Know more about Producer Company

Producer Company

The Companies Act introduces many forms of companies. There are Private Limited Company, Public Limited Company, Section 8 company, One person company and so on. All these companies have their own features, requirements, advantages, and disadvantages. One such company that is introduced in The Act is the 'Producer Company'. The concept was first introduced in 2002. The agriculture sector, especially in India, is given high importance from a very long time. Despite the importance that was and is still given to them, a large number of farmers committed suicide due to several problems faced by them in the infamous time period of 1995 to 2005. The introduction of Producer Company can thus, be seen as one of the solutions adopted by the Indian Government to stop this problem. There were many issues that were raised by the farmers. Their expectations from the agro sector were not up to the par. Thus, producer companies were given a special place in The Companies Act. Below, producer company is discussed in detail along with its features and need.

In a producer company, only a person who is associated with primary production can take part in the ownership of such a company. All members must be primary producers and thus the name is Producer Company. They provided limited liability and are limited by share capital. Primary producers can be broadly understood as those related directly to agriculture. It includes animal husbandry, floriculture, horticulture, forestry, re-vegetation, and viticulture. Even people included in handicrafts, handlooms, and other cottage industries are included in this category.

In order to register a producer company, you need ten members that are producers. A producer company (or producer institution) can be a member of another producer company also. They provide limited liability to their members. Any two producer institutions can also form a producer company together. A minimum of five directors is needed for the incorporation of such a company. A paid up share capital of five lakhs is another requirement while incorporating a producer company. These companies are required to work for their benefits. That is, for the benefit of their members. Members are provided with a value, decided by the directors of the company, to start or continue to work in better economic conditions. Maintaining a reserve is compulsory for such companies and are used in times of need by members specifically. However, if a company faces any kind of financial crisis, all members and directors are required to support the company by backing it up.

They work similarly to that of Private Limited companies with minor differences. Producer companies were introduced for the well being of all those that are related to the agriculture sector of our nation. Agriculture is essential and forms a very vital part of a nation. Therefore, the well-being of farmers and everyone associated with this particular sector are the responsibility of The Government. Producer companies can help all agriculturists to become entrepreneurs and help them grow their business widely. Companies provide members with useful advice as well as resources, depending upon their objectives and Articles of Association.  The companies have to register themselves with the Registrar of Companies. We, at LegalRaasta, can help you with Producer Company registration.

This article has been contributed by Simmi Setia, Content Writer at LegalRaasta, an online portal for GST Software, GST Return Filing, GST Registration, Section 8 Company Registration, Nidhi Company Registration, IEC Registration, Fssai License, File ITR Online.