies aimed at supporting the agricultural sector.
- Easier Credit Access: With collective strength, FPOs have enhanced creditworthiness, allowing them to secure loans more easily from banks and financial institutions.
- Improved Bargaining Power: By pooling resources, FPOs can negotiate better prices for their produce when dealing with buyers.
- Increased Productivity: FPOs often provide members with access to better agricultural inputs, technology, and training, improving overall farm productivity.
- Better Market Access: An FPO helps farmers reach wider markets, often yielding better returns for their produce.
To successfully register your Farmer Producer Company, ensure you have the following documents:
- PAN & Aadhar Card of all directors and members
- Passport-sized photographs of directors and members
- Proof of registered office address (electricity bill, gas bill, rent agreement, etc.)
- PAN, TAN, MoA, and AoA
- Digital Signature Certificate (DSC) and Director Identification Number (DIN)
- No Objection Certificate (NOC) from the landlord (if applicable)
- Producer Certificate from the District Horticulture Officer
- Consent from Directors in Form DIR-2
To register an FPO online in India, certain eligibility requirements must be met:
- Minimum Members: A minimum of 10 producer individuals or 2 producer institutions must be involved.
- Minimum Directors: At least 5 directors must be appointed to manage the company.
- Capital Requirement: The company must have a minimum share capital of ₹5 lakh.
- Name of the Company: The company's name must end with the words ‘Producer Limited Company’.
- Registered Office: A valid registered office address within India is mandatory.
The process of registering a Farmer Producer Company is straightforward:
Step 1: Choose Company Type & Name:
- Select the Type: Choose "Producer Company" as the company type during registration.
- Name Selection: Choose a unique name for your company that ends with "Producer Limited" (e.g., XYZ Producer Limited).
- MCA Approval: Ensure the name complies with the Ministry of Corporate Affairs (MCA) guidelines and does not conflict with existing company names or trademarks.
Step 2: Document Collection:
- Collect essential documents:
- PAN Card: For both the company and directors.
- Memorandum of Association (MoA): Defines the company's objectives, goals, and business activities.
- Articles of Association (AoA): Specifies internal rules and governance structure.
- Digital Signature Certificate (DSC): Required for signing the application online.
- Identity and Address Proof: For all directors and the company’s registered office.
Step 3: Obtain DIN & DSC
- Director Identification Number (DIN): Each director must obtain a unique DIN from the MCA portal.
- Digital Signature Certificate (DSC): Directors must get DSC for signing and submitting the application electronically.
Step 4: Draft MoA & AoA
- MoA: Outlines the company's business objectives and scope of activities.
- AoA: Defines the internal operational rules and the company’s governance framework.
Step 5: SPICe+ Application
- SPICe+ Form: Fill out the SPICe+ online application available on the MCA portal, providing company details, MoA, and AoA.
- Document Submission: Submit the completed form along with necessary documents for approval.
Step 6: Incorporation Certificate
- After the application and documents are reviewed, the MCA issues an Incorporation Certificate, including the Company Identification Number (CIN).
- Your Producer Company is now legally registered and can begin its operations.
Activities of a Producer Company:
The operations of a Producer Company cover a range of activities focused on the welfare and economic status of its members:
- Agricultural Advancements: Supporting activities related to the production, harvesting, grading, marketing, and export of the primary produce.
- Processing and Preservation: Involving activities like preservation, canning, packaging, and other value-adding processes.
- Supply of Equipment and Consumables: Manufacturing and supplying machinery and consumables required by members.
- Educational Initiatives: Providing education and training based on mutual assistance principles.
- Technical and Consultancy Services: Offering technical and consultancy services to promote members’ interests.
- Energy and Resource Management: Engaging in sustainable management of land, water, and energy resources.
- Insurance Services: Offering insurance tailored to protect producers or their primary produce.
- Member Welfare: Providing welfare services for members' benefit.
- Financial Support: Extending financial assistance for procurement, processing, and marketing activities.
Membership & Voting Rights in Producer Companies:
- Individual Producers: Each member gets one vote regardless of their shareholding.
- Producer Institutions: Voting rights for producer institutions depend on their participation in the company’s business during the previous year or, in the case of the first year, based on their shareholding.
- Both Individual Producers & Institutions: Voting rights are calculated based on a single vote per member.
Membership Structure:
- Primary Producers: Membership is exclusive to primary producers or producer organizations.
- Membership Process: Members acquire shares to join, and their decisions drive the operations and future of the company.
- Authority: Members are responsible for establishing the company, managing its activities, and, if necessary, initiating its dissolution.
Governance of a Producer Company:
A Producer Company is governed by a Board of Directors elected by the members at general meetings. Key aspects include:
- Board Composition: At least 5 directors must be elected by the members.
- Director Terms: Directors serve for 5 years and can be re-elected for up to two terms.
Share Capital Requirements:
- Authorized Capital: Rs. 5 lakhs (can be increased as per the company’s objectives).
- Paid-Up Capital: Rs. 1 lakh minimum.
Post-Incorporation Steps:
- Apply for PAN and TAN.
- Open a Bank Account in the company’s name.
- Start operating the business professionally.
Memorandum & Articles of Association:
Both the Memorandum of Association (MoA) and Articles of Association (AoA) are critical documents for FPO registration:
- MoA outlines the company’s name, objectives, capital, directors, and members' liabilities.
- AoA governs the internal management of the company, such as membership qualifications, voting rights, board structure, and profit distribution policies.
Compliance Requirements for Producer Companies:
Producer Companies are required to adhere to the following compliance guidelines:
- Annual Returns: Submit annual returns and financial reports to the Registrar of Companies.
- NABARD Registration: Register with NABARD for enhanced financial and technical support.
- Board Meetings: Conduct at least four board meetings annually, with the required quorum.
- Taxation: Adhere to standard taxation procedures, although agricultural tax benefits may apply.
- Authorized Capital: Minimum authorized capital of ₹5 Lakhs and paid-up capital of ₹1 Lakh.
- Profit Distribution: Up to 20% of annual profits can be distributed as dividends based on shareholding.
Producer Company Registration Timeline:
Typically, the registration process for a Producer Company takes around 25-30 days if all required documents are submitted accurately and on time.
FilingIn is your trusted partner for FPO registration in India. With our expertise and personalized service, we ensure a hassle-free experience from start to finish. We specialize in handling all aspects of FPO registration—from document preparation and filing to compliance—making us the preferred choice for individuals and groups looking to establish Farmer Producer Organizations
Frequently Asked Questions in India
What is a Producer Company?
A Producer Company is a legal entity formed by farmers, producers, or growers to collectively produce, harvest, market, process, and sell their products. It allows for the pooling of resources for mutual benefit, particularly in agriculture and rural areas
What are the benefits of registering a Producer Company?
Some key benefits include:
- Limited liability for members.
- Legal recognition as a corporate entity.
- Access to government subsidies and schemes.
- Ability to raise capital through shareholding.
- Shared resources, facilities, and expertise among members.
What is the minimum number of members required to form a Producer Company?
A minimum of 10 producers (individuals or entities) is required to form a Producer Company
What is the minimum number of directors required?
A Producer Company must have at least 5 directors. These directors can be elected by the members from among themselves
What are the activities that a Producer Company can engage in?
A Producer Company can engage in various activities such as:
- Production, marketing, and processing of agricultural produce.
- Providing financial assistance to members.
- Processing, manufacturing, and marketing agricultural products.
- Handling the post-harvest activities of members, such as warehousing, packaging, and branding.
What is the legal framework for a Producer Company?
Producer Companies are governed by the Companies Act, 2013, specifically under Section 581B. They also need to comply with regulations related to cooperatives and agricultural marketing
What is the capital requirement for a Producer Company?
There is no minimum capital requirement specified for the formation of a Producer Company. However, the company must raise capital by issuing shares to its members
Can a Producer Company have non-producer members?
No, only producers (individuals or entities involved in production, harvesting, or processing) can become members of a Producer Company
How is profit distributed in a Producer Company?
Profits in a Producer Company are distributed among the members based on their participation in the activities of the company, such as the quantity of produce supplied or services used, rather than the amount of shares held
What is the registration process for a Producer Company?
The process includes:
- Obtaining Digital Signature Certificate (DSC) and Director Identification Number (DIN).
- Selecting and approving a name for the company.
- Drafting the Memorandum of Association (MOA) and Articles of Association (AOA).
- Filing the incorporation application with the Ministry of Corporate Affairs (MCA).
- Issuing the Certificate of Incorporation once the application is approved.
