What Is A Producer Company?

The ‘producer company’ concept was enacted in the year 2002, this was enacted in the interest of the crucial issues of farmers and agriculturalists, who are collectively denominated as producers. It basically allows the Farmers’ co-operative society to act as an independent legal body under the auspices of the Ministry of Corporate Act. It requires a minimum paid up capital of five lakh rupees.

Objectives Of A Producer Company

  1. The Producer Company has to carry out the activities such as production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of primary production or import of the goods by itself or various other organizations. These activities are carried on for the benefits of its members. 
  2. Members’ produce packaging along with processing which includes preserving, drying, brewing or canning. 
  3. The members are provided with equipment or consumables along with manufacturing, sale or machinery supplies.
  4. To impart to the members as well as others, of the Company  proper education based on the principles of mutual assistance.
  5. To provide the members with all the technical services along with consultancy services. It also includes activities such as training, research as well as development and to promote the other interests of the members of the Company. 
  6. Primary production for the benefit of the company such as generation of power, transmission as well as distribution of power. It also includes revitalizing land as well as water resources along with their use. 
  7. Insurance of producers or their primary produce.
  8. Promoting techniques of mutuality and mutual assistance.
  9. The Board decides the welfare measures or the beneficial facilities which are to be provided to the members of the Company. 
  10. Activities which are supplementary or incidental to those as mentioned in clauses (a) to (i). It also includes activities that help in promoting mutuality as well as mutual assistance among the members of the company. 
  11. The members are given credit facilities or other financial services for the activities mentioned above along with procurement, processing, and marketing.

Requirements For Registration

  • There must be a minimum 15 members out of which 5 members should be directors and 10 other members;
  • A minimum of Rs five lakhs is necessary for incorporating the producer company.
  • The registration of the Producer Company in India cannot be held as a public company.
  • A minimum of four board meetings every year is necessary in case of the producer company. These meetings shall be held at least once every three months.


List of Documents required for the Registration


  • Digital Signature Certificate
  • Director’s Identification Number
  • Memorandum of Association
  • Articles of Association
  • A copy of self-attested ID cards of all the directors (PAN, Aadhar, etc.)


What is the procedure for registration?


  • Digital Signature Certificate and Directors’ Identification Number

A digital signature certificate and the Directors’ identification number have to be obtained by applying with the MOC.


  • Applying for the Company’s Name

More than one name has to be submitted to the Registrar so that he has a choice to pick a name that is not already registered or similar to the existing companies or trademarks.


  • Applying for a registration certificate of Company

After the name of the company has been approved and the DSC is acquired the directors have to file for the Incorporation of the company with the Ministry of Corporate affairs by paying the prescribed fees, the registrar issues the certificate of incorporation once he is satisfied that all the requirements are met.


What are the advantages of registration?


  • As determined by the Director, each member of the company receives the value of the product or product which has been pooled. The value received by the members will be distributed in the form of cash or by allotting equity shares. However, mode of receiving i.e cash or equity shares will be subject to the conditions of the Board.
  • Financial assistance is provided to the members of the Producer Company by the process of a credit facility. This facility is given to the members for a duration of six months.
  • Tax benefits under section 10(1) of Income Tax Act.
  • After the provision of payment of limited return as well as reserves is provided, leftover additional amounts are distributed among the members of the Producer Companyin the form of patronage bonus. The amount distributed will be to the extent of their participation in the activities of the company in the form of cash or equity.  
  • The members are also eligible for Loans and advances against security that have been mentioned in the Articles of Association. However, the loans and advances come with a condition where the member is required to repay it within three months and not more than 7 years. 
  • A producer company is eligible for selling or owning a property in its name when it has been duly registered.

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FAQs On Producer Company

A minimum of 5 Directors and 10 shareholders is required to form a Producer’s company.

Section 10(1) of the Income Tax Act exempts agricultural income and since the activities of a producer company are agricultural in nature, they are also exempted from Income tax.

NABARD provides support and financial assistance to meet the needs of Producer Companies.

No, a producer company can never be converted into a Public Company.

How Lead India Can Help You:

  1. Expert Advice - All the expert advice needed for registration is provided. We have the most experienced Advocates & provide you with the best guidance.
  2. Zero Stress - The owners do not have to worry about the paperwork & complex process at the court. Our Associate will perform all these actions at the court. 
  3. Top Quality Lawyers - Lead India will help you to choose among the best lawyers for your registration. There are different associates who work with us, you can choose a lawyer depending upon their practice area, experience & user rating.

Swati Singh

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