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What is Producer Company

Producer company means a body corporate having Objects or activities specified in section 581B and Registered as Producer Company Under the Companies Act,2014 (No 1 of 1956) and that the company is Pvt Ltd. More so, the department of ministry of Corporate Affairs of the central government constantly reviews the functioning of the company at regular intervals.
Company is not a personal institution owned by an individual but it is a fully democratic organization managed by the board of directors who are elected by the share holders of company in the annual general body meeting and the board of directors take decisions unanimously with total transparency

Objectives of Producer Company

  • Production,harvesting,Procurement,grading,Pooling,handling,marketing,selling,export of Primary produce of the Members or import of goods of 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.
  • Processing including preserving, drying, distilling, brewing, venting, panning and packaging of produce of its members.
  • Manufacture, sale or supply of machinery, equipment or consumables mainly to its Members.
  • Providing education on the mutual assistance principles to its Members and others;
  • Rendering technical services, consultancy services, training research and development and all other activities for the promotion of the interests of its Members.
  • Generation, transmission and distribution of power, revitalization of land and water resources, their use, conservation and communications relatable to primary produce.
  • Insurance of producers or their primary produce
  • Promoting techniques of mutuality and mutual assistance
  • Welfare measures or facilities for the benefit of members as may be decided by the Board
  • 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
  • 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.

A holistic concept

  • Producer company is an entity for, by and of producers.
  • Needs government funding.
  • Producer company staffed by professionals.
  • Producers responsible for on farm activities
  • Managed by professionals.

Origin of concept

  • The concept of producer companies was introduced in 2002 by incorporating a new Part IXA into the Companies Act, 1956 based on the recommendations of an expert committee led by noted economist, Y. K. Alagh.
  • Aim of the Committee was to – frame a legislation that would enable incorporation of cooperatives as companies and conversion of existing cooperatives into companies
  • Ensuring the unique elements of cooperative business with a regulatory framework similar to that of companies.

Characteristics of Producer Company

  • The registered producer company should be treated as a private limited company with the significant.
  • difference that a minimum of two persons cannot get them registered.
  • These companies are with limited liabilities and limited only by share capital.
  • The liability of the members is limited to the unpaid amount of the shares held by them.
  • The maximum number of members can exceed 50.
  • It shall never become a public (or deemed public) limited company.