Producer Company: An Overview

A producer company can be defined as a legally recognized body of farmers/ agriculturists to improve the standard of their living and ensure a good status of their available support, incomes and profitability. Section 465(1) of the Companies Act, 2013 (‘Act’) provides that the provisions relating to a Producer Company under the Part IXA of the Companies Act, 1956 shall continue to apply. Thus, under the Act, 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 specified under the Act.

A farmer-producer company is a hybrid between private limited companies and cooperative societies, registered under the Act. They have democratic governance and each member or producer has equal voting rights irrespective of the number of shares held.

Objectives

The main objective of the farmer producer company is to facilitate the formation of co-operative businesses as companies and to make it possible to convert the existing co-operative business into companies.

As per the Act, the objectives of a producer company should relate to all or any of the following matters: (as given in the law)

a) Production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of primary production of the Members or import of goods or services for their benefit, provided that the Producer Company may carry on any of the activities specified in this clause either by itself or through other institution.  
b) Processing including preserving, drying, distilling, brewing, venting, canning, and packaging of the produce of its Members.  
c) Manufacture, sale or supply of machinery, equipment or consumables mainly to its Members.  
d) Providing education on the mutual assistance principles, to its Members and others.  
e) Rendering technical services, consultancy services, training, research and development and all other activities for the promotion of the interests of its Members.  
f) Generation, transmission, and distribution of power, revitalization of land and water resources, their use, conservation and communication relatable to primary produce.  
g) Insurance of producers or their primary produce.  
h) Promoting techniques of mutuality and mutual assistance.  
i) Welfare measures or facilities for the benefit of Members as may be decided by the Board.  
j) 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.  
k) Financing of procurement, processing, marketing or other activities specified in clauses (a) to (j) which include extending credit facilities or any other financial services to its Members.

Authorized Activities of Producer Companies

The Producer Company is required to deal with the produce of its members and is authorized to carry on any of the following activities:

1. Processing (processing also includes, preserving, brewing, venting,  drying, distilling, canning and packaging) of the produce of its members;     
2. Manufacture, sale or supply of equipment, machinery or consumables to its producer members;     
3. To provide education on the mutual assistance principles to the producer members of the producer company and others;     
4. To render consultancy services, technical services, training, R&D and all other required activities for promoting the interests of producer members;     
5. Generation, transmission and distribution of power, conservation and communication relatable to primary produce, revitalisation of land and water resources,     
6. Insurance of the primary produce and its producer;     
7. To promote the techniques of mutuality and mutual assistance;     
8. The welfare of members as may be decided by the Board;     
9. Financing of procurement, marketing, processing or other activities such as extending credit facilities or any other financial assistance to its producer members.     
10. Any other activity (ancillary or incidental to the main objectives of the producer company) to promote mutual assistance amongst the producer members and the lines of principles of mutuality.

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.

Documents Required

The first step is to obtain a Digital Signature Certificate (DSC) from all the directors. Documents required to obtain a DSC are:

1. PAN Card of the Director  
2. Aadhaar Card of the Director  
3. Photo  
4. Email Id  
5. Contact Number  
 

After obtaining the DSC, the next step is to obtain the Director Identification Number (DIN) by filing form DIR – 3 or SPICe+ Form 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 SPICe+ to the Registrar of Companies (ROC) is to be filed by giving 2 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:  
 

The Memorandum of Association is to be drafted by incorporating all the objects that the company intends to follow.  
 

The Articles of Association are to be drafted containing all the by-laws of the company.  
 

An affidavit has to be signed by all the subscribers of the proposed company declaring their legal competency to act as the subscribers.  
 

A utility bill and a NOC have to be taken from the owner whose address is to be used as the registered office of the company. If it is not owned, a lease agreement will be attached to the form.  
 

All the drafted documents will be attached to Form SPICe+ 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.