Producer Company Incorporation: A Comprehensive Guide
If you’re looking to start a business in the agricultural or allied sectors, then a producer company could be a viable option. A producer company is a unique form of company that allows farmers, artisans, and other primary producers to form a collective and work towards mutual benefit. In this blog, we’ll walk you through the process of producer company incorporation, step-by-step.
- Understanding Producer Companies
Before we dive into the nitty-gritty of incorporation, it’s essential to understand what a producer company is. As per the Companies Act, 2013, a producer company is defined as “a company having ten or more persons engaged in the production of primary produce or having a group of two or more producer institutions or a combination of ten or more individuals and producer institutions.”
- Eligibility Criteria
To incorporate a producer company, you must fulfill the following eligibility criteria:
- The company should have a minimum of five directors and ten members.
- All members must be primary producers or producer institutions.
- The company’s main objective should be the promotion of the interests of its members.
- Choosing a Name
The first step in the incorporation process is to choose a name for your producer company. The name should be unique, memorable, and not similar to any existing company’s name. You can check the availability of the name on the Ministry of Corporate Affairs’ (MCA) website.
- Drafting the Memorandum of Association (MoA) and Articles of Association (AoA)
The next step is to draft the MoA and AoA, which are the company’s charter documents. The MoA defines the company’s objectives and scope of activities, while the AoA lays down the rules and regulations governing the company’s internal affairs. These documents need to be stamped and filed with the Registrar of Companies (RoC).
- Obtaining Digital Signatures
All the proposed directors of the company must obtain digital signatures from a certifying agency. Digital signatures are required for filing the incorporation documents online.
- Filing for Incorporation
Once the MoA, AoA, and digital signatures are in place, you can file an application for incorporation with the RoC. The application should contain the following documents:
- Memorandum of Association (MoA) and Articles of Association (AoA)
- A declaration by a chartered accountant, company secretary, or advocate stating that all the requirements of the Companies Act have been complied with.
- A statement of the nominal capital of the company and the number of shares subscribed by each member.
- A list of the proposed directors of the company, along with their consent to act as directors.
- A proof of address of the registered office of the company.
- Certificate of Incorporation
If the RoC is satisfied with the application, they will issue a Certificate of Incorporation. The certificate signifies that the producer company is now a legal entity and can commence business.
- Other Registrations
Once the producer company is incorporated, you may need to obtain other registrations, such as a PAN card, TAN, GST registration, and others, depending on the nature of your business.
In addition to the above-mentioned steps, there are a few more things you need to keep in mind when incorporating a producer company:
- Share Capital The minimum share capital requirement for a producer company is Rs. 5 lakhs. The members can contribute to the share capital in proportion to the shares subscribed by them.
- Board of Directors A producer company should have a minimum of five directors, and all of them should be members of the company. At least two-thirds of the directors should be elected by the members. The first directors are usually appointed by the promoters of the company.
- Conducting Meetings A producer company is required to hold at least one board meeting every three months and one general meeting every year. The meetings can be conducted in person or through video conferencing.
- Auditing A producer company is required to get its books of accounts audited by a qualified chartered accountant every year.
- Taxation A producer company is taxed at a lower rate than a regular company. The company is exempt from paying tax on its profits if it earns less than Rs. 20 lakhs in a financial year. If the profits exceed Rs. 20 lakhs, the company is taxed at 30%.
Conclusion
In conclusion, incorporating a producer company can be a good option for those looking to work in the agricultural or allied sectors. However, it is crucial to ensure that all the necessary steps are followed, and the company complies with all legal and regulatory requirements. Seeking the guidance of a professional can help you navigate the process smoothly and ensure the success of your producer company.
Frequently Asked Questions (FAQs)
What is a producer company?
A producer company is a type of company that allows primary producers such as farmers, artisans, and others to form a collective and work towards mutual benefit.
How many members are required to incorporate a producer company?
A producer company should have a minimum of ten members, and all members must be primary producers or producer institutions.
What is the minimum share capital required for a producer company?
The minimum share capital required for a producer company is Rs. 5 lakhs.
How many directors are required for a producer company?
A producer company should have a minimum of five directors, and all of them should be members of the company.
What is the process of producer company incorporation?
The process of producer company incorporation involves choosing a name, drafting the MoA and AoA, obtaining digital signatures, filing for incorporation with the RoC, and obtaining a certificate of incorporation.
Can a producer company raise funds from the public?
No, a producer company cannot raise funds from the public. It can only raise funds from its members and other producer institutions.
Is it mandatory to hold board meetings and general meetings for a producer company?
Yes, a producer company is required to hold at least one board meeting every three months and one general meeting every year.
What is the taxation rate for a producer company?
A producer company is taxed at a lower rate than a regular company. The company is exempt from paying tax on its profits if it earns less than Rs. 20 lakhs in a financial year. If the profits exceed Rs. 20 lakhs, the company is taxed at 30%.
Can a producer company change its registered office?
Yes, a producer company can change its registered office by filing the necessary forms with the RoC.
What are the benefits of incorporating a producer company?
Some of the benefits of incorporating a producer company include access to credit and markets, better bargaining power, and the ability to pool resources and expertise.
