A Producer Company is a body corporate having an object that shall relate to all or any of the following matters, namely, production, harvesting, procurement, grading, pooling, handling, marketing, selling, and export of primary produce of the Members or import of goods or services for their benefit.

In terms of the Act primary produce a produce of farmers arising from agriculture including animal husbandry, horticulture, floriculture, pisciculture, viticulture, forestry, forest products, re-vegetation, bee raising and farming plantation products: produce of persons engaged in handloom, handicraft and other cottage industries: by – products of such products; and products arising out of ancillary industries.

Producer Company

Company Registration for Producer Company

To register a Producer Company in India, the following members in any of the combination is necessary:

  • Ten or more individuals, each of them being a producer; or
  • Two or more producer institutions; or
  • A combination of ten or more individuals and producer institutions
  • The registration process for a Producer Company is similar to that of a Private Limited Company:
  1. DSC & DIN registration for the proposed first Directors of the Producer Company.
  2. Application for name approval can be filed with the Registrar of Companies (ROC). The name of a producer company must end with the words “Producer Limited Company”.
  3. Application for incorporation can be filed in the prescribed format for incorporating the Producer Company.
  4. If the Registrar is satisfied with the application for incorporation of Producer Company, then he/she will approve the same and issue Certificate of Incorporation.
  5. As soon as a producer company is incorporated, it shall function similar to a private limited company subject to certain provisions.

However, unlike a Private Limited Company, a Producer Company has some dissimilarities:

  1. It does not have a limit on the number of members.
  2. A minimum of two persons cannot get the company registered.
  3. The provision relating to minimum paid up capital of Rs 1 lakh Capital will not

Further, though the name of a Producer Company ends with the words “Producer Limited Company”, it shall under no circumstance become or be deemed to become a public limited company.

On registration, the producer company shall become as if it is a private limited company. For the purpose of application of law and administration of the company (however it shall comply with the specific provisions of part IXA).

Power of Attorney

All the work required to incorporate the Producer Company can be done either by the Board of Directors or alternatively, the General Body can authorize anyone of them or any other person to follow the matter with the RoC (in most cases the service of a Chartered Accounting firm or Company Secretary is acquired for the purpose). In the latter case, they have to execute a power of attorney in favour of the person, who is authorised to act on their behalf.

A power of attorney form duly stamped and executed by all the subscribers of directors have to be submitted to the RoC.

A power of attorney holder is, specifically, authorised to make corrections, as may be necessary in the Memorandum and Articles of Association and all other documents filed with the RoC and to attest the same on their behalf and to receive the Certificate of Incorporation.

Members’ equity cannot be publicly traded but be only transferred. As such, “producer companies would not be vulnerable to takeover by other companies or by MNCs.

Share Capital and Voting Rights:

(i) The share capital of a Producer Company shall consist of equity shares only.

(ii) Members’ equity cannot be publicly traded but only transferred.

(iii) Voting when membership is

  • Only of individuals then voting rights shall be based on a single vote for every member.
  • Only of producer institutions then voting rights on the basis of their participation.
  • Combination of both individuals and producer institutions then voting rights shall be based on a single vote for every member.


  • Every producer company is to have at least five and not more than 15 directors.
  • A full time chief executive should be appointed by the board and shall be entrusted with substantial powers of management as the board may determine.


Every producer company has to maintain a general reserve in every financial year and in case there are not sufficient funds in any year for such transfer, the shortfall has to be made up by members’ contribution in proportion to their patronage in the business.

Members’ Benefit

  • Members will initially receive only such value for the produce or products pooled and supplied as the directors may determine. The withheld amount may be disbursed later either in cash or in kind or by allotment of equity shares.
  • Members will be eligible to receive bonus shares.
  • There is a provision is for the distribution of patronage bonus (akin to dividend) after the annual accounts are approved — patronage bonus means payment out of surplus income to members in proportion to their respective patronage (not shareholding).

Dispute Resolution:

Dispute relating to producers companies are to be settled by conciliation or arbitration under the Arbitration and Conciliation Act, 1996 as if the parties to the dispute have consented in writing to such procedure.

Audit & Internal Audit Requirements:

Producer Companies shall carry out an internal audit of its accounts, at regular intervals in accordance with its articles of association and such an audit shall be carried on by a Chartered Accountant.

In addition to the internal audit, the auditor shall make an annual audit report to the members of the company on the accounts examined by him, and on every balance sheet and profit and loss account and on every other document declared by the Act to be part of or annexed to the balance sheet or profit and loss account, which are laid before the company in general meeting and the report shall state whether, in his opinion and to the best of his information and according to the explanations given to him, the said accounts give the information required by the Act in the manner so required and give a true and fair view.