This article has been written by Raghav Madan, pursuing a Diploma in Law Firm Practice: Research, Drafting, Briefing and Client Management from LawSikho. It has been edited by Zigishu Singh (Associate, LawSikho) and Ruchika Mohapatra (Associate, LawSikho).
Table of Contents
Introduction
In India, people are directly and indirectly dependent on the agricultural industry. Although India is the largest country engaged in agricultural fields, however, does not reach its full potential due to outdated methods, technologies and unorganized setup. This leads to failure of crops and thereby being the principal reason farmers commit suicide. Looking back to this problem, the Indian government has placed an expert committee to solve all the problems of the farmers.
A producer company in India is a company registered under the Companies Act with mutual objectives of agriculture production, procurement, post-harvesting processing activities, import goods, selling and distribution, export of primary production of the members to earn more benefits.
A producer company is a committee of 10 or more people and/or 2 institutions with a joint objective of dealing with agricultural and post-harvesting processing activities. In simple words, it is a cluster of farmers who join hands for better living and to improve their income.
Activities of a producer company
The producer company primarily deals with the production of its active members. It also deals with the following activities:
- Processing including preserving, drying, distilling, brewing, vinting, canning, and packaging its members’ produce;
- Manufacturing, selling, or supplying the machinery, equipment, or consumables to its members;
- Provide education to the mutual assistance principle to its members and others;
- Render technical services, consultancy services, training, research and development, and all other activities to promote its members’ interests;
- Activities for the promotion of the interest of its members;
- Generating, transmitting, and distributing power, revitalizing land and water resources, using conservation and communication, are 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 decided by the board;
- Any other activity, ancillary or identical to any of the actions which promote the principles of mutual assistance among the members in any different manner;
- Financing of procurement, processing, marketing, or other activities which include extending of the credit facilities or any other financial services to its members.
Requirements to form a producer company
Pre-registration requirements
- 10 or more than 10 individuals;
- A minimum of 5 directors and 10 members;
- Minimum paid-up capital of Rs. 5 Lakhs;
- The Producer Company cannot be deemed as a public company;
- The company can have only equity share capital;
- There should be at-least four Board Meetings every year and the meetings should not be held less than once every three months.
Documental requirements
- PAN Card/ Passport/ Election ID Card of all the directors and shareholder;
- Latest Bank Statement;
- Voter’s ID/Driver’s License/passport of all the directors and shareholders;
- Passport-sized photographs of all directors and shareholder;
- Copy of any Utility bill as a residential proof;
- In case of rented property a scan copy of Rent agreement along with NOC from the owner;
- In case of owned Property, a copy of Property Papers.
5 step procedure for incorporation of a producer company
Following are the steps for incorporation of Company which nowadays is a very simple procedure:
STEP 1: SPICe+ Login
1) At the very first, you need to Login to Ministry of Corporate Affairs (MCA) portal;
2) After that, please click on MCA services on “SPICe+”(login required to pursue this step);
3) Since you are forming a new company, click on “New Application”;
4) The user can view application numbers on click of existing application along with approved /proposed name. Now from here, you have two options:
a) SPICe+ Part A (enabled after clicking of New Application, which contains fields relating to name reservation of the proposed company);
b) SPICe+ Part B (enabled if the user opted to proceed for incorporation which will showcase different sections).
STEP 2: SPICe+ Part A OR SPICe+ Part B
A) SPICe+ Part A
1) For this you need to fill in the details of the proposed name of the company, class, type, sub-category, category, and click on the auto check button. It must be noted that auto check performs first level automatic inspection of the proposed name against any discrepancies the name rules;
2) Once Part A is completed, you can click on: Submit for Name Reservation for the establishment or, Proceed for Incorporation.
OR
B) SPICe+ Part B
1) Before going through the SPICe+ Part B, you must note that each section of Part B contains the ‘Save & Continue button”. You may check form validations which will happen on each and every segment of the section;
2) Enter the basic detail related to the company to be incorporated (registered or Correspondence Address, Subscribers and Director details, Details related to Capital, etc.);
3) Enter the basic details for the issuance of DIN, PAN (Permanent Account Number) and TAN (Tax Deduction Account);
4) Also, make sure to upload mandatory attachments in the web form and confirm the important declarations. Click on the pre-scrutiny and Submit once pre-scrutiny is successful;
5) Moreover, the user will get a confirmation message once web form is submitted successfully in the portal;
6) It must be distinguished that you being the user can also download Spice+ Part-B pdf for affixing DSCS from the dashboard;
7) All the important linked forms get enabled as well as available for the user to fill and submit based on the fields/parameters set by the user in Part-B form.
STEP 3: AGILE-PRO-S
Recently, the Ministry of Corporate Affairs (MCA) through a Notification dated 7th June 2021 notified the Companies (Incorporation) Fourth Amendment Rules, 2021. With this amendment, MCA has notified the new e-form AGILE-PRO-S (Form INC-35). By filing the AGILE PRO-S form together with the SPICe Plus incorporation form, companies would be enrolled automatically for GST, EPFO, ESIC, Professional tax registration, the opening of bank account, and Shops and Establishment Registration in one go. The present briefs the new E-form AGILE-PRO-S. AGILE-PRO-S needs to be filed as linked with Spice+ in order to get the following requirements:
– Registration with ESIC;
– Registration with GSTIN;
– Bank account number;
– Registration with EPFO;
– Professional Tax Registration.
STEP 4: EMOA AND EAOA FORM
1) Electronic Memorandum of Association (eMoA) is known to be the charter of the company can be filed as a linked form to SPICe+ in order to get the incorporations;
2) Electronic Articles of Association (eAoA) provides all the regulations connected to internal affairs of the company can be filed as a linked form to SPICe+ in order to get the incorporations.
STEP 5: URC-1 INC-9 PDF GENERATIONS
1) It is mandatory to fill “URC-1 Form” in case of Part-I companies, holding all the details of existing entity;
2) INC-9 Declaration Form shall be auto-populated supported by the details of subscribers and directors entered in Part B. It will be available in the dashboard to download and affix DSCs for the user;
3) Once completed, you must click on “Upload Forms” after affixing all other linked forms and DSCs in Spice+ Part B pdf.;
4) The unique Service Request Number (SRN) will get generated on successful upload of forms which will be displayed to the applicant.
Note: SPICe+ form has to be resubmitted in a similar manner in a case where the forms require resubmission for any fault being bannered upon processing.
Overall required attachments
a) SPICe+
1) Memorandum of Association (MOA);
2) Articles of Association (AOA);
3) Declaration by the first subscribers and directors (Affidavit not required);
4) Proof of office address;
5) Copy of utility bills (May vary);
6) Copy of COI (certificate of Incorporation) of foreign body corporate (if any);
7) Passed Resolution by Promoter Company;
8) The consent of 1st directors in other entities;
9) Consent of Nominee in Form INC-3;
10) Residential address & Proof of identity of subscribers;
11) Residential address & Proof of identity of the nominee;
12) Residential address & Proof of identity of applicant I, II, III;
13) In case of Chapter XXI (Part 1) Companies, resolution of unregistered companies has to be submitted;
14) Declaration in Form (INC-14);
15) Declaration in Form no (INC-15);
16) Optional attachments if required.
b) AGILE-PRO-S:
1) Documents related to principal place of business;
2) Documents related to appointment of Authorised Signatory for GSTIN (either of the documents Letter of Authorization /Managing Committee and acceptance Letter/ Copy of Resolution passed by Board of Directors);
3) Documents related to identity of Authorised Signatory for the opening of a bank account;
4) Documents related to address of Authorised Signatory for the opening of a bank account;
5) Documents related to Specimen Signature of Authorised Signatory for EPFO.
Important details regarding producer company
1) The members have to be unavoidably primary producers and can only perform activities prescribed under the Act in India;
2) The proposed name of the company shall end with the words “Producer Company Limited” only;
3) There is no maximum limit of number of members applicable to these types of Companies;
4) The producer company will become as if it is a “Private Limited Company” on registration, for the purpose of application of administration and law of the company;
5) The limit of minimum number of individual members is 10;
6) Share capital shall consist of equity shares only;
7) There must be a minimum of 5 and not more than 15 directors in the Producer’s company;
8) Voting rights shall be based on a single vote of individuals, for every member;
9) A full-time chief executive Officer (CEO) should be appointed by the board;
10) The average time for registration of a Producer company is roughly 30 business days.
Tax benefits
1) Registered Producer Company enjoys tax benefits such as exemption from agricultural income under section 10(1) of the income tax act, 1961;
2) The exemption varies based on activities carried out by the farmers such as the agricultural income is 100% exempted from the income tax while the income earned from the production of green tea is 60% exempted as per the law.
All these benefits make Producer Company Registration more advantageous for all the farmers in India. This could help them in more production and better credit facilities, thus resulting in more profits for their produce. All in all, the producer company is a good initiative for all the farmers in India.
Conclusion
The concept of Producer Company was introduced in 2002, keeping in mind the pressing issues of farmers and agriculturalists, collectively termed producers. The application procedure for incorporation of a Producer Company in India is very similar to that of a Private Limited Company. With a view to accelerate the Ease of Doing Business, the Government of India has made incorporation procedure significantly easier compared to the past years.
The whole procedure can be completed online now. Major form requirements consist of SPICe+ (which could be incorporated by way of Part A or Part B), AGILE-PRO-S, eMOA and eAOA.
Although, there are different types of Producer Companies in India but the procedure remains the same, however, requires much more diligence and accuracy now. With agriculture being the backbone of the Indian economy, the sector employs more than 50% of India’s total workforce and contributes almost 17-18% to the country’s GDP, Producer Companies need more encouragement and thereby this article aims at providing the procedure to incorporate the same.
References
· https://enterslice.com/learning/checklist-registration-producer-company/
· https://www.indiafilings.com/learn/producer-company-india/
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