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Producer Company Registration

Producer Company - An Overview

Producer company registration involves forming a specialized business entity under the Companies Act of 2013. These companies are established by farmers and other agricultural producers to improve the marketing and selling of their products. They offer limited liability to their members, meaning members are not personally liable for the company’s debts and obligations.

Advantages of Producer Company (FPO)

Registering a Farmer Producer Organization (FPO) provides several benefits, including:

  1. Limited Liability for Members:
    Members of an FPO are shielded from personal liability for the organization’s debts. This means their personal assets are safe if the FPO faces financial difficulties.
  2. Access to Government Support:
    FPOs can benefit from various government subsidies and grants, which aid in financing operations and business growth.
  3. Easier Credit Access:
    Financial institutions are more inclined to provide loans to FPOs rather than individual farmers, as FPOs are viewed as more creditworthy due to their larger asset base and collective strength, leading to better interest rates.
  4. Enhanced Bargaining Power:
    FPOs can negotiate better prices with buyers by selling in bulk, potentially increasing profits for their members.
  5. Increased Efficiency and Productivity:
    FPOs help farmers improve efficiency and productivity by offering access to superior inputs, technology, and training.

Better Market Access:
FPOs assist farmers in reaching new markets and achieving higher prices for their produce.

Eligibility Criteria for Producer Company Registration in India

To register a producer company online in India, you must meet these criteria:

  1. Minimum Number of Members:
    At least 10 individual producers or 2 producer institutions must be members.
  2. Minimum Number of Directors:
    A minimum of 5 directors is required.
  3. Minimum Capital Requirement:
    The company must have at least Rs. 5 lakhs in capital.
  4. Company Name:
    The name must include ‘Producer Limited Company’ at the end.

Registered Office:
The company must have a registered office address within India

Documents Required for Registration of FPO

The following documents are necessary for registering a producer company in India:

  1. PAN cards of all members and directors
  2. Aadhaar cards of all members and directors
  3. Passport-sized photographs of all members and directors
  4. Proof of registered office address (e.g., electricity bill, gas bill, or rent agreement)
  5. Memorandum of Association (MoA)
  6. Articles of Association (AoA)
  7. Digital Signature Certificates (DSCs) for all directors
  8. No Objection Certificate (NOC) from the landlord of the registered office (if applicable)
  9. Producer Certificate issued by the District Horticulture Officer (DHO) or other competent authority (if applicable)
  10. Registration certificate of the producer organization (if applicable)

Objectives of a Producer Company

As per Section 581B of the Companies Act of 2013, producer companies aim to:

  1. Provide benefits to members through activities related to production, harvesting, procurement, grading, pooling, handling, marketing, and selling agricultural produce.
  2. Offer financial services such as credit facilities and insurance to members.
  3. Provide educational and technical services to enhance member capabilities.
  4. Foster mutual assistance and cooperation among members.
  5. Undertake activities that benefit members and the agricultural sector overall.

Membership and Voting Rights

Voting rights in a producer company vary based on member types:

  1. Individual Producers:
    Each individual member gets one vote, regardless of their shareholding or patronage.
  2. Producer Institutions:
    Voting rights are based on the institution’s participation in the business from the previous year. During the first year, rights are determined by shareholdings.
  3. Combination of Individuals and Institutions:
    Voting rights are calculated based on each member having one vote.

Memorandum of a Producer Company

The Memorandum is a key document for forming a producer company. It should include:

  1. The company’s name ending with ‘Producer Company Limited.’
  2. The state where the business will be headquartered.
  3. The company’s primary objectives as outlined in Section 581B.
  4. The names and addresses of signatories.
  5. The required share capital and its distribution.
  6. The names, addresses, and roles of initial directors.
  7. Details on members’ limited liability.
  8. Each member’s shareholding.
  9. Details if the company’s objectives extend beyond one state.

Amendment of Memorandum

A producer company cannot alter its memorandum’s conditions unless explicitly allowed by the Act. However, the company can change its objectives through a special resolution, provided it aligns with Section 581B. Any changes must be filed with the Registrar within 30 days, including a certified copy of the amended memorandum and special resolution approved by two directors.

Articles of Association

The Articles of Association should be submitted to the registrar and include:

  1. The memorandum and articles.
  2. Principles of mutual assistance.
  3. Membership qualifications and share transfer conditions.
  4. Board structure, powers, and duties.
  5. Patronage and voting rights.
  6. Procedures for handling surplus, loans, and credits.
  7. Members’ access to company information.
  8. Handling of funds if the company dissolves.
  9. Authorization for division, merger, and joint ventures.
  10. Any other provisions recommended by members through a special resolution.

Amendment of Articles

To amend the articles, at least two-thirds of elected directors or one-third of members must propose the changes, which must then be adopted by a special resolution. The Registrar must receive a certified copy of the special resolution and the amended articles within thirty days.

Transition from Co-Operative Societies to FPO

Inter-State co-operative societies can apply for registration as Producer Companies. The application must include:

  1. A special resolution approving the transition, signed by at least two-thirds of members.
  2. Details of directors and chief executive, if any, and a member list.
  3. A declaration confirming participation in activities as per Section 581B.
  4. A declaration of the accuracy of the information, signed by two or more directors.

Share Capital and Member Rights

A Producer Company’s capital consists only of equity shares. The number of shares a member holds should reflect their contribution to the company. Special rights and privileges may be granted to active members based on the company’s articles and approved by the Board.

Procedure for Registration of FPO's

CRSB can assist with FPO registration in four straightforward steps:

  1. Consultation:
    Start by discussing the FPO registration process with CRSB’s experts to understand requirements and benefits.
  2. Document Preparation:
    Our team will collect and prepare all necessary documents, including proposed bylaws and member details.
  3. Application Filing:
    We will guide you through the filing process, ensuring all paperwork is submitted to the relevant authorities.
  4. Registration Completion:
    Once the application is reviewed and approved by the authorities, you will receive a Certificate of Incorporation, officially recognizing your FPO as a legal entity.

Contact CRSB to begin the FPO registration process and benefit from our expertise and support.

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