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Introduction to Producer Limited Company
Producer companies in India stand as unique corporate entities, registered under the Companies Act of 2013. Their core aim revolves around elevating the welfare of their members, typically engaged in agriculture, rural entrepreneurship, or primary goods production. These entities strive to foster collaboration, pool resources, and offer diverse benefits in agriculture and rural development.
Tax Benefits & Support for Farmer Producers
Farmer Producer Limited Company primarily serve Farmer Producer Members and extend tax advantages as follows:
- While Section 10(1) of the Income Tax Act of 1961 exempts agricultural income, specific tax exemptions for Producer Companies are not outlined.
- Farmers can establish Producer Limited Companies in alignment with the main objectives specified under the Companies Act, 2013, to avail tax benefits and exemptions.
- Income from the sale of grown produce is considered agricultural income under the Income Tax Act, 1961, and is entirely tax-free. However, further processing incurs taxation on 60% of the income.
- Reduced customs duty on agricultural equipment and parts imports benefits Producer Companies engaged in agricultural activities.
Financial Assistance
Farmer Producers can access support from the Small Farmers Agribusiness Consortium (SFAC), including:
- A Credit Guarantee Fund to mitigate credit risks for financial institutions lending to Farmer Producer Companies.
Matching equity grants of up to Rs. 10 Lac to augment borrowing capacity.
- Additionally, NABARD provides credit support for business operations and technical and managerial support.
Primary Objectives of Producer Companies
According to the Companies Act, 2013, Producer Companies focus on the following objectives:
- Production, harvesting, procurement, and marketing of primary produce.
- Processing, manufacturing, and supplying machinery or equipment to members.
- Providing education, technical services, and welfare measures to promote member interests.
- Generation and distribution of power, conservation of resources, and insurance services.
- Financing and other ancillary activities related to procurement and marketing.
Additional Requirements
Limited by Shares:
Producer Companies operate as companies limited by shares.
- Membership & Quorum in General Meetings:
- Formed by 10 or more individuals or a combination of producer institutions and individuals.
A quorum for General Meetings is set at 1/4th of the total members.
- Number of Directors & Minimum Quorum in Board Meetings:
- Requires a minimum of 5 and a maximum of 15 directors.
Board Meeting quorum is 1/3rd of the total strength, with a minimum of 3 directors.
- Company Secretary: Companies with an average annual turnover exceeding Rs. 5 crore must appoint a full-time Company Secretary.
- Conversion: Inter-state Co-operative Societies have the option to convert into a Producer Company.
- Voting Rights: Each member has one vote, with the Chairman having a casting vote in case of a tie.
Payment to Producer Company Limited Members
Producer Company members are compensated in the following ways:
a) Value for Produce: Determined by the Board and disbursed in cash, kind, or equity shares.
b) Limited Return: Members receive bonus shares based on their share capital contribution.
c) Patronage Bonus: Surplus funds are distributed among members based on their participation in business activities.
Post-Registration Compliances for Producer Company Limited
- Statutory Audit
- Tax Audit
- Income Tax Returns Filing
- Annual ROC Compliances
- Ongoing Corporate Secretarial Compliances
- Fulfillment of any other Compliances or Returns mandated by relevant Competent Authorities, if applicable
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In India, the Producer Company Incorporation may cost in a range between 45000 to 100000 the location of registered office, number of directors, amount of authorised capital etc. Sometimes the price may even go higher based on the government fee involved in the registration of Producer Company. com/producer-company-registrationPublic Limited Company registration(1) There is no fixed price or cost for registering a Public Limited Company in India. On an average for a company with 7 directors/ shareholders and minimum authorised capital of Rs. (3) The documents include the KYC documents of directors such as ID Proof, Address proof, PAN and Aadhar copies.
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Therefore, all of the following are collectively referred to as a Producer Company. As part of the formation and promotion of the 10,000 Farmer Producer Organization (FPO) Scheme, the Ministry of Agriculture and Farmers Welfare published New Guidelines for the Farmer Producer Organization. Additionally, the government offers equity grants and a credit guarantee fund to help FPOs. The New Guidelines for Farmer Producer Organizations are briefly discussed in this article (FPO). Click here to know more about the farmer producer company registration process
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Producer Company Registration
The aim of Producer Company to empower all the marginal and small-scale farmers in such a way to unlock their economies crisis and to educate them to use all the latest and new technologies to lead their life in a better and improved way.
Most of the farmers or producers in India are marginal or small-scale farmers owning less than 2 hectares of farmland.
Due to poor facilities and low production, the life of farmers is miserable.
Hence, consideration their miserable condition in mind, the Government of India aligned an expert committee, lead by Y.K.
Later in 2002, the expert committee brought a new concept named Producer Company Registration Online in India economy.
A company formed officially with the primary aim to improve the standard of farmers and agriculturists and it is named as a ‘Producer Company’.
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