Producer Company Registration in India

A Producer Company Registration is a kind of organization where a group of primary producers i.e., farmers or non-farmers comes together with an object to trade their products locally and internationally. The producer company is registered as a private company. The function of the producer company Registration is procuring, harvesting, grading, producing, pooling, marketing, exporting, and importing of goods. Producer Company Registration functions under the Ministry of Corporate Affairs and it is governed by the Companies Act 2013.

Features of the Producer Company

• A producer company’s liability is limited to the number of unpaid shares.
• Producer's company share capital consists of only equity shares. These shares can be easily transferred and are not traded publicly.
• The company's name must end with 'Producer Company Limited'.
• Every member of the organization has the right to vote.
• The producer company must conduct annual general meetings every year.
• A company must have a minimum of 5 directors and the maximum can be 15.
• The members of the producer company Registration should appoint a full-time CEO.
• The company must conduct a board meeting every 3 months and at least 4 times a year.
• The company must maintain a general reserve every year.

Benefits of Registration

• These companies provide assistance to the farmers.
• The members of the producer company will receive value for the products given in the form of cash, kind, or shares, plus bonus shares on the shares they hold.
• The surplus may be given as a patronage bonus (bonus given to members according to their active participation).
• Members can easily receive credit facilities for a period not exceeding 6 months for business purposes only.
• Obtaining loans and advances are made easier for farmers here, for a period not exceeding 7 years.
• SFAC, NABARD, the Department of Government, and domestic/aid officers have set up financial support for this kind of company (e.g., NABARD's ₹ 50-crore PODF).
• Fully exempted from tax if the farmer's producer company has a 100 crore turnover annually.

Producer Company vs. Cooperative Society

Although a producer company and a cooperative society share similarities (ensuring the interest of producers/poor people), they perform differently:

• Governing Law: Producer Companies are governed by the Companies Act 2013, while cooperatives are governed by the Cooperative Society Act.
• Jurisdiction: Producer Companies can operate anywhere in India; cooperative societies are usually restricted to certain areas.
• Shares: Shares of a producer company are non-tradable but transferrable; cooperative shares are strictly non-transferrable.
• Objectives: Producer companies can have multiple objectives; cooperatives generally have one.
• Voting Power: In producer companies, members hold voting power; in cooperatives, the Registrar holds significant power.
• Dividends: Producer company dividends are proportionate to the volume of business; cooperative dividends correspond to shares.