Home Company Incorporation PRODUCER COMPANY




  • Section 465 proviso of Companies Act, 2013 says that provisions of Companies Act, 1956 shall be applicable for the producer company until a special act is enacted for Producer Company.
  • The companies (Amendment) Act, 2002 vide notification dated 5.02.02 has inserted Part IX-A to the companies Act, 1956 and introduced the concept of Producer company.


A Producer Company is a form of business organization that are working like Co-operative societies ( Producer co-operative is registered under Co- operative societies Act whereas Producer company is registered under Companies Act), mainly these type of companies are registered in rural areas by the producers. These companies are incorporated to develop the rural economies and bridge the gap between industry and agriculture, rural and urban area, industry and labour etc.

A Producer Company can be formed having their business objective as one of the following:

  • Procurement
  • Production
  • Harvesting
  • Grading
  • Pooling
  • Handling
  • Marketing
  • Selling, or
  • Export

of the Primary produce of the Members or import of goods or services for their benefit.


Whether Producer Company is Private Company or Public Company:

As the name of the Company ends with Producer Company Limited it seems to be a Public Company but as per clause (5) of the section 581C of Companies Act,1956, on registration the Producer Company shall become a body corporate as if it is a Private Company and shall not under any circumstances deemed to be a Public Company. However without any limit to the number of members to 200.


  1. Primary Produce: Primary produce has been defined under the Companies Act 1956 as a produce arising from agriculture by a farmer which includes animal husbandry, floriculture, horticulture, viticulture, pisiculture, re-vegetation, bee raising, forestry, forest products and farming plantation products, produce of hand-loom, handicraft and other cottage industries.
  2. Producer: Producer means any person engaged in any activity or connected with or relatable to any primary produce.
  3. Producer Institutions: Producer Institution means 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 to in section 581B and which agrees to make use of the services of the Producer Company or Producer Companies.


A producer company shall carry on following activities as mentioned in section 581B of Companies Act, 1956 :

  • Production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of primary produce of the Members or import goods for their benefit.
  • Processing including preserving, drying, distilling, brewing, venting, canning and packaging of produce of its members.
  • Manufacture, sale or supply of machinery, equipment or consumables mainly to its Members.
  • Providing education on the mutual assistance principles to its Members and others.
  • Rendering technical services, consultancy services, training, research and development and all other activities for the promotion of interest of its members,
  • Generation, transmission and distribution of power, revitalisation of land and water resources, their use, conservation and communications relatable to primary produce.
  • Insurance of producers or their primary produce
  • Promoting techniques of mutuality and mutual assistance
  • Welfare measures or facilities for the benefit of Members as may be decided by the Board,
  • Any other activity, ancillary or incidental to any of the activities referred to in above clauses which may promote the principles of mutuality and mutual assistance amongst the Members in any other manner.
  • Financing of procurement, processing, marketing or other activities specified in above clauses which include extending credit facilities or any other financial services to its members.


  1. 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.
  2. A minimum capital of 500,000 is required to incorporate a producer company.
  3. There should be minimum 5 directors (maximum of 15) in a producer company.
  4. It can never be converted into a public company however it can be converted into a multi-state co-operative society.


The process of registering a Producer Company is similar to that of a Private Limited Company.

Procedure and Documentation required incorporating a Producer Company:

  1. Obtain Digital Signature Certificate (DSC), documents required to obtain DSC:
  • PAN
  1. The name of the production company is to be finalized. For that, RUN (Reserve unique name) is to be filed with CRC (Central Registration centre). The name shall have the
  2. After the name is approved by the CRC, the following documents are to be prepared:
  • The Memorandum of Association is to be drafted by incorporating all the objects that the company intends to follow,
  • The Articles of Association is to be drafted containing all the by-laws of the company,
  • A declaration by a professional has to be drafted in the format of form INC – 8
  • An affidavit has to be signed by all the subscribers of the proposed company declaring their legal competency to act as the subscribers,
  • A utility bill and a NOC have to be taken from the owner whose address is to be used as the registered office of the company. If it is not owned, a lease agreement will be attached to the form,
  • The directors will give their consent to act in the Form DIR – 2,

On proper verification, the ROC will issue a Certificate of Incorporation and the company can start its business operations.

Directors & Subscribers documents Required in Incorporation::

  • Case1: Directors not having DIN


  • Personal mobile number,
  • Email ID,
  • Digital signature Certificate,
  • DIN
  • PROOF OF ID(Self attested)
  • Passport, or
  • Driving License, or
  • Voter ID.
  • Residential Proof: (self attested)
  • Bank Statement
  • Electricity Statement
  • Mobile Bill
  • Telephone Bill
  • PAN (Self Attested)
  • Aadhaar Card(Self Attested)
  • Case2: Directors having DIN:

o  Personal mobile number,

o  Email ID,

o  Digital signature Certificate,

o  DIN

  • PAN( Self Attested)
  • Aadhaar Card (Self Attested)


  • E-MOA and E-AOA shall not be applicable for producer companies. Scanned copy of signed MOA and AOA shall be attached with SPICe.
  • DIN of maximum 3 directors can be allotted through SPICe. In case of DIN for more directors, DIN-3 shall be filed.


  1. Voting rights in Producer Company shall be based on a single vote irrespective of share held for every member.
  2. No person, who has any business interest which is in conflict with business of the Producer Company, shall become a Member of that Company.
  3. Every Producer Company shall deal primarily with the produce of its active Members for carrying out any of its objects specified in this section.
  4. One-fourth of the total membership shall constitute the quorum at a General Meeting.
  5. Share Capital of a producer company shall consist of equity shares only.


Benefits for Producer Companies

The following are the benefits enjoyed by a Producer Company:-

  1. The members of the producer company initially will receive the value for the produce pooled and supplied as determined by the directors. This amount will be given out later in the form of cash/ kind/ equity shares.
  2. The members of the producer company will be entitled to get bonus shares in the same proportion to the shares held by them.
  3. The surplus (after providing provision for payment of limited return and reserves) may be given as patronage bonus to the members of the producer company.

NOTE: Patronage bonus signifies a distribution of the surplus income to the members of the producer company in proportion to their respective patronage. Patronage, on contrary, is the participation by members in their business activities by using the services offered by producer company.


The Income Tax Act, 1961 under section 10(1) exempts the agricultural income. However, the exemption provided under section 10(1) for the agricultural income sometimes vary on the basis of the agricultural activity carried out.

The Income Tax Act does not specify any specific tax benefit which essentially provides special tax benefits or exemptions to producer companies by its definition. But subject to the agricultural activity carried out by the producer company, certain tax benefits and exemption can be availed.