Producer Company Registration Process in India

Overview of Farmer Producer Company Registration

Do you wish to start an Indian company that produces, exports, and trades primary agricultural products? If so, you're in the correct place since setting up a Producer Company is the simplest and most economical method to begin a producer business in India. Just ten people and simple documentation requirements are to be fulfilled in order to start a producer company. To register as a Producer Company, you must have at least Rs. 5 lakh in capital.

Producer Company is limited to using its members' assistance in the production, procurement, harvesting, grading, pooling, marketing, and trading of primary products. Financing is also provided to them for these operations, including the extension of credit facilities. It can lend money or raise funds from company members and not from the general public. Nonetheless, it is simple to add members to a Producer Company using a few simple documents and a quick procedure. Additionally, the only business structure that may be used to launch a lending company in India without RBI clearance is the producer company registration.

A producer company is a combination of a cooperative society and a company. It integrates the distinctive features of cooperative business with the regulatory framework of a corporation, combining the features of a co-operative society with the compliances of a company.

What is a Producer Company?

A producer company is a company registered to manage the primary agricultural production of its active members. A producer company combines the features of a cooperative society and a private limited business to give its member producers' collective advantages under a clear legal structure. Only companies that are already registered as Private Limited companies are eligible to register as Producer Companies in India.

However, the names under which these companies are established will have "Producer Company Limited" suffix to them. Organizations and individuals involved in primary production in India may come together to form a Producer Company. Since agriculture makes up the bulk of India's economy, farmers were also granted a corporate status through the production of Producer Companies, which aimed to further their agricultural operations. The agriculture industry has expanded globally during the past few decades, creating opportunities for more Producer Companies to incorporate in India.

What are the objectives of forming a Farmer Producer Company?

• Production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of primary produce of the Members or import of goods or services for their benefit shall be the objects of the Producer Company.
• Handling the processing of its members? produce, such as drying, distilling, brewing, canning, and packaging.
• Manufacturing, selling, or supplying equipment's, machinery, or other consumables to its members.
• Educating its members and other parties on the principles of mutual assistance.
• Providing training, research and development, technical services, consulting, and other services in order to further the interests of its members.
• The production, distribution, and transmission of electricity; the revitalization of land and water resources; their utilization, preservation, and correspondence about primary products.
• Producers' insurance or main produce insurance.
• Encouraging methods of reciprocity and aid, as the Board may determine.
• Providing facilities for the welfare or benefit of its members.
• Any other activity that may further the mutuality and assistance among members in any other way.

What are the advantages of Producer Company?

The advantages of a farmer producer company are listed below:

Loans and Investments

The government has enacted a unique provision for lending money to the producer members of the producer company, which is comprised of people or organizations that are primary producers. For Example, the NABARD Bank was incorporated with the motive of providing financial assistance to farmers and producers by offering NABARD Loans.

Separate Legal Entity

As a Producer Company is an independent legal company, it is able to make purchases and take on debt in its own name. The company's lenders are not obligated to the directors.

Limited Liability of Members and Director

Directors and shareholders are protected from unlimited responsibility by the Companies Act of 2013. Therefore, in the event that the company faces any financial difficulties, the director's assets are safeguarded and their personal assets cannot be seized by banks or other governmental institutions.

Tax advantages

Depending on the type of agriculture a producer company engages in, it may be eligible for a variety of tax exemptions and advantages. As a result, taxes do not apply to the Producer Company's earnings. These Companies are not currently required to comply with any tax regulations by the IT department.

Profit sharing among members

The profit or income of the farmer-producer business is distributed among the serving members and remains inside the organization.

Deposit acceptance

A registered producer company may take one-time or recurring deposits, and it may also grant lower-interest loans to its members and farmers.

Perpetual Succession

A producer company will never come to an end unless dissolved by law. The production company continues to function even after membership changes since it is a separate legal entity and is not impacted by the resignation or death of any members.

What are the Requirements of Farmer Producer Company in India?

The following requirements must be fulfilled before registering a farmer-producer company in India:

• Minimum Number of Members: A producer company must have 10 members or more as a minimum requirement.
• Producer Members: The second prerequisite is that members of the producer company must function as producers, meaning they must be involved in the production of products and services.
• Need for capital: The farmer-producer company's third condition should clarify that it should motivate members to make capital contributions. For example, the required minimum capital is five lakhs.
• Board of Directors: For Producer Company Registration, five board of directors, with two-thirds of the members being producers is required.
• Documents: The primary documents needed are the Articles of Association (AA), PAN, TAN, Memorandum of Association (MoA), and certificate of incorporation.

Documents Required for Farmer Producer Company

Make sure you have all these documents if you intend to start a producer company in India. Here is a detailed list of all the necessary documents:

• Each director and shareholder need to have a voter ID, PAN card, and passport.
• The most recent months' bank statements.
• Each director and shareholder must have a valid passport, driver's license, and voter identification card.
• All of the directors or shareholders should have passport-sized photos.
• A copy of a utility bill, such as electricity, water, etc., as a proof of company's address.
• In the event of rented property, a scanned copy of the NOC or the leasing agreement.
• If the property is owned, a copy of the property documents is required.

What is the Farmer Producer Company Registration Process?

Here are the steps you need to take in order to register a farmer-producer company in India:

Step 1: Obtain Digital Signature and DIN

The first step in registering a producer company is to obtain digital signature certificates for each director so that they can sign electronic documents. Once you have the digital signature, you need to obtain a DIN (Director's identification number), which can be obtained by applying with a SPICE form, saving you the trouble of filing a separate form.

Step 2: Choose a Company Name and Get Approval

After obtaining the DSC and DIN, you need to choose a name for your company, making sure it is not already in use. After deciding on a company name, submit an application for approval. You must submit your application in the prescribed form and pay the Reserve Unique Name (RUN) fee in order to get your company's name approved. After submission of the application, the registrar will confirm whether the name is unique and not already in use and provide approval if all the things are satisfied.

Step 3: Submit the application for incorporation or registration.

Now, you may complete and submit the incorporation application with the relevant Registrar of Companies (ROC) in the SPICE form.

Step4: Drafting the AOA and MOA

You can prepare the Memorandum of Association (MOA) and Articles of Association (AOA) once the registrar has approved the name of your company. The internal rules and regulations of the company are contained in these documents. You must also attach these documents with the registration form.

Step 5: Complete the Agile Pro Form

The Agile Pro form, which includes the bank and GST data, must be filed once the SPICE form has been appropriately filled.