Producer Company Registration

Producer Company Incorporation

A producer company is a group of farmers/agriculturalists for the betterment of their living standards and as a means to increase their collective bargaining capacity. We help to incorporate the producer company in India.
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What is the meaning of a Producer Company?

A producer company combines the best features of a cooperative society and a Private Limited Company, offering collective benefits to its member producers under a robust and definitive legal framework. Only business entities registered as Private Limited Companies are eligible for Producer Company registration in India. However, the names that these companies are incorporated with, shall end with the words “Producer Company Limited”. Individuals and institutions involved in Primary Production activities can come together and form a Producer Company in India.

Key decisions to be taken before starting a Producer Company?

  • What would the proposed business activities be?
  • What amount of capital must be invested?
  • What benefits will be offered to the members?
  • Who would be the first directors of the company?
  • What should be the name of the company?
  • What should be the registered address of the company?

Producer Company Incorporation Checklist

Businesses looking forward to registering as Producer Companies must first fulfill certain prerequisite conditions as prescribed under the Section 465 (1) of the Companies Act, 2013. These conditions are concerned with the number of members, number of directors, name, address, and capital of the company. A detailed list of all such legally mandatory conditions have been mentioned in the table below.

Procedure for Incorporation of Producer Company

A Producer Company gets registered as a Private Limited Company, and hence, the entire process of registering a Producer Company is similar to that of a Private Limited Company. The application is filled out by any director of the Company, and submitted to the Registrar of Companies, who verifies the details furnished in the application and the documents attached with it. Once the verification of the application is complete, the ROC shall issue the Certificate of incorporation in the name of the company.
STEP 1 – Documentation
You must present specific legal documents in order to apply for the incorporation of a producer limited company. The section below contains a list of every single document that is required for registration. You must make sure you have all of these documents before even starting the procedure for Producer company registration, and if you don’t, you must make arrangements for them as soon as you can.
STEP 2 – Name selection
A Producer Limited Company’s name needs to be distinctive and conveying of its brand and business activity. Additionally, a set of requirements that must be met to set up a Producer Limited Company have been laid down in the Companies Act, the Company (Incorporation) Rules, the Trademark Act, and the Names and Emblems Act. A company’s name cannot be the same as or similar to the name of an already-existing company, LLP, or applied or registered trademark. Read our article on requirements for name approval to receive a detailed insight.
STEP 3 – Name Approval and Reservation
Once you’ve decided on a legally valid name for the business, you must reserve it with the Registrar of Companies in order to stop other companies from using it without your permission or stealing it. All you have to do is use our name approval and reservation services, where we will not only search the validity of the names proposed by you, but also apply for its reservation in the RUN (Rserve Unique Name) or PART A of the SPICe+ applications.
STEP 4 – Filing of SPICe+ application
You can continue with a Producer Limited Company’s incorporation after approving its name. You must complete the online SPICe+ application found on the MCA’s official website in order to apply for the incorporation of the company. Part A of the SPICe+ application is used for reserving a name, and Part B is used for Producer Company Registration. Any director of the Producer Company may complete and sign the application before submitting it to the ROC, along with the required supporting documentation.
STEP 5 – Issue of Certificate of Incorporation
The ROC, after receiving the application for Producer Company registration, verifies all the details and documents furnished in it. Only after the ROC is satisfied with the authenticity of such details and documents, he shall register the Producer Limited Company, and issue a Certificate of Incorporation to the company as a conclusive proof of such registration. Additionally, the ROC also allots a Corporate Identification Number as the unique identity of the company.

Documents Required for Registering a Producer Company in India

The application for the registration of a Producer Company must be accompanied by the scanned copies of the documents prescribed under the Companies Act, 2013. These documents can be categorized into the documents of the members, documents of the company, and the documents of the premises where the business is being carried out. An elaborate list of such documents have been mentioned in the table below.
Documents of the Members
  1. Passport-size coloured photograph
  2. PAN Card
  3. Proof of Identity
  4. Proof of Registered
  5. Proof of Producer activity
Documents of the Premises
  1. Proof of Registered Address
  2. No Objection Certificate from the owner
  3. Rent Agreement / Property Documents
Legal Drafts
  1. Questionnaire For Company Registration
  2. Consent of Directors in Form DIR-2
  3. Specimen Signature of Directors
  4. Signed Subscriber Sheet

Frequently Asked Questions About Producer Company Registration

A Producer Company may, by special resolution, make donation or subscription to any institution or individual for the purposes of
  1. promoting the social and economic welfare of Producer Members or producers or general public, or
  2. promoting the mutual assistance principles among the members
Provided that the aggregate amount of all such donation and subscription in any financial year shall not exceed three per cent of the net profit of the Producer Company in the financial year immediately preceding the financial year in which the donation or subscription is to be made. Additionally, no producer company shall make any political donation to any political party or any person for a political purpose.
Producer Companies are companies that are directly or indirectly involved in the business of Primary Production. Broadly, such companies can be categorized into :
  1. Business involved in production, procurement, or manufacturing of Primary Produce
  2. Business involved in the marketing / promotion of primary produce
  3. Businesses involved in technical assistance to producers, like training and educating members or Research and Development activities
  4. Businesses that are exclusively financing primary production activities
  5. Businesses providing infrastructure support for primary business activities
Although a Producer Company is of the nature of a Private Limited Company where the maximum limit on the number of shareholders is 200, there is no such restriction or maximum limit on the number of members in a Producer Company. As far as the directors of Producer Companies are concerned, they cannot have more than 15 directors at a time, except in the case of an inter-State co-operative society incorporated as a Producer Company, where the company may have more than fifteen directors for a period of one year from the date of its incorporation as a Producer Company.
The objects of the Producer Company shall directly or indirectly relate to all or any of the following matters, namely production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of primary produce of the members or import of goods or services for the primary produce of the members.
The duration of the term of a director of a Producer Company must not be less than 1 year and must not exceed 5 years.
Yes, like a private limited company, it is mandatory for a Producer Company to maintain account books and get them audited internally, by a Chartered Accountant appointed in the company. Such audits shall be conducted at intervals specified in the articles of association of the company. The auditor of a Producer company shall be appointed every year at the annual general meeting of its shareholders.
It usually takes 20-25 days to register a Producer Company in India.

Subject to provisions in articles of association of a Producer Company, every Member shall initially receive only such value for the produce or products pooled and supplied, as the Board of Producer Company may determine, and the withheld price may be disbursed later in cash or in kind or by allotment of equity shares, in proportion to the produce supplied to the Producer Company during the financial year to such extent and in such manner and subject to such conditions as may be decided by the Board.

Every Member shall, on the share capital contributed, receive only a limited return, and surplus if any, remaining after the payment of limited return, may be disbursed as patronage bonus, amongst the members, in proportion to their participation in the business of the Producer Company, either in cash or by way of allotment of equity shares, or both, as may be decided by the Members at the general meeting of members.

The Income tax Act, 1961, does not provide any exclusive tax benefits that can be applicable to all producer companies in India. However, farmer tax exceptions have been provided for agricultural income of a producer company, earned from certain kinds of agricultural activities only.
A Producer Company shall have the liability of its members limited by the memorandum of association of the company, to the amount, if any, unpaid on the shares respectively held by them.
Only an inter-state co-operative society, the objects of which are not confined to a single state can be converted into a Producer Company.
The memorandum of association of every Producer Company shall state
  1. the name of the company with “Producer Company Limited” as the last words of the name of such Company
  2. the State in which the registered office of the Producer Company is to situate
  3. the main objects of the Producer Company among the many objects specified in section 581B of the Companies Act, 2013
  4. the names and addresses of the members
  5. the amount of share capital with which the Producer Company is to be registered and the capital subscribed by each member
  6. the names, addresses and occupations of the first directors
  7. the individual liabilities of the members
  8. in case of inter state co-operative societies, the states to whose territories their objects extend to.
Every Producer Company having an average annual turnover exceeding five crore rupees in each of three preceding consecutive financial years shall appoint a full-time company secretary. A failure to do so shall result in imposition of penalties on the defaulting company and its officers incharge for the appointment of the CS.
No, the shares of a Producer company cannot be transferred to entities other than another member of the same company after seeking an approval from the Board members, or the nominee of a member of the company after his death.
Every Member shall, within three months of his becoming a Member in the Producer Company, nominate, in the manner specified in articles of the company, a person to whom his shares in the Producer Company shall be transferred to in the event of his death. Such a person / nominee shall, on the death of the member, become entitled to all the rights of the deceased member and the Board of that Company shall transfer the shares of the deceased Member to his nominee. Provided that in a case where such a nominee is not a producer, the Board shall direct the surrender of shares together with special rights transferred to the nominee.
A Producer Company may, by special resolution, make donation or subscription to any institution or individual for the purposes of
  1. promoting the social and economic welfare of Producer Members or producers or general public, or
  2. promoting the mutual assistance principles among the members
Provided that the aggregate amount of all such donation and subscription in any financial year shall not exceed three per cent of the net profit of the Producer Company in the financial year immediately preceding the financial year in which the donation or subscription is to be made. Additionally, no producer company shall make any political donation to any political party or any person for a political purpose.

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