A producer company is basically a body corporate registered as Producer Company under Companies Act, 1956 and shall carry on or relate to any of following activities classified broadly
- Production, harvesting, processing, procurement, grading, pooling, handling, marketing, selling, export of *primary produce of the Members or import of goods or services for their benefit;
- processing including preserving, drying, distilling, brewing, vinting, canning and packaging of produce of its Members
- manufacture, sale or supply of machinery, equipment or consumables mainly to its Members
- rendering technical services, consultancy services, training, education, research and developmentand all other activities for the promotion of the interests of its Members
Characteristics of Producer Company
The registered producer company should be treated as a private limited company with the significant difference that a minimum of two persons cannot get them registered.
- These companies are with limited liabilities and limited only by share capital.
- The liability of the members is limited to the unpaid amount of the shares held by them.
- As per the new circular No. 27/1/87 dated 13/3/1989 minimum paid-up authorized capital is of Rs. 5 lakh.
- The minimum number of members can exceed 10 and each of them must being a producer.
- It shall never become a public (or deemed public) limited company.
- Member's equity cannot be publicly traded but be only transferred.
As such, 'producer companies would not be vulnerable to takeover by other companies or by Multinational Companies (MNCs).''
Incorporation of a Producer company
Any of the following combination of producers can incorporate a producer company:
1 Ten or more producers (individuals) or
2 Two or more producer institutions or
3 Combination of the above two (10+2).
- In a Producer Company, only persons engaged in an activity connected with, or related to, primary produce can participate in the ownership.
- The members have necessarily to be primary producers.
- These companies shall be termed as 'Companies with Limited Liability' and the liability of the Members will be limited to the amount, if any, unpaid on the shares.
- The name of the company shall end with the words 'Producer Company Limited'.
- On registration, the producer company shall become as if it is a private limited company for the Purpose of application of law and administration of the company (however it shall comply with the specific provisions of part IXA).
- The provision relating to a minimum paid-up capital of Rs. 1 lakh will not apply. The maximum number of 200 members is not applicable to these companies.
Indian economy is basically an agrarian economy. More than two-thirds of the Indian population depends upon agriculture for their livelihood.
The Indian Income Tax Act, 1961('the IT Act') specifically exempts tax on agricultural income under section 10(1). However, the exemption for such agricultural income shall sometimes vary depending upon the kind of agricultural activity carried on.
Minimum Requirement to be fulfilled to Form a Private Limited Company
- Ten promoters (Shareholders)
- Five directors
- Authorized capital of Rs. 5, 00,000
- DIN (Director Identification Number) for all the directors
- DSC (Digital Signature Certificate) for all the directors