Producer Company

A Producer Company is a group of people engaged in the production of primary produce or having one or more objectives relating to the primary produce.A group of ten/more people or two/more producer institutions or a combination of ten/more individuals and producer institutions can register as a Producer Company provided they:

Deal with primary produce of its members.Primary Produce means:

  • Produce of farmers, arising from agriculture (including animal husbandry, horticulture, floriculture, pisciculture, viticulture, forestry, forest products, re-vegetation, bee raising and farming plantation products), or from any other primary activity or service which promotes the interest of the farmers or consumers; or
  • Produce of persons engaged in handloom, handicraft and other cottage industries;
  • Any products resulting from any of the above activities, including by-products of such products;
  • Any product resulting from an ancillary activity that would assist or promote any of the aforesaid activities or anything ancillary thereto;
  • Any activity which is intended to increase the production of anything referred to above or to improve the quality thereof

Engage in any of the following objects:

  • Production, procurement, harvesting, grading, poling, handling, marketing, selling, export of primary produce of the Members or import of goods or services for their benefit; (these can be undertaken by the Producer Company either by itself or through any other institution)
  • Processing including preserving, drying, distilling, brewing, venting, canning and packaging of produce of its members;
  • Manufacture, sale or supply of machinery, equipment or consummables mainly to its members;
  • Providing education on mutual assistance principles to its members and others;
  • Rendering technical services, consultancy services, training, research and development and all other activities for the promotion of the interests of its members;
  • Generation, transmission or distribution of power, revitalization of land and water resources, their use, conservation and communication relatable to primary produce;
  • Insurance of producers or their primary produce;
  • Promoting techniques of mutuality and mutual assistance;
  • Welfare measures or facilities for the benefit of the members as may be decided by the Board;
  • Any other activity, ancillary or incidental to any of the activities referred to above or other activities which may promote the principles of mutuality and mutual assistance among its members in any other manner
  • Financing of procurement, processing , marketing or other activities specified above which include extending of credit facilities or any other financial services to its members

Salient features of Producer Companies

  • A Producer Company can have only equity share capital
  • The minimum paid-up capital required for incorporating a Producer Company is Rupees Five Lakhs only
  • Minimum ten individuals or two producer institutions or any combination of ten individuals and producer institutions are required for forming a Producer Company.
  • There is no restriction on the maximum number of members of a Producer Company
  • Minimum five directors are required for a Producer Company
  • A Producer Company can have a maximum of fifteen directors
  • The tenure of the directors of a Producer Company shall range from one year to five years subject to the provisions made in the Articles of Association in respect thereof
  • The first directors should be elected by the subscribers to the memorandum and articles of association within ninety days from the date of registration
  • The directors other than the first directors shall be elected or appointed by the members in their Annual General Meeting
  • The Producer Company can under no circumstances become a deemed public company
  • In case of Producer Company comprising only of individual members or combination of individual members and producer institutions, then the voting rights shall be based on one vote per member
  • In case of Producer Company consisting only of producer institutions, then the voting rights shall be based on the participation in the business of the Producer Company in the previous year.
  • The Producer company can restrict the voting rights to only its active members provided it is authorized by its Articles of Association
  • The Board of Directors of the Producer Company should meet at least one in every three months and at least four such meetings should be held in every year
  • The First annual general meeting of the Producer Company should be held within ninety days from the date of its registration
  • A Producer Company is required to appoint a whole-time secretary if its average annual turnover exceeds Rupees Five Crores in each of the three consecutive financial years
  • The maximum amount of dividend (limited return) that can be paid by a Producer Company is determined by its Articles of Association.

Benefits available to the members of a Producer Company

  • Pooling of produce which enables the members to have better bargaining position in the market
  • Elimination of intermediaries resulting in reduced costs and enhancement of returns
  • Development of greater command over domain knowledge in the produce, ultimately leading to enhancement of quality, productivity and returns
  • Aggregation of demand for inputs enabling bulk purchases resulting in availment of greater discounts
  • Producers have the option to partner with corporate entities for floating producer companies without losing control due to the rule of one member one vote
  • Acquisition of better technology resulting in enhanced quality and productivity
  • Timely and easy availability of inputs