Majority of farmers and primary producers in India are small and marginal with fewer resources. Indian farmers are poor and uneducated. They don’t know latest technology and even they can’t bargain with the merchants to get fair price of their produce. That is the reason why the concept of producer companies came into existence.
Producer Companies are legally recognized body of farmers/agriculturists/primary producers with the aim to improve the standard of their living, and ensure a good status of their available support, incomes and profitability. By organization them into producer companies, economies of scale can be unlocked and their livelihood can be improved.
Producer Company is a company registered under the Companies Act which has the objective of production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of primary produce of the Members or import of goods or services for their benefit.
‘Primary produce’ means:
- Produce of farmers, arising from agriculture (including animal husbandry, horticulture, floriculture, pisciculture, viticulture, forestry, forest products, re-vegetation, bee raising and farming plantation products), or from any other primary activity or service which promotes the interest of the farmers or consumers; or
- Produce of persons engaged in handloom, handicraft and other cottage industries;
- Any product resulting from any of the above activities, including by-products of such products;
- Any product resulting from an ancillary activity that would assist or promote any of the aforesaid activities or anything ancillary thereto;
- Any activity which is intended to increase the production of anything referred above or improve the quality thereof;
Therefore, a Producer Company deals primarily with agriculture and post harvest processing activities.
Objects or Activities of the Producer Company
- 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.
- Processing including preserving, drying, distilling, brewing, vinting, canning, and packaging of the produce of its Members
- Manufacture, sale or supply of machinery, equipment or consumables mainly to its Members.
- Providing education on the mutual assistance principles, to its Members and others.
- Rendering technical services, consultancy services, training, research and development and all other activities for the promotion of the interests of its Members.
- Generation, transmission, and distribution of power, revitalization of land and water resources, their use, conservation and communication relatable to primary produce.
- Insurance of producers or their primary produce.
- Promoting techniques of mutuality and mutual assistance.
- Welfare measures or facilities for the benefit of Members as may be decided by the Board.
- Any other activity, ancillary or incidental to any of the activities referred above which may promote the principles of mutuality and mutual assistance amongst the Members in any other manner.
- Financing of procurement, processing, marketing or other activities referred above which include extending of credit facilities or any other financial services to its Members.
Procedure for Producer Company Registration
Things to be kept in mind before registration
- 10 or more Individual producers can join together to form a production company but there is no upper limit on the number of members OR any 2 or more producer institutions can form a producer company.
- There should be minimum 5 directors and maximum of 15 in a producer company.
- No person, who has any business interest which is in conflict with business of the Producer Company, shall become a Member of that Company.
- The name of the Company shall end with “Producer Company Limited” which shall be stated in the Memorandum.
- The AOA and MOA of Producer Company shall be prepared in accordance with the provision under section 581F and 581G of Companies Act, 1956.
- One-fourth of the total membership shall constitute the quorum at a General Meeting.
- Share Capital of a producer company shall consist of equity shares only.
A Producer Company name must follow suffix ‘Producer Company Limited’. The word private isn’t used in the name and the absence of which does not indicate that the company is a public. For e.g: Maahi Milk Producer Company Limited. You can file 2 names in “RUN” facility of MCA for name availability. Attach activity letter stating main object of proposed company while filing name availability.
Obtain Digital Signature
Apply for Class 2 Digital Signature of proposed first Directors. Id Proof, Address Proof, Photo, Email Id, Phone No. etc. will be required for Digital Signature.
Drafting of Memorandum and Articles of Associations
MOA and AOA are basically the charter and internal rules and regulations of the Company. Thus, it is essential to be drafted with the greatest care and with the guidance of the experts. MOA and AOA must be signed by the requisite subscribers, i.e. 10 or more individuals, each of them being a producer or 2 or more producer institutions or a combination of ten or more individuals and producer institutions. Each subscriber to the memorandum shall write in his/her own hand, his/her father/husband’s name, occupation, address and the number of shares subscribed for by him/her. The signature of all the subscribers shall also be witnessed. The witness shall also sign and write in his own hand, his name, his father’s name, occupation, and address.
Filing of Documents and Forms electronically with Registrar of Companies
File e-form SPICe-32 attaching following documents:
- Memorandum of Association
- Article of Association
- An self declaration in form INC-9 signed by all the subscribers and first directors of the proposed company; (On Plain Paper)
- Consent and Declaration by first Directors in form DIR-2; (On Plain Paper)
- A latest utility bill of registered office; (Telephone/Gas/Electricity Bill)
- NOC 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;
- Id Proof and Address Proof of first Directors;
- If the subscriber is a body corporate, Certified True Copy of Board Resolution authorizing a person to sign the Memorandum & Articles on its behalf.
On proper verification, the ROC will issue a Certificate of Incorporation and the company can start its business operations.
Certificate of Incorporation of the Producer Company
Once the registrar fully gratified, that all the necessities of this Act have been obeyed with in respect of registration & matters precedent and incidental thereto, he shall within 30 days of the receipts of documents required for registration, register the memorandum, articles and other documents, if any, and issue a Certificate of Incorporation under this Act. The Registrar will issue the Certificate of Incorporation bearing a Corporate Identification Number (CIN) consisting of 21 digits within 30 days of the receipt of the documentation required for registration.
Benefits to the Members of Producer Companies
Value of Produce
The members of the producer company will pool their produce together to sell in the market. The members of the producer company will receive the value for the produce pooled and supplied as determined by the directors. This amount will be given out later in the form of cash/ kind/ equity shares.
The members of the producer company will be entitled to get bonus shares in the same proportion to the shares held by them.
The surplus after providing provision for payment of limited return and reserves may be given as patronage bonus to the members of the producer company. Patronage bonus signifies a distribution of the surplus income to the members of the producer company in proportion to their respective patronage. Patronage, on contrary, is the participation by members in their business activities by using the services offered by producer company.