India is an agrarian economy where 58% of the population depends on agriculture for its livelihood and it provides employment for 42 % of Indian Population. Instead of playing such a pivot role in the economy of India, Agriculture sector has not experienced that much growth as compared to other sector. Considering the various obstacle that agriculture sector faces like limited capital and asset base, climate dependency, electricity water supply, transportation etc. lawmakers had resorted to provide a corporate structure to agricultural activities in India. Thus concept of producer company was introduced which basically takes all the features of a cooperative society and merged with the framework of a body corporate. Under Producer Company, group of farmers comes together to act as member to carry agricultural business on self-help basis with an intention to earn profit and provide help to each member of its company through democratic management. Some of examples of producer companies in India are: Dhari Krushak Vikash Producer Company Limited, Gujarat Rangsutra in Kerala Sahyadri Farmer Producer Company, Nasik Nachalur Farmer Producer Company, Tamil Nadu etc

1. Producer Company
Agriculture Business in Corporate Structure

2. Background
India is an agrarian economy where 58% of the population depends on agriculture for its livelihood and it provides
employment for 42 % of Indian Population. Instead of playing such a pivot role in the economy of India, Agriculture
sector has not experienced that much growth as compared to other sector.
Considering the various obstacle that agriculture sector faces like limited capital and asset base, climate
dependency, electricity water supply, transportation etc. lawmakers had resorted to provide a corporate structure
to agricultural activities in India. Thus concept of producer company was introduced which basically takes all the
features of a cooperative society and merged with the framework of a body corporate.
Under Producer Company, group of farmers comes together to act as member to carry agricultural business on
self-help basis with an intention to earn profit and provide help to each member of its company through
democratic management. Some of examples of producer companies in India are:
• Dhari Krushak Vikash Producer Company Limited, Gujarat
• Rangsutra in Kerala
• Sahyadri Farmer Producer Company, Nasik
• Nachalur Farmer Producer Company, Tamil Nadu etc
2

3. It’s Benefit
3
• Producer Company is corporate structuring for agricultural activities which support its members toincrease the
productivity by mutually resolving issues like funds for machinery,seed, fertilizer, marketing and distribution,
storage, export ,import etc.
• Being a body corporate it enjoys separate legal entity and have perpetual sucession
• Producer Companies are widely recognised by Government, when it comes to subsidy of financial aids,
since they are more organised and managed.
• It operates on self-help basis thus support its members by providing them financial support.
• Producer Company enjoys minimal regulatory control from authorities.
• It is hybrid form of cooperative society and body corporate thus enjoys benefits of both form of business.

4. Legal Entity in India
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Part IX A of Companies Act, 1956 (“Act”) deals with formation and working of producer companies which is now
repealed by Companies Act,2013. However on considering Companies Act, 2013 , Section 465 states as below:
“The provisions of Part IX A of the Companies Act, 1956 shall be applicable mutatis mutandis to a Producer
Company in a manner as if the Companies Act, 1956 has not been repealed until a special Act is enacted for
Producer Companies”
Thus Government is under consideration to enact such law which focuses specifically on producer companies, till
then provisions of producer companies as given in Companies Act, 1956 will be taken as legal and valid.

5. Basics of Producer Company
5
Section 581A (j) (k),(j),(m) of the Act defines Primary Produce, Producer, Producer Company, Producer Institution
respectively
PRIMARY PRODUCE
Produce of farmers, arising from:
• Agriculture (including animal husbandry,
horticulture, floriculture, pisciculture
viticulture, forestry, forest products, re-
vegetation, bee raising and farming
plantation products)
OR
• Any other primary activity or service
which promotes the interest of the
farmers or consumers; or
Produce of persons engaged in handloom, handicraft and
other cottage industries;
Any product resulting from any of the above activities,
including by-products of such products;
Any product resulting from an ancillary activity that would
assist or promote any of the said activities or anything
ancillary thereto
Any activity which is intended to increase the production of
anything referred hereby or improve the quality thereof

6. Basics of Producer Company
6
PRODUCER
Any person engaged in any activity connected with or relatable to any primary produce
PRODUCER COMPANY
A body corporate having objects or activities specified in Act and registered as Producer Company under this Act
PRODUCER INSTITUTION
A Producer Company or any other institution having only producer or producers or Producer Company or Producer
Companies as its member
• whether incorporated or not
• having any of the objects referred in the Act
which agrees to make use of the services of the Producer Company or Producer Companies as provided in its
articles.

7. Object to be Persued
7
Producer Company are not authorised to carry any object it wants to undertake at its own wish, Act has given
provisions as to what objects a producer company should undertake. Section 581B states the producer company
can undertake objects which is given as below or relates to such objects:
1. Production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of primary produce
of the Members or import of goods or services for their benefit;
2. Processing including preserving, drying, distilling, brewing, vinting, canning and packaging of produce of its
Members;
3. Manufacture, sale or supply of machinery, equipment or consumables mainly to its Members;
4. Providing education on the mutual assistance principles to its Members and others;
5. Rendering technical services, consultancy services, training, research and development and all other activities
for the promotion of the interests of its Members;

8. Object to be Persued
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6. Generation, transmission and distribution of power, revitalisation of land and water resources, their use,
conservation and communications relatable to primary produce;
7. Insurance of producers or their primary produce;
8. Promoting techniques of mutuality and mutual assistance;
9. Welfare measures or facilities for the benefit of Members as may be decided by the Board;
10. Any other activities which may promote the principles of mutuality and mutual assistance amongst the
Members in any other manner;
11. Financing of procurement, processing, marketing or other activities specified in clauses (1) to (9) which
include extending of credit facilities or any other financial services to its Members.

9. Who can Form it
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While forming Producer Company, certain aspects needs to be considered as to whom are eligible to form a
producer company which is mentioned in section 581C of the Act as depicted below.
Any ten or more
individuals, each
of them being a
producer
Any two or more
producer
institutions
A combination of ten
or more individuals
and producer
institutions
Desirous of forming a
Producer Company to
carry object as given in
the Act can register
Producer Company

10. Process to Incorporate Company
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Persons willing to incorporate a Producer Company must follow below given procedure:
1. Apply for Digital Signature of proposed members and directors of the Company, generally class 2 DSC serves
the purpose for filing forms at the portal of Ministry of Corporate Affairs.
2. Ascertain name of the Company and check the availability of the same in accordance with section 4 of the
Act and Rule 8 of the Companies (Incorporation) Rules 2014.
3. File name application in PART A of web based form SPICE+, applicant can file two proposed name in this
web based form, after approval of name, file incorporation documents in E form Spice.
4. Proposed directors of the Company can also apply for DIN in same form is they are not holding DIN prior to
application. Maximum three directors can apply for DIN allotment at the time of application.

11. Process to Incorporate Company
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5. Applicants needs to submit below given documents with E Form Spice.
• Memorandum of Association
• Articles of Association
• Proof for Registered Office
• Declarations in prescribed format for engagement in agriculture activity
• Id and Address proof for subscribers and directors etc.
6. After scrutiny by the Registrar at Central Registration Centre, in case of any deficiency the Registrar may call
for additional documents or clarification after providing a chance to resubmit form in 15 days, however if all
the documents and details are appropriate than Registrar will issue Certificate of incorporation in form INC-
11.
7. After incorporation, Company is require to file a declaration in form INC-20 A within 180 days of
incorporation. This declaration will state that that every subscriber to the memorandum has paid the value of
the shares agreed to be taken by him and Company has verified its Registered Office.

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