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Incorporating a Producer Company in India: Demystifying the Process and Provisions

Demystifying the Process and Provisions of Incorporating a Producer Company in India


In India, the concept of producer companies, also known as farmer producer companies, has gained prominence as a mechanism to empower farmers and primary producers while providing them with the benefits of a corporate entity. Combining the features of a cooperative society and a private limited company, producer companies offer a robust legal framework to facilitate collective benefits for their member producers. This article aims to elucidate the intricacies of incorporating a producer company in India, delineating the process, applicable legal provisions, and essential considerations.

Understanding Producer Companies:

Producer companies, as defined under Section 378A(1) of the Companies Act, 2013, are body corporates registered with the specific objective of promoting the interests of their members engaged in primary production activities. These entities can consist of ten or more individual producers, two or more producer institutions, or a combination thereof. The fundamental aim of producer companies is to improve the standard of living and ensure the sustainability of earnings, assets, and profits for their members, primarily farmers and agriculturists.

Legal Framework and Applicable Provisions:

The registration and functioning of producer companies are governed by Sections 378A to 378ZU of the Companies Act, 2013, along with the Producer Companies Rules, 2021. Section 378C delineates the constitution of producer companies, specifying the eligibility criteria for membership and the minimum number of members required for incorporation. Notably, producer companies must bear the suffix “PRODUCER COMPANY LIMITED” in their names, as mandated by Section 378C(5) of the Act.

Eligible Activities for Incorporating a Producer Companies:

Producer companies are authorized to engage in a diverse range of activities related to primary production, marketing, processing, and export of agricultural produce. These activities include production, harvesting, processing, procurement, grading, pooling, handling, marketing, selling, and export of primary produce of the members. Additionally, producer companies can render technical services, provide consultancy, training, research, and development, and offer financial services for the benefit of their members.

Incorporating Process of Producer Companies:

The process of incorporating a producer company entails several procedural steps, as outlined under the Companies Act, 2013. The following sections elucidate the detailed procedure for the incorporation of a producer company in India:

Step 1: Name Reservation

The first step in incorporating a producer company involves reserving a unique name for the entity. Applicants can apply for name reservation through the MCA portal using the web service available for this purpose. It is essential to ensure that the proposed name complies with the provisions of the Companies Act and does not infringe any existing trademarks. Upon approval, the name is reserved for a specified period, typically 20 days, extendable by paying additional fees.

Step 2: Preparation of Documents

Once the name is approved, the applicant must prepare the necessary documents for incorporation, including the Memorandum of Association (MOA) and Articles of Association (AOA). Additionally, documents such as proof of identity, address, and digital signatures of subscribers and directors are required. It is imperative to obtain a farmer certificate from the local authority to establish the eligibility of subscribers as farmers.

Step 3: Fill Information in Spice+ Part B

The next step involves filling out the Spice+ Part B form on the MCA portal, providing all relevant information related to the proposed company. This web-based form allows applicants to input details such as the registered office address, director details, and main business activities. Additionally, applicants must attach the MOA, AOA, and other requisite documents in electronic format.

Step 4: Submission of Linked Forms

After completing the Spice+ Part B form and attaching the necessary documents, applicants must submit the linked forms, including AGILE PRO for GST registration and bank account opening. The information provided in these forms should align with the details furnished in Spice+ Part B to ensure consistency and accuracy.

Step 5: Filing of Forms with MCA

Once all forms are duly filled, digitally signed, and linked, they can be uploaded on the MCA portal for submission. Applicants must pay the prescribed fees for each form and ensure compliance with regulatory requirements. Upon successful submission, the Registrar of Companies (ROC) reviews the application for approval.

Step 6: Certificate of Incorporation

Upon approval of the application, the ROC issues the Certificate of Incorporation in Form INC-11, signifying the legal establishment of the producer company. The certificate contains the permanent account number (PAN) of the company, as issued by the Income Tax Department. Subsequently, the company can commence its operations and pursue its objectives in accordance with the law.

Key Considerations and Compliance Requirements for Incorporating a Producer Company

Incorporating a producer company entails adherence to various legal and regulatory requirements, as prescribed under the Companies Act, 2013, and other applicable laws. Some essential considerations and compliance requirements include:

  • Eligibility Criteria: All subscribers and directors of the producer company must qualify as farmers or primary producers, as per the definition provided under the Act.
  • Minimum Paid-up Capital: The producer company must have a minimum paid-up capital of Rs. 5 lakhs to complete the incorporation process.
  • Directorship and Shareholding: The company must have at least five directors, who should be individuals, and there is no restriction on the maximum number of members.
  • Digital Signature and DIN: All subscribers and directors must possess a Digital Signature Certificate (DSC) for filing incorporation forms, and Directors Identification Number (DIN) is mandatory for directors.
  • Compliance with GST, EPFO, and ESIC: Producer companies are required to obtain GST registration and comply with the provisions of EPFO and ESIC for employees’ welfare.
  • Continuous Compliance: Post-incorporation, producer companies must ensure ongoing compliance with statutory requirements, including filing of annual returns, maintenance of books of accounts, and adherence to corporate governance norms.

Conclusion: Empowering Farmers through Producer Company Incorporation

In conclusion, the incorporation of a producer company in India necessitates meticulous planning, compliance with legal provisions, and adherence to procedural requirements. By harnessing the benefits of corporate structure and collective action, producer companies play a pivotal role in empowering farmers and primary producers, thereby contributing to the socio-economic development of rural communities. Through a streamlined incorporation process and robust regulatory framework, producer companies can effectively fulfill their objectives of enhancing the livelihoods and prosperity of their members while contributing to the growth of the agricultural sector.



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