A Producer Company is a special category of company registered under the Companies Act, 2013, treated as a private limited company but specifically designed to empower farmers and agricultural producers. The core purpose of a producer company is to improve the standard of living of farmers, ensure sustainable income, and provide necessary support for their agricultural activities.

One key distinction: a producer company can never be converted into a public company, though it may be converted into a multi-state cooperative society.

Why Register as a Producer Company?

Agriculture is the backbone of India’s economy, yet farmers often face challenges in earning consistent profits. To address this, the Government of India introduced the concept of Producer Companies, backed by legislative support and economic incentives.

A committee formed in 2002 continues to work for the upliftment of farmers. These companies enjoy several tax benefits, including agriculture income exemptions under the Income Tax Act, 1961 (Section 10(1)). For example, while income from green tea production is only partially exempt, 60% of it qualifies for tax relief.

Key Features of Producer Companies

• Minimum Requirements:
  • Minimum 5 directors
  • Minimum 10 members (individual producers)
  • Minimum paid-up capital: ₹5,00,000
• Membership:
  Only producers (farmers, agriculturists, etc.) can become members.
• Share Capital & Liability:
  Equity share capital only, with limited liability for members.
• Unlimited Members:
  While there’s a minimum member requirement, there’s no upper cap on the number of members.
• Naming Convention:
  The company’s name must end with “Producer Company Limited.”

Benefits of Registering a Producer Company

1. Profit Sharing & Bonuses:
   Members are eligible for bonus shares and patronage bonuses based on their participation.
2. Tax Exemptions:
   Agricultural income is exempt from tax, as per Section 10(1) of the IT Act.
3. Financial Assistance:
   Producer companies can provide credit facilities, loans, and advances to members. They can also access funding through institutions like NABARD.
4. Limited Liability:
   Personal assets of members are protected in case of financial distress.
5. Separate Legal Entity:
   The company has a distinct legal identity, separate from its members.
6. Property Ownership:
   A producer company can own property in its name and offer loans at reasonable rates.
7. Ease of Management:
   Governance is straightforward with four board meetings a year and flexibility to make managerial changes.
8. Enhanced Credibility:
   Government recognition lends credibility, making it easier to access benefits like subsidies, pensions, and scholarships.
9. Holistic Development:
   The company can offer education, consultancy, R&D, and technical services to uplift members.

Activities Permitted Under a Producer Company

A producer company may engage in the following:

• Procurement, harvesting, handling, marketing, selling, and exporting primary produce
• Import of goods/services for members
• Processing: canning, drying, preserving, packaging, etc.
• Training, consultancy, R&D, and technical services
• Mutual assistance activities and welfare services

Types of Producer Companies

A producer company may operate in areas such as:

• Production Business
• Marketing Business
• Technical Services
• Infrastructure Development
• Financial Services

Requirements for Registration

• Minimum 5 directors and 10 members
• Minimum paid-up share capital of ₹5 lakhs
• Cannot be registered as a public limited company
• Equity share capital only
• Minimum four board meetings per year

Step-by-Step Registration Process

1. Obtain DIN & DSC:
   Directors must acquire the Director Identification Number (DIN) and Digital Signature Certificate (DSC).
2. Name Reservation:
   File an application for name approval with the Registrar of Companies (ROC).
3. Incorporation Filing:
   After name approval, submit incorporation documents via the SPICe+ form, along with prescribed fees.
4. Certificate of Incorporation:
   Once verified, the ROC will issue the Certificate of Incorporation.

Documents Required for Registration

For Directors & Members:

• PAN card copy
• Identity proof (Voter ID/Passport/Driver’s License)
• Latest bank statement
• Passport-sized photographs

For Registered Office:

• Electricity or gas bill
• Bank statement
• Rental agreement (if applicable)
• No Objection Certificate (NOC) from property owner
• Sale deed or property ownership document