Producer Companies (PC) are a relatively new legal entity that includes only certain categories of persons. These consists of, agricultural produce, forest produce, artisanal products, or any other local produce, where the members are primary producers. Producer Company as a legal entity was enacted in 2003 as per section IX-A of the Indian Companies Act 1956.

Activities of Producer Companies

  1. Production, harvesting, processing, procurement, grading, pooling, handling, marketing, selling, export of primary production of the Members or goods or services for their benefit.
  2. Rendering technical services, consultancy services, training, education, research and development and all other activities for the interest of the members
  3. Generation, transmission, and distribution of power, revitalization of land and water resources, their use, conservation and communications related to primary production.
  4. Promoting mutual assistance, welfare measures, financial services, insurance of producers or their primary produce.

Incorporation  of Producer Companies

  • 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. A combination of the above (10+2)
  • Only persons engaged in or connected to primary production activity can be members and owners of a Producer Company.
  • These companies are termed as “Companies with Limited Liability” and the liability of the members will be restricted to the amount, if any, unpaid on the shares.
  • The name of the company has to end with “Producer Company Limited”
  • For the objective of implementation of law and administration of the company, the Producer company is treated as a Private Limited Company.

Share Capital and Voting Rights 

  1. The share capital of a Producer Company shall consist of equity shares only.
  2. Members’ equity cannot be publicly traded but only transferred.
  3. The minimum paid up authorised capital is Rs. 5 lakh.
  4. Voting when membership is
  • Only of individuals then voting rights will be a single vote for every member.
  • Only of producer institutions then voting rights on the basis of their participation.
  •  A combination of both of the above, then voting right will be a single vote for every member.

Management

  1. They should be a minimum of 5 directors. The maximum number of directors is 15.
  2. A full-time chief executive should be appointed by the board and shall be entrusted with substantial powers of management as the board may determine.

The process of a registration for a  Producer Company can be time-consuming and tedious. Take assistance from Legalraasta to easily start up your own Producer Company.