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What is a Producer Company?

A Producer Company is a company formed under the Companies Act of 2013, which manages the production, sourcing, and marketing of the goods of the farmers. These are formed by a group of primary producers such as farmers, artisans, or rural producers. It functions as a cooperative, sharing ownership and decision-making to guarantee improved resources and revenue for its members.

Objectives of the Producer Company Registration

The main goal of the producer company registration is to further the interests of its members by assisting in production, marketing, sales, and exportation of their main products. By offering a structured framework for group growth, the company hopes to give its members better market access and increased rewards. The business is also permitted to import products or services necessary for its members' well-being and smooth operation.

The Producer Company aims to guarantee the general well-being of its member producers, advance sustainable development, and raise income levels by supporting these activities.

Section 581B of the Companies Act of 1956 has defined the key objectives of the Producer Company Registration. These objectives are as follows –

  • The registration ensures members get benefits by handling activities like harvesting, production, grading, pooling, marketing, procurement, and selling the agricultural yield.
  • It provides financial aid to its members, such as insurance, and even extends its credit facilities.
  • Ensuring technical and educational services to these members to aid them in functioning.
  • To make sure that there is harmony, cooperation, and mutual assistance between its members.
  • To look into other perspectives and ways through which the agricultural sector can be benefitted.

Producer Company Legal Framework

Certain legal frameworks have to be followed by the Producer Company to run its business across the country without any legal hindrance by the authorities. These are as follows –

  • Producer Company is governed by the provisions of Section 465 of the Companies Act of 2013. The regulations for it are also laid down under Part IX A of the Companies Act of 1956, with certain modifications.
  • The Producer Company must have objectives that align with those set out under section 581B of the Companies Act of 1956.

Benefits of Producer Company Registration

Producer Company Registration makes sure that these farmers and their agricultural yield get enough support in the market. The benefits of Producer Company Registration are as follows-

1. Limited Member Liability

Members of a Producer Company are not held personally liable for the company’s debts and losses. For any losses to the organization, the personal assets of the members would not be at risk.

2. Government Grants

The government periodically offers certain benefits and grants to these companies. With Producer Company Registration, they can avail themselves of these benefits to help their organization grow and establish themselves in the market.

3. Separate Legal Entity

The Producer Company Registration makes the entity a different legal entity through which it can directly enter into contracts and even own property in its name. Any legal case in the court can also be initiated in the company’s name, making it more credible in the market.

4. Taxation Benefits

Producer Company Registration ensures that the organizations get tax benefits through their business activities. They get certain exemptions during the initial 5 years and sometimes lower tax rates on their expenses. This helps them grow their business and survive in the market.

5. Capital Access

Producer Company Registration helps entities access capital through their investors by issuing them shares and debentures. It also helps these organizations grow in the market and expand their business further.

6. Market Access

Through company registration, these entities gain enough market outreach that more customers connect with them, generating profits and allowing their businesses to grow further.

7. Technological Advancement

Through Producer Company Registration, the farmers get enough support in terms of machinery, making it easier for them to cultivate and harvest crops. This reduces their workload and allows them to process the work quickly.

8. Funding from Banks & Financial Institutions

It is easier for these entities to receive funding from banks and financial institutions easily and at a very cheap rate. Company registration provides them with authenticity and assurance that they are legitimate, which ensures that they get a decent amount of loan at lower interest rates.

Requirements for a Producer Company Registration

Registering a producer company is essential for farmers and agriculturists looking to accelerate their business growth. The requirements for a Producer Company Registration are as follows –

  • There must be at least 10 members to get a Producer Company Registration.
  • The members must also be the producers in the company, and they should be linked to producing their goods and services.
  • The company's farmers should be inclined to contribute to its minimal capital requirement, which is Rs 5 Lakhs.
  • There must be a board of directors in the company where at least 5 members should be there, along with two-thirds of the directors being producers as well.
  • The company must have PAN, TAN, Articles of Association and Memorandum of Association.
  • The company's name should end with ‘Producer Limited Company’.
  • The company to be registered should have a registered official address in the country.

Documents Required for Producer Company Registration

Certain documents are necessary to obtain a Producer Company Registration. The list of these documents is given below –

  • Director’s and member’s PAN & Aadhar card.
  • Directors’ and members’ passport-sized photographs
  • Proof of registered official address (gas bill/ electricity bill/ telephone bill/ rent agreement, etc.)
  • PAN, TAN, Articles of Association (AoA), and Memorandum of Association (MoA).
  • Digital Signature Certificate (DSC) & Director Identification Number (DIN)
  • No Objection Certificate from the owner of the registered office (if Applicable).
  • District Horticulture Officer’s issued producer certificate.
  • Producer Organization’s registration certificate copy.
  • The director’s consent is in Form DIR- 2.

Producer Company Registration Process

Applying for producer company registration is easy and straightforward. Here is the process followed for Producer Company Registration- -

Step 1: Choosing Company Type and Name

The first step for the applicant is to choose the company type and its name meeting all the required criteria. The company's name should end with ‘Producer Limited Company’. The name should be unique and the Ministry of Corporate Affairs should approve of such chosen name.

Step 2: Documentation

The applicant needs to collect all the necessary documents that are required to fill up the form and submit it for Producer Company Registration approval. These documents are mandatory and are necessarily required for the registration process to be completed.

Step 3: Obtaining DIN & DSC

Digital Signature Certificates of all the shareholders along with the directors are needed and upon that Director’s Identification Number is also required for the process to be completed. The directors must take DIN through the Ministry of Corporate Affairs.

Step 4: Drafting of AoA & MoA

Drafting the AoA and MoA is a necessary step since it lays down the company policies, objectives, mission, vision, rules, and regulations. This ensures the company's functioning and compliance with the Companies Act rules and regulations.

Step 5: SPICe+ Application Form

To request the incorporation of a company, you must fill out the online SPICe+ application found on the official website of the MCA. This application's Part B is utilized to register a Producer Company, and Part A is meant for reserving a company name. The application may be completed by any director of the Producer Company and signed before being sent, together with the required supporting documentation, to the Registrar of Companies (ROC).

Step 6: Incorporation Certificate

After the SPICe+ application is made to the MCA, the MCA reviews the application form and all the requirements before granting the incorporation certificate to the producer company.

Producer Company Compliance

Producer Company Compliance is a very important part of the post-registration of the company to follow legal procedures. These compliances are as follows –

  • The producer companies are required to present their finances and audit reports at the Annual General Meeting to submit them to the registrar of companies annually.
  • The annual returns of the company need to be submitted to the registrar of companies, highlighting the company’s finances and operational management.
  • They need to register with NABARD to enhance the agricultural support financially and technically.
  • The company must arrange at least 4 board meetings annually while meeting the required quorum.
  • They need to follow standard taxation, but sometimes they can get agricultural tax benefits based on the policies established by the governments and their authorities.
  • The cooperative societies in existence and that are in primary production can convert into Producer Companies as per the Companies Act of 2013.
  • The basic requirement for the authorized capital is Rs 5 Lakhs, and for the paid-up capital, it is Rs 1 Lakh. Failure to do so will lead to the dissolution of the company.
  • 20% of the annual profits can be distributed as dividends based on the shareholdings of every member.

Producer Company Registration Fee

The Producer Company Registration fee depends on various factors. Certain licenses must be obtained along with other formalities to get the certificate under the Companies Act, 2013. The approximate fee required to get the Producer Company Registration is around Rs 15,000—Rs. 50,000, including the government fee and the professional fee (if professional help is sought). The registration fee depends on which type of company registration is required.

Producer Company Registration Timeline

The Producer Company Registration Timeline depends on how fast and accurate the registration process is moving. For this, the applicant must accumulate all the required documents and licenses so that the SPICEe+ Form can be submitted to the authorities in a timely manner. After that, they will follow the regular process and check all the details before granting the registration certificate. The process generally takes around 25-30 days if everything is submitted on time.

Why Corpbiz?

Choosing Corpbiz for professional help can be very productive for any applicant since we have experienced professionals who are dedicated to their work. We have much experience in the matter and ensure timely disbursal of the registration certificate. We have ensured timely producer company registration certificates for 200+ applicants, which makes us a professional entity indulged in operational expertise.

Frequently Asked Questions

A Producer Company Registration’s main motto is to further the interests of its members by assisting in the production, marketing, sales, and exportation of their main products. By offering a structured framework for group growth, the company hopes to give its members better market access and increased rewards.

The time required to register a Producer Company is 25- 30 days, including all the necessary documentation and approvals.

The Producer Company Registration makes the entity a different legal entity through which it can directly enter into contracts and even own property in its name. Any legal case in the court can also be initiated in the company’s name, making it more credible in the market.

Producer Companies are governed by the provisions of Section 465 of the Companies Act of 2013. The regulations for them are also laid down under Part IX A of the Companies Act of 1956, with certain modifications. Section 581B of the Act has defined the key objectives of the Producer Company Registration.

The term of directors in a producer company is for a minimum of one year and a maximum of five years.

No, a producer company’s shares cannot be transferred outside the company. However, they can be transferred to the members of the producer company only after the approval by the board of directors.

Yes, the cooperative societies that are in existence and engaged in primary production can be converted into Producer Companies as per the Companies Act of 2013.

Yes, the Producer Companies are required to conduct a minimum of 4 board meetings with adherence to the quorum in a year.

Yes, a producer company must appoint an auditor so that the company’s books of accounts are audited properly and on time.

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