Producer Company

A Producer Company is a unique corporate body delineated under section 581B of the Companies Act, 1956. It's structured to facilitate activities related to various agricultural, post-harvest processing, and primary production realms.

Objectives and Activities

Producer Companies aim at a range of objectives including but not limited to:

• Production and harvesting
• Procurement and grading
• Pooling and handling
• Marketing, selling, and import-export of primary produce

Such a company can be formed by either:

• Ten or more individual producers
• At least two producer organizations
• A mix of individuals and producer institutions exceeding ten members

Upon meeting specific standards and submitting the required documents, the registrar authenticates the company's formation by issuing an incorporation certificate within a month.

The essential nature of a Producer Company revolves around catering to the post-harvest and agricultural requirements of its members. It's designed to aid in various stages like production, grading, pooling, handling, selling, and marketing of the primary products generated by its member producers.

Significance of Producer Companies

Producer Companies are instrumental for the small and marginal farmers in India, which constitute about 85% of the farming community. These farmers usually own lands less than 2 acres, making it challenging for them to leverage modern technologies and practices. The establishment of producer companies offers an organized platform for farmers, enhancing their socio-economic status. The very essence of these companies is to uplift farmers by orchestrating them into agricultural groups, further organized as producer companies.

Membership and Governance

Every member in a producer company has a singular voting right, irrespective of their capital contribution. Shares of such companies are exclusive to the members and are non-transferrable. Governance in these companies demands a minimum of five directors, but it shouldn't exceed fifteen. Notably, producer entities or a combo of two such entities can initiate a producer company.

Core Activities of a Producer Company

Producer Companies are multifaceted, engaging in a plethora of activities:

• Educating members about mutual assistance principles
• Processing, which encompasses preserving, packing, brewing, and more
• Supplying machinery, equipment, and other essentials to its members
• Offering consultancy services, R&D, and technical support
• Generating and distributing electricity
• Financing, marketing, and providing credit facilities to its members
• Insuring the primary product and the producer
• Promoting mutual assistance methodologies

Benefits of Registering a Producer Company

Registering a producer company comes with a myriad of advantages:

• Simplified management through easy modification of the Board of Management
• Legal entity status granting broad legal powers
• Ability to acquire, own, and transfer property
• Increased credibility compared to non-registered entities
• Continuous existence irrespective of member changes

Prerequisites for Producer Company Registration

Registration of a producer company mandates certain criteria:

• Formation can involve more than two institutions, over ten individuals, or a mix of both
• Board governance should range between 5 to 15 directors
• At least four board meetings should be conducted annually, with no more than three months between sessions
• A minimum paid-up share capital of ₹5 lakhs
• Permanent appointment of a Chief Executive Officer (CEO)

A Producer Company emphasizes solely on equity share capital, marking its unique nature in the corporate world.