PRODUCER COMPANY

Producer Company

Producer companies in India were introduced by the Companies Act 2013. It offers people the opportunity to start a company in production-related activities, especially those grown or produced through agriculture. A producer company may consist of ten or more producers (those who are involved in or involved in production or growth-related activities), two or more production companies, or a combination of ten or more producers and production companies. Such a company may only have an equity capital that requires a minimum of five directors and authorised capital of Rs 5 lakh. The procedure for establishing a producer company is similar to the one for forming a private limited company.

Benefits of Producer Comapany

Products Pooled

Every member of the company will receive a value for the product or products pooled and supplied as determined by the director. The amount will be distributed in cash or by allotment of equity shares. This may be subject to the conditions of the board.

Additional Amount

Moreover, the additional amount remaining after making provision for payment of limited return and reserves can be distributed as a patronage bonus. This will be in proportion to their participation in business activities either in cash or through equity shares.

Financial Assistance

Members of the producer company are also eligible to get financial assistance through a credit facility for a period not exceeding 6 months.

Loans and Advances

Loans and advances against security as specified in articles, upon the condition of repayment within a period of 3 months and not more than 7 years.

Bonus Shares

Members can get bonus shares in proportion to the amount held.

Procedure of Producer Comapany

Signature Certificate

Obtain Digital Signature Certificate (DSC) and Director’s Identification Number (DIN) from all the directors with self-attested copies of documents like PAN, aadhaar card, and contact detail.

FORM-1A

File the proposed company name in FORM-1A with the RoC of the respective state along with the prescribed fee. Once the name is available, the RoC informs about the availability of the name.

MoA

Draft the necessary documents like MoA to incorporate the company’s objects and the amount of share capital to be registered, and AoA to contain the company’s by- laws.

Statutory Declaration

Filing of other documents like the statutory declaration in Form-1 declaring compliance of all and incidental matters regarding the formation of companies; affidavit signed by the subscribers of the proposed company. Director’s consent, utility bill, and NOC are required.

Public Limited

The certificate will be issued after which the company shall become a corporate body as if it is a private limited company. Under any circumstances, it cannot become a public limited company.

Documents Required For Producer Comapany

Scanned copy of PAN card or passport (For Foreigners & NRIs)
Scanned copy of voter's ID/passport/driver's license
Scanned copy of bank statement / telephone or mobile bill / electricity or gas bill
Passport-size photograph
Specimen signature of directors in a blank document
Scanned copy of notarised rental agreement in english
Scanned copy of No-objection Certificate from property owner
Scanned copy of sale deed / property deed in english (in case of owned property)

Eligibility Criteria of Producer Comapany

10 or More Producers

Any 10 or more producers (individuals) can join together to form a production company but there is no upper limit on the number of members. Or, any 2 or more producer institutions can form a producer company.

Capital of Rs 5 Lakh

A minimum capital of Rs 5 lakh is required to incorporate a producer company.

Minimum of 5 Directors

There should be a minimum of 5 directors and a maximum of 15 directors in a producer company.

FAQs

Q. Do I need to be physically present during this process?

This isn't required. The entire process is now automated and handled online. You will receive the DIN numbers and Certificate of Incorporation by e-mail from the Ministry of Corporate Affairs (MCA).

Q. How much time is needed for setting up a producer company in India?

Expect it to take 35 to 40 days to complete the entire procedure. This will, however, depend on whether you have all your papers in order and the workload of the RoC.

Q. What are the rules for picking a name for a producer company?

Every company has two parts to its name. The first part is unique. For example, 'WIPRO' or 'MERCEDES-BENZ'. The second part describes the business activity of the company. For example, 'Legal Solutions' or 'Technologies'. This second part must be as descriptive as possible. The name of the company must end with 'Producer Company Limited'.

Q. What documents need to be submitted to start a producer company?

Most importantly, all directors must have an identity and address proof and rights to practice on the property they are operating on. The owner of the registered office will also need to submit an NoC, stating that the company may operate from that location.

Q. Will the books of a producer company need auditing?

Yes, a producer company must have its books audited from its very first year. And in case of turnover crosses Rs 5 crores, it must employ a full-time company secretary to manage its affairs.

PRODUCER COMPANY