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A producer company is essentially a business that is registered to deal with the primary production of its active members in the farming industry. The primary goal encompasses everything from producing to selling and exporting. Part IXA of the Companies Act of 1956 applies to the creation of production firms until a specific Act is established for such companies.
A producer company is registered with over 10 members who are producers, two or more producer institutions, or a mix of the two. The responsibility of its members, like that of any other corporation, is limited to the amount of unpaid share capital by its members. Under this Act, the producer company is regarded to be a private limited company; nonetheless, the number of members criterion does not apply.
Wish to engage in activities relating to Produce (grown or produced) in farming? This is the company for you. Register your business with the help of Law Suvidha and receive a pan-India service fully online at your leisure and convenience.
If the production company’s AoA provides for it, active members may be granted unique user privileges. Regarding such rights, the company may issue relevant instruments to active members. The special use rights refer to any right of the active member’s provision of additional produce or any other right connected to his produce.
Like any other corporation, the producer company has its own legal identity. Assets, liabilities, rights, obligations, and privileges will be owned by the firm. The corporation can do business in its name and own the properties. The change in members or directors does not affect the company’s existence, assets, liabilities, or rights and duties.
Initially, each member can only get the worth of the product as established by the Board. The withheld price may be paid later in cash or as equity shares. Members are only entitled to a restricted return, but they may also be assigned bonus shares. The excess might also be distributed as a patronage bonus.
Members and producer institutions have limited accountability for the company’s debts and commitments. In the event of a loss or liquidation, their assets are untouched. Producers can invest in such companies with lower risk if they are assured of less responsibility.
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Yes! Producer companies are, in fact, private limited companies.
Even though it is a private limited company, it can have more than 50 members.
The Producer Company must have at least 5 directors but no more than 15 directors.
Conversion of a Producer Company is not possible in any other business structure, such as a Private Limited Company, a Public Limited Company, a Limited Liability Partnership, or an LLP.
The producer company must have a minimum paid-up capital of Rs. 5 lakh.
The words “Producer Company Limited” must be at the end of the name of the company. For example, Sanskriti India Producer Company Limited.
The following is a step-by-step approach for incorporating a producer company in India, often known as the registration process of a farmer producer organisation in common parlance: