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Producer Company
As per Companies Act, 2013, a producer company is defined as a body corporate set up to carry on or relate to any of following activities:
a) Production, harvesting, processing, procurement, grading, pooling, handling, marketing, selling, export of primary produce of the Members or import of goods or services for their benefit.
(b) Rendering technical services, consultancy services, training, education, research and development and all other activities for the promotion of the interests of its Members;
(c) Generation, transmission and distribution of power, revitalization of land and water resources, their use, conservation and communications relatable to primary produce;
(d) Promoting mutual assistance, welfare measures, financial services, insurance of producers or their primary produce;
Agriculture is the backbone of the Indian Economy. However, agriculture always has remained an unorganized sector. By way of setting up the producer companies, the farmers can come together and carry out the activities such as harvesting, production, processing, etc of the agricultural produce and can provide technical services to other farmers, resulting in increased yield of crop production leading to overall development of the Nation and the economy.
Features of Producer Company
- Incorporation: Any of the following combination of producers can incorporate a producer company:
i. Ten or more producers (individuals); or
ii. Two or more producer institutions; or
iii. Combination of the above two (10+2). - Share capital: Only equity share capital can form part of the capital structure of the Company and the same can never be traded on the stock exchange.
- No. of Directors: Every producer Company should have a minimum of 5 Directors and maximum of 15.
- Name of the company: The name of every producer company shall end with “Producer Company Limited”.
- Voting rights: Each individual shall have one vote, irrespective of its holding in the Company.
Advantages of Producer Company
- Limited Liability– Each member or shareholder has a limited liability. It means that in case of any loss, the shareholders are liable only to the extent of their share. Their personal assets cannot be used for company’s benefit.
- Perpetual succession– Company’s identity is different from its owner. Therefore death, insolvency, or bankruptcy of any of its members has no impact on company’s existence.
- Better reputation: Since a Producer Company is required to get its accounts audited as per the provisions of the Companies Act, it drastically improves the trust of the clients and other stakeholders on the Company.
- Separate legal assistance: The Producer company has a separate legal existence from that of its owners. It can own property and sue and be sued.
- Better management: Since the producers can have a formal management structure, they shall be able to control the things in a much better and planned way.
Procedure for registration
Checking the name availability of the Company and applying to ROC for obtaining the approval of the name.
Applying for the DIN and digital signatures of the Directors of the Company.
Drafting of the Memorandum and the Articles of association of the Company.
Filing/ E-filing of the all the relevant documents with the ROC and obtaining the Certificate of Incorporation of Company
Opening the bank account and applying for PAN/ TAN/ other registrations.
Documents Required
- DSCs and DINs of the proposed directors;
- PAN of all the Directors;
- Identity proof of all the directors;
- Copy of the bank statement/ electricity bill/ telephone bill of the place of business;
- NOC from the landlord, in case of rented premises;
- Copy of telephone bill/ electricity bill/ gas bill, etc as proof of place of business.
Precautions to be taken while keeping the name of the Company:
- The name of the such Producer Company should end with “Producer Company Limited”.
- Proposed name should NOT be identical with another existing name of the Company.
- Certain words such as India, Prime Minister, President, etc shall not be used in the name of the Company.
- It is not necessary to reflect the object of Company in Name of the Company.
- Company can be incorporate with the abbreviated word of the name of the promoters.
- It is prohibited to use certain emblems and names in an improper way.
FAQ’s
1. What is the limit for the no. of Directors of the Producer Company?
Every producer Company should have a minimum of 5 Directors and maximum of 15.
2. Is DSC required for all the Directors of the Company?
Yes. Since their digital signatures shall be required at the time of filing of various E-forms, thus it is compulsory for all the Directors to have DSC.
3. Is there a limit on the number of members of the Producer Company?
Minimum no. of members should be 10. However, there is no restriction with regard to the maximum number of members.
4. Can the shares of a PC be listed in any Stock Exchange?
Since a producer company is formally of the nature of Private Company rather than a Public Company. Thus, it can never be listed on any recognized stock exchange.
5. Is there any restriction on the area of operations that can be undertaken by the Producer Company?
Yes. A Producer Company can undertake only those activities which are specified under section 465(1) of the Companies Act 2013 i.e. production, harvesting, processing, etc.
6. Is there any relief under given to Producer Companies under Income Tax Act, 1961?
Since the activities undertaken by Producer Companies mostly pertain to Agricultural sector, thus the income arising from sale of agricultural activities is exempt under section 10 of the Income Tax Act, 1961.
Other auxiliary services provided by us with regard to setting up of business:
- Obtaining DIN for the Directors;
- Obtaining DSC for the Directors;
- Opening of the bank account for the Company;
- Applying PAN and TAN of the Company;
- Registration under GST/ service tax/ VAT/ Excise/ PF/ ESI;
- Review and maintenance of records as required under GST/ service tax/ VAT/ Excise/ PF/ ESI;
- Applying for Import/ export code;
- Assisting the clients in getting loans from the bank;
- Book-keeping services;
- Filing of TDS/ GST/Service tax/ VAT/ Excise returns;
- Computation of income tax and filing of Income tax returns;
- Filing of other forms as required by MCA;
- Maintenance of statutory registers/ minutes of the meetings;
- Filing of annual returns with MCA;
- Providing internal audit services;
- Assisting in finding CA’s/ lawyers/ CS and other solicitors for your work;
- Registration of Copyrights, trademarks and patents;
- RBI approval for foreign companies investing in India and FIPB approval.