Incorporation of Farmer Producer Company
According to the Companies Act, 1956; a producer company can be formed by 10 or more persons; 2 or more institutions; or by a combination of both, there is no upper limitation on the number of members. The one of the objectives for the formation of producer company should be procurement, production, harvesting, grading, pooling, handling, marketing, selling or export of the product or import of good and services for the benefit of members.
The producer company facilitates the formation of co-operatives as companies and support the co-operatives to convert into companies. The concept of farmer Producer Company seeks to foster the betterment of financially aggrieved farmers in India through synergy and collective efforts.
Such entities seek to operate in line with the underlying objects, which typically revolve around the mutual financial growth of the member. As such, Farmer Company has no intention to serve the public domain in any way.
Note: Farmer Company Can also serve a Role of a Lending Agency with RBI’s Consent.
Objectives of the Farmer Producer Company
The producer company is essentially permitted to undertake any of the following tasks by itself or through other entities on behalf of the members:
- The procurement, production, harvesting, grading, pooling, handling, marketing, selling or export of the product or import of good and services for the benefit of members.
- Processing including preserving, distilling, brewing, canning, & packaging the produce of members.
- Manufacture, sale, or supply of machinery, equipment or consumables to its members
- Providing education to its members and others on basis of mutual assistance principles.
- Giving technical services, consultancy services, research and development, training, etc, for promoting interest of members.
- Generation, transmission and distribution of power. Restoration of land and water resources, its use conversation and communication relating to primary produce.
- Insurance of primary produce and their producers.
- Promotion of techniques of mutuality and mutual assistance.
- Welfare measures for benefit of members.
- Any other activity which is ancillary or incidental to above-mentioned objectives.
- Financing all activities or extending credit facilities or financial conditions of the members.
Benefits of the Farmer Producer Company
Producer Company is also acknowledged as the mixture of a co-operative society and a registered company. It excels in the unique elements of a cooperative structure, having governing framework similar to that of a company. Such entity primarily refers to a registered corporate served by a group of individuals (mainly farmers) as its members.
Following is the List of Benefits Rendered by The Farmer Producer Company in India:
Deposit Acceptance
The prevailing bylaw permits the Producer Company to accept a deposit in the form of a fixed deposit or a recurring deposit.
Loan against security
Farmer Producer companies are legally permitted to function as lending agencies. They are eligible to lend credit against the fixed deposits, gold and government securities.
Profit allocation to the members
The profit or income generated by the farmer producer company remains within the organization and is distributed among the serving members.
No taxes on the agricultural income
As such, no taxes are levied on the profit generated by the Producer Company. Presently, these entities are exempted from addressing any tax obligations imposed by the IT department.
Loan Facility to Members
Farmer Producer companies are legally eligible to disburse the credit to the founding members.
Farmer Producer Company Incorporation: Mandatory Documents
The followings are the mandatory documentation for incorporating Farmer producer companies in India:
- PAN & Photo
- PAN & Photographs of the active directors & shareholders
- ID Proof
- Aadhar card, Driving License, passport, & voter ID of the Directors, members, and shareholders.
- Address Proof
- Bank Statement, utility bills such as landline bill, mobile bill, and electricity bill
- Producer Proof
- Sarpanch letter/ /Khasra - Khatuni/ Income Tax Return (ITR)with Agriculture Income/ Any other proof a person as a serving member
- Registered Address proof
- No objection certificate from the owner, Utility bill and Rent agreement
Pre-incorporation legalities for incorporation
- At least ten producers to register the company.
- Minimum 5 and maximum 15 directors
- Maximum 200 members: if the proposed entity willing to function as a private limited company
Note: Inter-state co-operative society functioning as a producer farmer company may have more than 15 Directors for one year from the incorporation date of a producer company.
Procedure of Farmer Producer Company Registration in India
To begin with the incorporation process, the proposed member needs to make an online application in the e-form, viz Spice+ on the MCA portal. The said form is available under the services section of the MCA portal which the applicant can access after creating the account.
Spice+ e-form acts as online application for company registration, which is divided into two important parts.
Part A And Part B
Part A enables the applicant to legalize the proposed name; meanwhile, part B renders the below-mentioned services:
- Incorporation
- DIN (Director Identification Number) allotment
- PAN (Permanent Account Number) Allotment
- TAN (Tax Account Number) allotment
- EPFO registration
- ESIC registration
- GSTIN allotment
- Profession Tax registration
- Opening of Bank Account
Spice+ refers to an integrated digital form that renders 10 services by three different ministries operating at the central and state level. This e-form saves time and cost for the applicant and simplifies the registration. Spice+ e-form is introduced by the Government of India given the ongoing initiative Ease of Doing Business (EODB). Ministry of Corporate Affairs usually takes thirty days to grant the certificate of registration from the date of the receipt of the application.
Arvisa Incorporation services
- Facilitate comprehensive support throughout the incorporation process.
- Well versed in underlying compliances and registration legalities.
- In-depth experience in tackling post-incorporation compliances.
- Offers assistance in documents and application.
- Charges Nominal fees for incorporation.
Frequently Asked Questions
Any 10 or more people (producers) can collectively set up a farmer producer company or any two or more producer agencies can set up a producer company.
A corporate body is registered with MCA, for the purpose of agricultural production & processing undertakings, is known as a Producer company. It can be formed by a minimum of 10 people and two institutions
A Farmer Producer Company has some attributes of a private limited company as well as co-operative societies. Such entities aim at accumulating farmers and operating for their betterment, primarily in terms of finances.
According to the Company Act, 2013, at least five directors are required to run a farmer producer company in India. The upper limit in this regard has been capped at 15.
Some of the key benefits of incorporating an FPC include improved credibility, Acceptance of Deposits, Ease in management and registration, etc.
PM Narendra Modi had introduced "Formation and Promotion of Farmer Producer Organisations" on 19th Feb 2020, to incentivize over 10000 FPOs in the subsequent five years, starting 2019-20, which would support financially aggrieved farmers to improve their income.
As such there is no minimum capital requirement to setup by the farmer producer company in India
To improve the financial standing of the small farmers in India via collective effort and synergy
As per section 581B of Company Act, 2013, the producer company must hold its first AGM within three months from the incorporation date.
Common document that goes along with AGM notification includes P&L statement, auditor appointment letter, agenda of the meeting, prevailing capital, so and so forth.
