The concept of Producer Company was introduced in India way back in 2002, keeping in mind the objective of channelizing the agricultural activities as well as policy changes and technological advancements. The aim of the Producer Company was to bring in better governance and allow the cooperatives to function under the Ministry of Corporate affairs as a corporate entity.
What is a Producer Company?
According to the Companies Act, the Producer Company can be defined as a company that allows the farmers’ cooperative to function as a corporate entity under the Ministry of Corporate Act.
The Companies Act 1956 states that the main objective of the producer company is related to the following or any one of this:
- Import/Export of primary produce
These activities of the Producer Company can be carried through separate entities or all by themselves.
- Providing education to its members and others on mutual assistance principles.
- Processing includes preserving, brewing, distilling, canning, vinting as well as packaging the produce of its members.
- Offering consultancy services, technical services, development and training research and other activities that promotes the interests of its members.
- Generation, distribution and transmission of power, revitalisation of water and land resources, their conservation, their use and communication relatable to primary produce.
- Insurance of their producers and their primary use.
- Fostering techniques of mutual assistance and mutuality
- Facilities and welfare measures for the benefit of people.
- Marketing, processing or financing of procurement that includes the extension of credit facilities for its members.
Registration of Producer Company
The formation of a Producer Company requires ten or more individuals each of them needs to be a producer. It can also be formed by two or more producer institutions or a combination of ten or more individuals or producer institutions.
Registration of a Producer Company is a matter of five steps.
Step 1: Obtain a Director’s Identification number and digital Signature Certificate from all the directors with self-attested copies of documents such as the Aadhaar card, PAN and contact details.
Step 2: File the proposed name of your company in FORM-1A with the prescribed fee and the RoC of the respective state. Once the name is available, the ROC informs of the availability of the name.
Step 3: To incorporate the objects of the company and the amount of share capital, some necessary documents are required to be drafted like the MoA. AoA is needed to contain the by-laws of the company
Step 4: Filling other documents such as the Statutory declaration of the FORM-1 declaring compliance of all incidental matters regarding the formation of companies and the affidavit signed by the subscribers of a proposed company.
Step 5: In the final stage, a certificate will be issued after which the company will become a corporate body and act full-fledged like a private limited company. Although it can become a public limited company under any circumstances.
- Members can get bonus shares in proportion to the amount held.
- Members of the producer company are also eligible to get the financial assistance by way of credit facility for a period that does not exceed six months.
- Loans and advances against securities that could be secured as specified in articles upon the condition of repayment within a period of three months and not more than seven years.
Producer Companies have a minimum of five directors. The figure can go up to a limit of fifteen at maximum. These directors need to be elected within ninety days of registering the company. The directors are usually appointed by the members of the Annual General Meeting. The first Annual General Meeting is conducted within ninety days from the days of incorporation. In order to start a producer company that deals with breakaway lanyards you must keep this in consideration.