A Producer Company consists of a group of people who are involved in the production of primary produce or having one or more objectives related to the primary produce. Part IXA of Companies (Amendment) Act, 2002, deals with the Indian Producer Company. The main objective to introduce this concept was to frame a legislation permitting incorporation of cooperatives as companies and the conversion of existing. Indian Producer Company is a body corporate and has its activities/objectives specified under Section 581B.
1. Production, procurement, harvesting, pooling, grading, marketing, handling, selling and export of the primary produce of members. Provided that the Producer Company shall continue these activities themselves or through other institution;
2. Processing including drying, preserving, brewing, venting, canning, distilling and packaging of the produce;
3. Manufacture, supply or sale of machinery, equipment or consumables to its members;
4. Imparting of knowledge on the mutual assistance principles to its members;
5. Delivering technical services, consultancy services, training and other activities for the promotion of interests of its members;
6. Insurance of producers and or the primary producer.
Applicant: Any person (10 or more) being a producer, or two or more producer institutions, or a combination of the above, can incorporate an Indian Producer Company.
Filing of Name: File an application in FORM-1A along with a fee of Rs.1000. The application has to be made to the Registrar of Companies of the state where the producer company office is proposed to be located. A name that is available and one that best defines the purpose of your producer company is to be selected. When the ROC informs about the availability of the name, a MOA and AOA of the company is drafted in accordance with the rules of Sec. 581F and 581G respectively.
MOA and AOA: These documents have to be stamped by the appropriate authority in agreement with the rules of the Indian Stamp Act, 1899 either physically or electronically. These documents have to be signed by each producer. The date will be the date of stamping.
Object: The object clause in MOA must specify all the matters which are specified in Sec. 581B.
Appointment of the First directors– The AOA of the company mentions the first directors of the producer company who hold office till directors are appointed within a period of 90 days of the registration. The minimum number of directors is 5 and maximum 50.
1. Copy of PAN Card of all the directors
2. Passport size photographs of the directors
3. Copy of the voter identity card/Aadhaar Card
4. Copy of the Rent agreement (If it is a rented property)
5. Water/Electricity bill (Business Place)
6. Copy of the Property papers (If owned property)
7. Landlord NOC
1. AOA and MOA duly signed, dated and stamped.
2. Power of Attorney
3. Statutory declaration in the e-Form- 1(on Stamp paper) declaring compliance of all and incidental matters regarding the formation of companies.
4. Payment of stamp duty electronically through the MCA portal. In case it is not paid electronically, then original stamped physical copies of the uploaded e-Form-1, AOA, MOA along with a copy of the challan in the concerned office of ROC has to be submitted.
5. Filling of Form-18
6. Filling of Form-32
7. Registration Fees
The registrar issues an incorporation certificate having a CIN consisting of 21 digits within 30 days of the receipt of the documents required for company registration in india.
The members will initially receive the value for the produce or products pooled and supplied as the directors may determine. This amount is given out later either in cash or in kind or by allotment of equity shares.
Members will be eligible to receive bonus shares in proportion to the shares held by them.
The surplus after provision for payment of limited return and reserves may be given out as patronage bonus, among the Members. Patronage bonus means payment out of surplus income to members in proportion to their respective patronage. Patronage, on the other hand, is the use of services offered by producer companies to their members by participation in their business activities.
The Indian Income Tax Act, 1961(“the IT Act”) specifically exempts tax on agricultural income under section 10(1).
However, the exemption for such agricultural income shall sometimes differ on the basis of the kind of agricultural activity undertakes.
It is important to note that the IT Act does not essentially provide any special benefits or exemptions to producer companies by definition. But subject to the kind of agricultural activity carried out, certain tax benefits can be availed.
For instance, income from green tea leaves grown and sold directly is agricultural income under the IT Act. Such income is 100 % tax-free. But if the green tea leaves are further processed and tea is manufactured only 60% of the income derived from such an activity is considered as agricultural income. Only 60% of such income is eligible for tax exemption.
Thus, it is clear that the tax exemption to a producer company depends upon the activity it carries on.
The members of the Producer Company are primary producers, and thus, are in need of financial assistance from time to time. Hence, a special provision is made by the Act 61 of Producer Company of giving loans to its members. The Company can provide financial assistance to its members through:-
The credit facility, to any member, in connection with the business of the Company, for a period not exceeding six months.
Loans and advances, against security mentioned in articles to any Member, repayable within a period exceeding three months but not exceeding seven years from the date of disbursement if such loans or advances.
NABARD Loan: NABARD has taken up the cause of supporting and to meet the needs of Producer Companies. It set up a Rs. 50 crore Producer Organisation Development Fund (PODF) in 2011, out of its operating surplus.
FAQS RELATING TO PRODUCER COMPANY
Ans.: For the formation of Producer Company minimum 5 Directors are required and maximum number of Directors can be 15.
Ans.: The Minimum period for directorship is 1 year and the maximum is for 5 years. But the retired director shall be eligible for appointment.
Ans.: Minimum authorized capital required for the formation of a Producer Company is Rs. 5 Lakhs.
Ans.: Minimum number of Board Meeting required in a Producer company is 4 and not more than 3 months gap should be there between two Board Meeting.
The quorum for such Board meetings will be 1/3rd of the total strength or 3 whichever is greater.
Ans.: Every Producer company having an average annual turnover exceeding Rs. 5 crore in each consecutive 3 financial years shall compulsorily appoint whole-time Company Secretary.
Ans.: Advantage of forming a Producer Companies:
1. Limited liability.
2. Economies of scale.
3. Better Management.
Ans.: Usually, 35-40 working days are required in the formation of a Producer Company.