Overview producer company registration

India is a growing economy where more than 62% of the population directly or indirectly depends upon agricultural activities for a living. The agricultural sector is the backbone of the growing Indian economy. However, the farmers have to struggle a lot for their profit share and are deprived of advanced farming technologies and digitization due to a lack of knowledge and shortage of funds.

To address these problems, the Indian government came up with an expert committee headed by Y.K. Alagh to look up into this matter. In 2002 the expert committee brought the concept of a producer company in Indian society. Since then, the status of farmers has improved and the government is coming with various measures to improve the farmer’s status.

What is a producer company?

A producer company is a legally recognized body of farmers to improve their standard of living, income, and profitability. As per the company’s Act, 1956, a producer company can be incorporated by 10 (or more) individuals each of them being a producer or 2 (more) producer institutions or by a combination of both (10 individuals and 2 producer institutions) having any of the following business objectives:

Production, grading, procurement, harvesting, pooling, handling, marketing selling, or export of the produced goods.

Rules and regulations for easy availability of loans and credit

As the producer companies consist of members involved in primary production. Hence, they are always in need of financial support from time to time. And to fulfill this aim special provisions are made to sanction loans to the members of the producer company through

Credit facility : This facility will be given to a member of the producer company for six months or less than that.

Loans and advances : Loans and advances will be given to the members against a security repayable within seven years from the date of disbursement.

NABARD loan : NABARD stands for the national bank for agricultural and rural development that provides loans to the production companies for meeting their financial requirements. In 2011, the organization’s development fund of Rs 50 crores was set up by the NABARD out of its operating surplus.

Authorized activities performed by the farmer producer company

According to the company’s Act 1956, the following activities are authorized for a producer company

  • Production, processing, harvesting, pooling, marketing, selling, and export of the agricultural produce
  • Processing (including preserving, brewing, drying, distilling, canning, and packaging) of the crops
  • Manufacturing and selling other types of equipment to its members
  • Education and mutual assistance to the lower class farmers who are deprived of newer technologies. So that they can grow better crops
  • Render technical services, consultancy services, training, and R&D to promote the member’s interests.
  • Generating, transmitting, and distributing power for better utilization of land and water resources.
  • Insurance to their members and their produce
  • Any other activity which promotes mutual assistance among the members in a different manner

Eligibility criteria for registration of a producer company

  1. Any 10 members can join together to form a producer company
  2. Two or more institutes can combine for incorporating a producer company or a combination of 10 members and two institutes.
  3. There must be a minimum of 5 directors and a maximum of 15 directors
  4. The minimum paid-up capital of 5lakh is required to register a company
  5. There is no limit for the maximum number of members
  6. It can never be converted into a public company
  7. The company must conduct an annual general meeting (AGM) once a year
  8. All the members of the company must be primary producers

Benefits of a producer company

Limited liability

Like public companies, the principle of limited liability would apply to producer companies. The liability of the members and directors is limited to a specific amount only. In case of any losses or debts, the creditors cannot go after the personal assets of the members.

Separate legal entity

The registered producer company is considered a separate legal entity that can sell or purchase and in its name.

Greater credibility

By registering as a producer company enjoys additional benefits such as increased transparency and credibility. Apart from that, the public will find it more credible to invest.

Ease of management

As compared to the unregistered companies these companies can make the desired changes in the board of management by filing simple forms to the registrar of companies (ROC).

Ability to accept a deposit

Producer companies can accept any form of deposits like fixed deposits and recurring deposits.

Documents required for producer company registration

  • PAN card of all the members and directors
  • ID proof (voter ID, Aadhaar or driving license) of director and members
  • Latest bank statement
  • Passport-sized photograph of all shareholders and directors
  • Utility bills (electricity bill or telephone bill) of the premises
  • Rent agreement and NOC (No objection certificate) from the owner
  • Sale deed in case the property is owned

Procedure for producer company registration

The registration process for a producer company is similar to a private ltd company.

The following are the steps involved in a registration producer company.

Applying for DSC and DIN

The first step is to obtain a digital signature certificate (DSC) and digital identification number (DIN). The DSC is used to sign the documents digitally and authorize them. Further, DIN is required for all the directors. You can easily apply for DIN in the SPICe form.

Name approval

The next step is applying for the company’s name from the registrar of the company (ROC). This can be done by filing the proposed name in FROM -1A. After applying ROC will verify the uniqueness of the name and approve it.

Drafting the Memorandum of Association (MoA) and Article of Association (AoA)

After approval of the name, the application for incorporation has to be filled in the SPICe form along with all the necessary documents such as MoA and AoA. An affidavit must be provided by members for this purpose.

Filing other documents

Other important documents like the statutory declaration in form-1declararing compliance and incidental matters regarding company incorporation and affidavit signed by the subscribers.

Incorporation certificate

After verifying all the documents and applications, the certificate of incorporation will be issued by the registrar of the company (ROC).


Please fill this form to start your Business Journey with us

Call Now