Producer Company Registration in Kochi & Calicut

Agriculture plays an important role in our national economy and livelihood of more than 55% population of our country is dependent on agriculture and allied activities. However, there weren’t any successful organized business formats that could pass the benefits to farmers due to several reasons. Producer Company format overcome all the structural limitations of Cooperative Societies and enable and provide a good platform to those who can take the leadership to a group of farmers with bona fide business intention and allows to pass the benefits to the farmers while the promoters also enjoy for their time and efforts. 

A producer company is a legally recognized body of farmers/ agriculturists with the purpose to improvise the standard of their living, by ensuring a good status of their available support, incomes and profitability. It shall carry on activities as mentioned in section 581B of Companies Act 1956 and shall have the objective of including but not limited to production, harvesting, procurement, grading, pooling, handling, marketing, selling, the export of primary produce of the Members or import of goods or services for their benefit and Financing of procurement, processing, marketing or other activities specified in the Act. A producer company operates under the regulatory framework that applies to companies, which is distinctly different from that of the cooperatives, which was seen as arbitrary and corrupt

Features

• Any 10 or more producers (Individuals) can join together to form a production company but there is no upper limit on the number of members.
• Or, any 2 or more producer institutions can form a producer company.
• A minimum capital of Rs. 500,000 is required to incorporate a producer company.
• There should be minimum 5 directors (maximum of 15) in a producer company.
• It can never be converted into a public company however it can be converted into a multi-state co-operative society.

Steps for Registration procedure 

The Producer Company Registration is identical to that of a private Limited Company. The first step includes the application for obtaining the Digital Signature (DSC) and Director Identification Number (DIN) .The next step is to file a name reservation application with the Registrar of Companies (ROC). It is mandatory that the company name must end with the words “Producer Limited Company”. Corresponding to the approval of all the above, all the documents in the prescribed format and an application for incorporation is to be filed. Once the Registrar is satisfied with the documentation, the approval shall be granted and a Certificate of Incorporation shall be issued.

Documents Required for Registration 

• PAN Card of the Director 
• Aadhar Card of the Director 
• Passport sized photographs 
• A declaration by a professional has to be drafted in the format of form INC – 8
• An affidavit has to be signed by all the subscribers 
• A utility bill and a NOC have to be taken from the owner whose address is to be used as the registered office of the company. If it is not owned, a lease agreement will be attached to the form

Benefits for Producer Companies

The following are the benefits enjoyed by a Producer Company: -

• The members of the producer company initially will receive the value for the produce pooled and supplied as determined by the directors. This amount will be given out later in the form of cash/ kind/ equity shares.
• The members of the producer company will be entitled to get bonus shares in the same proportion to the shares held by them.
• The surplus (after providing provision for payment of limited return and reserves) may be given as patronage bonus to the members of the producer company.

A Producer Company can provide financial assistance to its members through: -

• Credit facility: This is available to any member for a period not exceeding six months (such facility must be in connection with the business of the Company).
• Loans and advances: These are provided to the producer member against security, repayable within a period not exceeding seven years from the date of disbursement of such loans or advances.
• NABARD Loan: NABARD provides support and financial assistance to meet the needs of Producer Companies. 

The Income Tax Act does not specify any specific tax benefit, which essentially provides special tax benefits or exemptions to producer companies by its definition. But subject to the agricultural activity carried out by the producer company, certain tax benefits and exemption can be availed.