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What is a Producer Company

The main objective of the producer company is to facilitate the formation of co-operative business as companies and to make it possible to convert existing co-operative business into companies.

The objects given under section 581B are as follows:

“The objects of the Producer Company shall relate to all or any of the following matters, namely: (as given in the law)

  1. Production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of primary production of the Members or import of goods or services for their benefit, provided that the Producer Company may carry on any of the activities specified in this clause either by itself or through other institution.
  2. Processing including preserving, drying, distilling, brewing, vinting, canning, and packaging of the produce of its Members
  3. Manufacture, sale or supply of machinery, equipment or consumables mainly to its Members.
  4. Providing education on the mutual assistance principles, to its Members and others.
  5. Rendering technical services, consultancy services, training, research and development and all other activities for the promotion of the interests of its Members.
  6. Generation, transmission, and distribution of power, revitalization of land and water resources, their use, conservation and communication relatable to primary produce.
  7. Insurance of producers or their primary produce.
  8. Promoting techniques of mutuality and mutual assistance.
  9. Welfare measures or facilities for the benefit of Members as may be decided by the Board.
  10. Any other activity, ancillary or incidental to any of the activities referred to in clauses (a) to (i) or other activities which may promote the principles of mutuality and mutual assistance amongst the Members in any other manner.
  11. Financing of procurement, processing, marketing or other activities specified in clauses (a) to (j) which include extending of credit facilities or any other financial services to its Members.”

Pre-Incorporation Checklist

  • 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.

Procedure and Documentation required to incorporate a Producer Company

  1. The first step is to obtain a Digital Signature Certificate (DSC) by all the directors. Documents required to obtain a DSC are:
    • PAN Card of the Director
    • Aadhaar Card of the Director
    • Photo
    • Email Id
    • Contact Number
  2. After obtaining the DSC, the next step is to obtain the Director Identification Number (DIN) by filing form DIR – 3 along with a self-attested Identity proof, address proof, and a photo
  3. Then the name of the production company is to be finalized. For that, Form INC – 1 to the Registrar of Companies (ROC) is to be filed by giving 6 names in the order of preference along with the significance of the names. The name shall have the words PRODUCER COMPANY at the end
  4. After the name is approved by the ROC, the following documents are to be prepared:
    • The Memorandum of Association is to be drafted by incorporating all the objects that the company intends to follow
    • The Articles of Association is to be drafted containing all the by-laws of the company
    • 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 of the proposed company declaring their legal competency to act as 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
    • The directors will give their consent to act in the Form DIR – 2 and details in DIR – 8
  5. All the drafted documents will be attached to Form INC – 7, INC – 22 and DIR – 12 and uploaded to the ROC website.
    On proper verification, the ROC will issue a Certificate of Incorporation and the company can start its business operations.

This form of establishment promotes the primary producer who is in a low-income group to optimize their income with collective bargaining and by selling the products directly to consumers.

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