Producer Company Registration
The miserable condition of farmers has been the main concern for the Indian Government. Around 12,000 farmers committed suicide from the year 2015-2018. Keeping this in mind the government took initiative to introduce Farmer Producer Company Registration for the small scale and marginal farmers.
What is the Producer Company Registration?
Just like other companies, Producer Company is also registered as per the provisions of Companies Act, 2013 but with a special motive to raise the standard of living in farmers and bring some change in their miserable lives. Chief objectives of Producer Company is producing, harvesting, procuring, grading, handling, pooling and selling farm goods for profitable business practices.
India is an agricultural-based country where more than 85% of people are dependent upon farm activities. Most of the farmers in India are small or marginal scale farmers holding less than 2 hectares of land. Low production and poor facilities make their life miserable and make them deprived of the latest technologies. Producer Company aims at empowering all the small and marginal scale farmers so that their economies can be unlocked they could also opt the latest and new technologies to lead better and improved lives.
To form a Producer company they have to get Producer Company Registration as per the rules and regulations.
What are the activities performed by the Farmer Producer Company?
As mentioned, Producer Company deals with all the production and harvesting as well as post-harvesting activities. Here is the detail of the activities performed by them:
- Processing of crops and farm products: the first step is the processing of the produce which involves various procedures such as brewing, preserving, drying, venting, distilling, packaging, and canning.
- Manufacturing of the crops and farm products: manufacturing involves the production of produce on a large scale by using the high tech machines. They further supply and sale the necessary types of equipment and machines for better outcomes and manufacturing.
- Assistance and Education: low scale farmers are deprived of using new technologies so guidance and assistance are provided to them so that they can opt for better ways to grow crops. Education related to mutual assistance principle is provided to the members of farmer Producer Company.
- Render various services such as technical, consultancy, training and other promotional activities as per the interest and requirements of the producer company.
- Insurance of the producer and his primary produce
- Make sure to generate, transmit and distribute power and best utilization of water and land resources.
- Promotes various techniques related to mutual assistance and mutuality.
- Financial assistance to the members for marketing, procurement or other activities.
- Some additional activities to promote the mutuality and mutual assistance amongst the members of the company.
Note: as per the Companies Act, 1956, primary produce is the product arising from the agricultural land of the farmer such as floriculture, horticulture, animal husbandry, re-vegetation, viticulture, pisciculture, bee raising, forest products, forestry, and farming products.
Before incorporation, the farmer producer company has to fulfill below-given requirements:
- There must be a minimum number of 5 directors and 10 members to incorporate the company.
- The minimum paid-up capital should be Rs 5 lakhs or more to register a company
- There is no limit for the maximum number of members in a producer company.
- Further the company cannot be registered or considered as a Public Limited Company.
- The company can only possess equity share capital.
- The company must carry on 4 board meetings per year and it should not be held less than every three months
Other Mandatory Requirements:
Here are some additional mandatory requirements for Producer Company Registration:
- Only a person or member engaged in activities related to the production of primary produce can participate in the ownership of the company.
- All the members should be primary producers.
- The liabilities of the producer company members are limited to the amount of their unpaid share.
- The name of the proposed company must contain “Producer Company Limited” at the end of their name.
- The proposed Producer Company is deemed as the private limited company as per the provisions of the Companies Act.
What is the Procedure for Producer Company Registration?
Just like a Private limited company, Producer Company is also registered as per the rules and regulations of the ministry of corporate affairs. The process is similar and starts with obtaining a Digital Signature Certificate or DSC and Director’s identification number or DIN for all the proposed directors of the company. After that, the applicant has to apply for the reservation of name through the RUN form with the registrar of companies (RoC). The name must end with “Producer Limited Company” and should be unique and non-offensive.
After the name approval, the applicant can apply for the incorporation certificate. The application is filed in a prescribed format along with the required documents and MOA and AOA. If all goes well and the registrar is satisfied with the documents and application the company would receive the incorporation certificate. Following are the documents an applicant would require at each step of the process:
Step 1: Obtain a Digital Signature Certificate or DSC:
All the directors have to obtain a DSC and for this, they require below given documents:
- PAN card of all the directors
- Aadhar card of all the directors containing the same information as per the PAN card.
- Passport Size photograph of the directors
- Working Email address and Contact number.
Step 2: obtain the Director’s Identification Number:
All the designated directors of the company have to obtain their DIN. As per the new rules it can be obtained during the incorporation of the company through SPICe form without applying for an extra DIR-3 form.
Step 3: Reservation of the Name of the Company:
Name is reserved through the RUN (Reserve Unique Name) form respective of Registrar of Companies. The name should end with “Producer Limited Company” and must be unique. The applicant can apply for the incorporation with the 20 days of name reservation.
Step 4: Preparation of MOA and AOA along with other documents:
Once the name has been approved, the applicant must start the incorporation process by preparing the below-given documents:
- Memorandum of Association or MOA: it is drafted as per the objectives of the company.
- Article of Association or AOA: it is drafted as per the by-laws of the proposed company.
- A declaration drafted by a professional
- An affidavit signed by all the proposed subscribers declaring their competency to act as legal subscribers of the company.
- A utility bill such as electricity, gas or water bill along with a No Objection Certificate from the owner as a residential proof of the corresponding office of the company. In the case of rented property, a lease agreement would be attached to other documents.
Step 5: incorporation application:
All the drafted documents such as AOA, MOA, Affidavit, and declaration would be attached along with the SPICe form with relative Registrar of companies. After that, all the documents and application would be verified by the higher authorities.
It would take around 7-15 days for the verification of the documents. If all is as per the requirements of ROC the incorporation certificate would be issued to the company.
Benefits of a Producer Company Registration:
A Producer company enjoys all the benefits of a private limited company such as:
1. A separate legal entity:
Just like a private limited company, a registered farmer producer company is also considered as a separate legal entity that can purchase or sell land at its own name.
2. More Credibility:
More credibility is offered to the registered companies as compared to the non-registered ones.
3. Ease in Management:
An applicant can make desired changes in the board of management by filing some simple form with regards to the registrar of Companies (ROC)
4. Limited Liability:
The liabilities of the members are limited and their personal assets cannot be used to cover up the debt and losses of the company.
Rules and Regulations for easy availability of loans and Credits:
The main aim of the producer company is to uplift the standard of living of the primary producers in India. And to fulfill this aim a special provision was passed according to which loan would be sanctioned to the respective members of the producer company through:
1. Loans and advances:
As per the law loans and advances would be issued to the members of the producer company against security for 7 or less than 7 years from the date of disbursement of the loan.
2. Credit facilities:
credit facilities would be availed for the members of the producer company period of 6 months or less than that.
3. NABARD Loan:
NABARD stands for National Bank for Agriculture & Rural Development that helps to meet the financial requirements of small and regional scale farmers. The members of Producer Company can obtain loans under the NABARD loan scheme.
Tax Exemptions for the Registered Producer Companies:
Registered Producer Company enjoys tax benefits such as exemption from agricultural income under section 10(1) of the income tax act, 1961. The exemption varies based on activities carried out by the farmers such as the agricultural income is 100% exempted from the income tax while the income earned from the production of green tea is 60% exempted as per the law.
All these benefits make Producer Company Registration more advantageous for all the farmers in India. This could help them in more production and better credit facilities and more profits for their produce. All in all producer company is bliss for all the farmers in India.