Producer Company Registration – Star Business Mantra

Producer Company Registration in India

Producer Company is a special business Model. The term “Producer Company” indicates that only certain categories of persons, known as “primary producers,” can become shareholders in the Producer Company. Primary Producer means those persons who are engaged in primary agriculture activities such as:

Animal Husbandry: breeding or caring for animals on the farm.
Horticulture: Producing and growing plants, fruits, or vegetables.
Floriculture: Growing Flowers.
Pisciculture: Fish farming.
Viticulture: Producing grapes.
Forestry: Preserving forest.
Re-vegetation: Rebuilding or replanting disturbed land.
Bee raising: keep bees to collect honey.

Other businesses like handloom, handicraft, etc. can be the producer company’s activities. Producer companies are the preferred choice of business model amongst farmers because producer company areas of operations are not restricted to a particular state as in the case of a Cooperative society. Moreover, it has lesser government intervention in a running company and can also access financial institutions for raising money for day-to-day expenses requirements.

Objective Of A Producer Company

The varied objectives to establish a Producer Company in India can be on the following matters:

Production, harvest, procurement, grading, pooling, handling, marketing, selling, and export of primary produce of the Members.
For processing, including preserving, drying, distilling, brewing, venting, canning, and packaging of the produce of its members.
Manufacture, sell or supply machinery, equipment, or consumables mainly to its members.
Provide education on mutual assistance principles to its members and others.
Render 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, land, and water resources revitalization, use, conservation, and communications relatable to primary produce.
Insurance of producers or their primary produce.
Promoting techniques of mutuality and mutual assistance.
Welfare measures or facilities decided by the Board to benefit members.
Any other activity, ancillary or incidental to any of the activities mentioned above, may promote the principles of mutuality and mutual assistance amongst the members.
Financing procurement, processing, marketing, or other activities include extending credit facilities or other financial services to its members.
Every Producer Company must deal primarily with the produce of its active members for carrying out any of its above-specified objectives.

Features of Producer Company

There are some unique features of the Producer Companies:

Producer companies are private limited companies.
Though it is a private limited company, its members can be more than 50 members
A minimum of 10 or more individuals, producers, or any two or more producer companies, or a combination thereof, are required to form a Producer Company.
Producer Company shall have at least 5 but not more than 15 directors.
Conversion is not possible in any other business structure, such as Pvt. Limited company, Public Limited Company, LLP, etc.
Producer Company shall have the words “Producer Company Limited” at the end of its name. For example, Vanilla India Producer Company Limited.
The Minimum Paid-up capital must be Rs. 5 lakh.

Voting rights in the producer company are aligned with the principle of “one man-one vote,” regardless of the producer companies’ shareholding

Benefits of a Producer Company

Why Producer Company?

Producer companies can take advantage of various central and state government schemes like “Rashtriya Krishi Vikas Yojana funds, National Food Security Mission,” and so on.
Equity Grant Scheme: To raise the capital base, a grant of upto Rs. 10 lakh is provided to each Producer Company.
Credit Guarantee Fund (CGF): This will cover 85% of the loans given by banks to Producer Companies.

Eligibility Criteria for Producer Company Registration in India

Membership and Capital requirements:

The following are the membership requirement that must be observed by the applicant to register itself as a Producer Company under the Companies Act of 2013:
1. A minimum of five directors are allowed in a Producer company.
2. A minimum of ten members are allowed in a Producer company.
3. A minimum of two institutions can come together to form a Producer company.
4. A minimum capital of five lakh rupees is required for Producer company incorporation.
5. A Producer company cannot be transformed into a public limited company.

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