What is a farmer producer company?
A farmer producer company is a company formed under the Companies Act, 2013, by primary producers so that they can pool, process, and sell their produce. The liability of a member is limited to the amount unpaid on that member’s shares.
Who can form it?
Section 378C allows three combinations. Ten or more individuals, each of them a producer, can form it. Two or more producer institutions can form it. A combination of individuals and producer institutions can form it when they number at least ten. Primary producers include farmers and the other producers the Act names, such as persons engaged in cattle, poultry, fishery, or handloom. How the company is incorporated is on the producer company page.
What may it do?
Section 378B lists the objects. They include production, harvesting, procurement, grading, pooling, handling, marketing, selling, and export of the primary produce of the members. They include processing of that produce, supply of machinery and consumables mainly to the members, education and technical services, insurance of the producers or their produce, and power, water, and land resources relatable to primary produce. Export of the goods still needs an importer-exporter code, which is on the import-export code page.
Can the shares be listed?
No. The shares are not offered to the public and are not traded on a stock exchange. The company is limited by shares. It is not a company limited by guarantee, and it is not a public company. A member transfers shares only with the approval the articles require, and only to a person the Act and the articles allow. Government, NABARD, and other programmes may support a producer company. The rupee amount of any grant is the amount in the current scheme notification.
How is it run?
The board has at least five directors and not more than fifteen, unless the Central Government approves a higher number. The members hold the first annual general meeting within 90 days of incorporation, and a meeting each year after that. Where the average annual turnover exceeds ₹5 crore in each of three consecutive financial years, the company appoints a whole-time company secretary who is a member of the Institute of Company Secretaries of India. Financing the procurement and marketing of the members’ produce can be an object. Taking deposits from the public, or carrying on lending as a principal business, is outside that object and can need a separate registration, such as the one on the NBFC page.
Frequently asked questions
Four questions cover the headcount, capital, a public issue, and deposits.
Is ten the only way to start?
No. Two or more producer institutions can form the company. A mix is also allowed when the individuals and the institutions together are at least ten.
Is there a minimum capital?
No. The Act sets no minimum authorised capital. A figure such as ₹5 lakh is not a statutory floor.
Can it become a public company?
Its shares are not offered to the public and are not listed on a stock exchange. A transfer needs the approval the articles require.
Can it take deposits from the public?
No. Financing the procurement and marketing of members’ produce can be an object. Taking deposits from the public, or lending as a principal business, needs the registration that activity requires.
Sources
Producer companies are in Chapter XXIA of the Companies Act, 2013. Formation is section 378C. The objects are section 378B. Incorporation of this kind of company is a separate service.