1. “Producer Company” means a body corporate having objects or activities specified in section 378B and registered as Producer Company under this Act or under the Companies Act, 1956 (1 of 1956); 
  2. “producer” means any person engaged in any activity connected with or relatable to any primary produce;
  3.  “Producer Institution” means a Producer Company or any other institution having only producer or producers or Producer Company or Producer Companies as its member whether incorporated or not having any of the objects referred to in section 378B and which agrees to make use of the services of the Producer Company or Producer Companies as provided in its articles;

Objects of Producer Company

(1) The objects of the Producer Company shall relate to all or any of the following matters, namely:-

(a) production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of primary produce of the Members or import of goods or services for their benefit: Provided that the Producer Company may carry on any of the activities specified in this clause either by itself or through other institution; 

(b) processing including preserving, drying, distilling, brewing, vinting, canning and packaging of produce of its Members; 

(c) manufacture, sale or supply of machinery, equipment or consumables mainly to its Members; 

(d) providing education on the mutual assistance principles to its Members and others; 

(e) rendering technical services, consultancy services, training, research and development and all other activities for the promotion of the interests of its Members; 

(f) generation, transmission and distribution of power, revitalisation of land and water resources, their use, conservation and communications relatable to primary produce; 

(g) insurance of producers or their primary produce; 

(h) promoting techniques of mutuality and mutual assistance; 

(i) welfare measures or facilities for the benefit of Members as may be decided by the Board; 

(j) any other activity, ancillary or incidental to any of the activities referred to in clauses (a) to (i) or other activities which may promote the principles of mutuality and mutual assistance amongst the Members in any other manner;

 (k) financing of procurement, processing, marketing or other activities specified in clauses (a) to (j) which include extending of credit facilities or any other financial services to its Members.’’. (2) Every Producer Company shall deal primarily with the produce of its active Members for carrying out any of its objects specified in this section.

Formation of Producer Company and its registration-

(1) Any ten or more individuals, each of them being a producer or any two or more Producer Institutions, or a combination of ten or more individuals and Producer Institutions, desirous of forming a Producer Company having its objects specified in section 378B and otherwise complying with the requirements of this Chapter and the provisions of this Act in respect of registration, may form an incorporated company as a Producer Company under this Act. 

(2) If the Registrar is satisfied that all the requirements of this Act have been complied with in respect of registration and matters precedent and incidental thereto, he shall, within thirty days of the receipt of the documents required for registration, register the memorandum, the articles and other documents, if any, and issue a certificate of incorporation under this Act.

 (3) A Producer Company so formed shall have the liability of its Members limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them and be termed a company limited by shares. 

(4) The Producer Company may reimburse to its promoters all other direct costs associated with the promotion and registration of the company including registration, legal fees, printing of a memorandum 204 and articles and the payment thereof shall be subject to the approval at its first general meeting of the Members. 

(5) On registration under sub-section (2), the Producer Company shall become a body corporate as if it is a private limited company to which the provisions contained in this Chapter apply, without, however, any limit to the number of Members thereof, and the Producer Company shall not, under any circumstance, whatsoever, become or be deemed to become a public limited company under this Act.

Documents/Checklist for a Private Limited Company

Copy of Aadhar

Copy of PAN

Driving License OR Voter ID card OR Passport

Bank Account Statement Updates

Mobile Number

Email ID of all promoters and directors

Passport Size Photograph of all promoters and directors

Address Proof for Registered Office (Electricity Bill not more than 1 month)

Name of Company

Qualification of Promoter

Paid-up Capital of Company

Specimen Signature of One Director

Farmer Certificate issued by appropriate Authority.

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Benefits of the Producer Limited Company

Benefits To The Members:

The most essential benefit is that members of the Producer Company receive the money for the produce pooled and delivered once the directors of the relevant producer company have determined the amount. This money is then distributed to the business’s members in the form of cash or equity shares. • Producer Company members also get bonus shares in the same proportion as the equity shares they own in the producer company. Surplus (after allowing for the payment of the minimal return and reserves) may be returned to the producing company’s members as a patronage bonus. Patronage bonus refers to the distribution of surplus money to the production company’s members in proportion to their patronage. 

Tax Benefits

Section 10(1) of the Income Tax Act of 1961 exempts agricultural income. The agricultural income exemption, on the other hand, differs according to on the activity carried out by the producers or farmers. The Income Tax Act does not give any particular tax benefits to farmer producer firms, but there are several tax exclusions and perks that they can take advantage of based on the agricultural activity that the company engages in. For example, currently, the agriculture income is 100% exempted. As a result, money earned from green tea leaves is tax-free, but if those tea leaves are used to make tea, 60 percent of the income will be exempt, while the remaining 40 percent would be taxed. As a result, it is evident that tax advantages and exemptions are dependent on the company’s activity. During periods of restricted return distribution and patronage bonus, the Producer Company is obligated to pay dividend tax at the corresponding rates, while the dividends are tax-free in the hands of the company’s members. Members are exempt from paying taxes during the allotment of Bonus Shares. During the sale or redemption, however, regulations relating to capital gain tax will apply.

Transferability of of Shares

The capital of accompany is divided into parts called shares. The shares are said to be moveable property and subject to certain conditions, freely transferable for that. No shareholder is permanently or necessarily wedded to a company. It may be noted that this right of shareholder is restricted in the case of a private company.

Contractual Rights

A company, being a legal entity different from its members, can enter into contract for the conduct of the business in its own name. A member of a company cannot sue in respect of torts committed against it, nor can be sued for torts committed by the company.

Termination of existence

It has the existence only in contemplation of law. It is created by law, carries on its affairs according to law throughout its life and ultimately is affected by law. Generally, existence of a company is terminated by means of winding up.

Separate Property

No member can claim himself to be the owner of the company’s properties either during its existence or in its winding up. A member does not even have an insurable interest in the property of the company.

Capacity to sue and be sued


A company, being a body corporate, can sue and be sued in its own name.

Limited liability

A company limited by shares is a registered company having the liability of its members limited to the amount, if any, unpaid on the shares respectively held by them. If his shares are fully paid-up, he has nothing more to pay.

Separate Management


The members of a company may derive profits without being burdened with the management of the company. The company is administered and managed by its own managerial personnel.