The concept of Producer Company in India was introduced to allow cooperatives to function as a corporate entity under the Ministry of Corporate Affairs. In this article, we look at the procedure for registering a Producer Company in India, under the Companies Act, 2013.

Producer Company Overview:-

The Companies Act defines Producer as any person engaged in any activity connected with or relatable to any primary produce (Produce: “things that have been produced or grown, especially by farming”). A Producer Company is thus a body corporate having an object that is one or all of the following:-

• Production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of primary produce of the Members or import of goods or services for their benefit.
• Further, the Producer Company must deal primarily with the produce of its active Members and is allowed to carry on any of the following activities by itself or through other entities – on behalf of the members.

1. Processing including preserving, drying, distilling, brewing, vinting, canning and packaging of produce of its Members;
2. Manufacture, sale or supply of machinery, equipment or consumables mainly to its Members;
3. Providing education on the mutual assistance principles to its Members and others;
4. Rendering technical services, consultancy services, training, research and development and all other activities for the promotion of the interests of its Members;
5. Generation, transmission and distribution of power, revitalization of land and water resources, their use, conservation and communication relatable to primary produce;
6. Insurance of producers or their primary produce;
7. Promoting techniques of mutuality and mutual assistance;
8. Welfare measures or facilities for the benefit of Members as may be decided by the Board;
9. Any other activity, ancillary or incidental to any of the activities which may promote the principles of mutuality and mutual assistance amongst the Members in any other manner;
10. Financing of procurement, processing, marketing or other activities which include extending of credit facilities or any other financial services to its Members.

Producer Company Registration

• To register a Producer Company in India, the following members in any of the combination is necessary.
• Ten or more individuals, each of them being a producer; or
• Two or more producer institutions; or
• A combination of ten or more individuals and producer institutions

The registration process for a Producer Company is then similar to that of a Private Limited Company. DSC & DIN must first be obtained for the proposed first Directors of the Producer Company. Once, DSC and DIN are obtained, application for name reservation can be filed with the Registrar of Companies (ROC). The name of a producer company must end with the words “Producer Limited Company”. Once, name is approved by the ROC, application for incorporation can be filed in the prescribed format for incorporating the Producer Company.

If the Registrar is satisfied with the application for incorporation of Producer Company, then he/she will approve the same and issue Certificate of Incorporation. Once, a producer company is incorporated, it shall function similar to a private limited company subject to certain provisions. However, unlike a Private Limited Company, a Producer Company does not have a limit on the number of members. Further, though the name of a Producer Company ends with the words “Producer Limited Company”, it shall under no circumstance become or be deemed to become a public limited company.

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:-

Registration

• 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.

Major Steps involved for incorporation of Producer Company

• Getting DSC
• Getting DIN
• Name Search and application for Name Availability.
• Drafting of Bye Laws (MOA & AOA)

Minimum Requirement to be fulfilled to Form a Producer Company:-

• Ten promoters (Shareholder)
• 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

Note: Director and the shareholder is the same person.

Know About Digital Signature

What is a Digital Signature Certificate (DSC)?

The Information Technology Act, 2000 provides for use of Digital Signatures on the documents submitted in electronic form in order to ensure the security and authenticity of the documents filed electronically. This is the only secure and authentic way that a document can be submitted electronically. As such, all filings done by the companies under MCA21 e-Governance program are required to be filed with the use of Digital Signatures by the person authorized to sign the documents.

Getting DIN

The concept of a Director Identification Number (DIN) has been introduced for the first time with the insertion of Sections 266A to 266G of Companies (Amendment) Act, 2006. As such, all the existing and intending directors have to obtain DIN within the prescribed time-frame as notified.

DIN is a unique identification number allotted to an individual who is an existing director of the company or intends to be appointed as director of a company. DIN is an 8 digit number. For example: 02165789.This is allotted by Central Government (office of regional director), Ministry of Corporate Affairs. A private company must have at least 2 directors. 

Required documents/information’s for Allotment of DIN:-

• Self attested copy of the PAN Card, the signature must be same as in PAN.
• Self attested identity proof of the proposed directors (like Voter ID Card/ Valid Driving License/ Valid Passport/ Aadhar Card etc).
• Self attested Address proof of the proposed directors (like Latest Bank Statement/  Telephone or Mobile Bill/ Electricity Bill etc).
• Passport size color & clear photograph (3.5 cm X 2.5 cm)
• An specified Affidavit by the individual (Declaration by the individual and self attested)
• Educational Qualification.
• Current Occupation
• Valid Email Id and Mobile No.
•  

Name Search and application for Name Availability

Next step in the formation of a company is the approval of the name by the Registrar of Companies (ROC) in the State/ Union Territory in which the company will maintain its Registered Office. This approval is provided subject to certain conditions: for instance,

• There should not be an existing company by the same name.
• The first word contain a noun and the second word must relate to the main object of the proposed company.The last words in the name are required to be "Producer Company  Ltd."
• The application should mention at least two suitable names to maximum 6 names of the proposed company, in order of preference.

Once company name is approved, it is valid for a period of sixty days from the date of application, within which time Memorandum of Association (MOA) and Articles of Association (AOA) together with miscellaneous documents should be filed. If one is unable to do so, an application may be made for renewal of name by paying additional fees.

The following information is required for seeking name approval:-

• Proposed name of the company and alternative names (2 to 6 names)
• Names of the proposed promoter(minimum 10)/director (minimum 5)
• Authorized share capital (minimum INR 500000)
• Main objects of the company in brief (200 alphabetic words)
• Declaration from the local authority that all the promoters are producer.
• Address proof for registered office of the proposed company
• Address for the nearest police station of proposed registered address of the company.
• NOC, if the promoter is carrying on any Partnership firm, sole proprietary or unregistered entity in the name as applied.
• NOC from the person if the proposed name(s) contain(s) name of any person other than promoter(s) or their close blood relatives.
• If the proposed name(s) include(s) the name of relatives then the proof of relationship is also required.
• If the proposed name(s) include(s) the name of relatives then the proof of relationship is also required.

Drafting of Bye Laws (MOA & AOA)

The Memorandum of Association is a document that sets out the constitution of the company. It contains, amongst others, the main objectives, incidental or ancillary objectives for the attainment of the main objectives and the scope of activity of the company and also describes the relationship of the company with the outside world.

The Articles of Association contain the rules and regulations of the company for the management of its internal affairs. While the Memorandum specifies the objectives and purposes for which the Company has been formed, the Articles lay down the rules and regulations for achieving those objectives and purposes. It also states the authorized share capital of the proposed company and the names of its first / permanent directors.

Incorporation Process

I. After getting the name approval, the MOA/ AOA have to be drafted.

II.Get the subscription sheet of MOA and AOA signed by the subscriber/promoter in his own handwriting with the following details as per the given order:-

• The name of the subscriber
• Father’s name of the subscriber
• Address of the Subscriber
• Occupation of the subscriber

The subscription sheets of MOA must be mentioned the number of shares subscribed by the promoters in numbers as well as words and the passport size photograph of the subscribers must be affixed. The subscription sheets of MOA/AOA must be witnessed by at least one person.

III. Form INC 7

The following information/documents required in INC 7:-

• Finalized MOA/ AOA containing subscription sheets.
• Affidavit for non acceptance of public deposit from all the promoters/ directors.
• PAN card, address proof, identity proof of all the promoters
• Declaration from the local authority that all the promoters are producers.
• INC 8,9 &10 in specified format.
• DIR 2  consent of director.
• duly digitally signed by promoter/ director

IV. Form INC 22

This is a form to be filed by the company informing the ROC the address of registered office of the proposed company duly digitally signed by one of the director along with a professional.

The following information/documents required in Form INC 22:-

• If property is owned by the proposed director, then:-
• Registered proof in the name of the director like latest Electricity Bill, Telephone bill, Gas bill.
• NOC from the proposed director to use the premises.
• If the property is owned by other than proposed director, then:-
• Rent agreement between the land lord and proposed company through its proposed directors.
• Registered address proof in the name of the landlord like latest Electricity Bill, Telephone bill, Gas bill.
• NOC from the landlord to use the premises.
• The name and address of the nearest police station of the premises where the company is going to be incorporated

V. Form DIR 12

This form states the fact of appointment of the proposed directors on the board of directors from the date of incorporation of the proposed company and that it is digitally signed by one of the proposed directors along with the professional.

The following information/documents required in Form DIR 12:-

• Appointment Letter
• INC 9 and DIR 2 in specified format: Detail of appointment of board of directors digitally signed by one of the proposed directors along with the professional.

VI. After obtaining the details of Form INC7, INC22 and DIR12, these forms are uploaded on the MCA portal with the respective fees along with the stamp duty of the respective state.

VII. After this, incorporation certificate having CIN (corporate identification number) like U 72900 RJ 2012 PTC 039206 will be obtained.

VIII.The certificate of incorporation along with the approval of commencement of business will be required while opening the current bank account in company name.

Documents/Information Required During Process

Following documents/ forms need to be submitted along with requisite fee which is based on the amount of authorized capital as under:-

DOCUMENTS / FORMS REQUIRED AFTER INCORPORATION

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