FARMER PRODUCER COMPANY: INCORPORATION AND THEIR BENEFITS
A producer company is a Company that is incorporated under the provisions of the Companies Act, 2013 and shall carry on following activities that are mentioned as following:
- Production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of primary produce of the Members or import goods for their benefit.
- Processing including preserving, drying, distilling, brewing, venting, canning 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 interest of its members.
- Generation, transmission and distribution of power, revitalisation 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 above clauses 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 above clauses which include extending credit facilities or any other financial services to its members.
What are the function of Farmer Producer Company ?
A farmer producer company is a group of farmers that band together to increase their revenue and enhance their standard of life. In India, a Producer Company can be formed with merely 10 members and two institutions. In India, more than 80% of farmers are unorganized and have tiny or marginal holdings. Farmer Producer Company encourages farmers and assists them in reaching their economic potential by pursuing the following goals:
- Production
- Procurement
- Harvesting and Grading of Fruits and Vegetables
- Handling and Poling
- Agricultural product marketing
- Selling, exporting and importing agricultural products.
What are the Benefits of forming a Farmer Producer Company in India?
The Producer Company’s major goal is to establish a farmer society in the form of a corporation and to convert an existing cooperative society into a formal corporation. For this, they engage in operations such as production, procurement, pooling, harvesting, grading, handling, marketing, selling, and import/export of all members’ primary producers.
Trustworthiness -In comparison to other unregistered farmer or agriculturist groups, a producer business provides more legitimacy to farmers.
Separate legal entity with limited responsibility- The formation of a production company provides its members with a separate legal entity and restricted liability.
Owning of property- A properly registered farmer corporation has the authority to sell or possess real estate in its name. It also has the authority to take deposits or provide loans to its agriculturist members at very low-interest rates.
Management and registration are simple.
It is straightforward to register as a production business, and the firm can make changes to the Board of Management by completing a few basic paperwork with the relevant ROC.
Deposits are accepted –Deposits can be made in the form of fixed or recurring deposits by a registered firm. They can also release the loan to members and farmers at any time.
What are the Benefits of joining a Farmer Producer Company in India?
Here are some of the producing company’s main benefits to its own 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.
PRE-REQUISITES FOR INCORPORATION:
1. As per section clause (1) of section 581C of the Companies Act, 1956, any one of the following combinations can form a Producer Company: Any ten or more individuals each of them being a producer Or any two or more Producer Institutions Or Combination of 10 or more individuals and Producer Institutions.
2. There should be a minimum of 5 and maximum of 15 directors in a producer Company.
3. A minimum capital of Rs. 500,000 is required to incorporate a producer company. However, it is always recommended to form the producer Company with an authorized capital of Rs. 15 lacs as the same falls under the government scheme of nil stamp duty.
4. All the Subscribers should have Digital Signature in spite of the no of the Directors.
INCORPORATION PROCESS OF PRODUCER COMPANY:
1. Name Reservation:
The name of the Company should be applied through SPICE Part A along with the fees of Rs. 1,000/- or directly applied with the Company. The name of the Company should end with PRODUCER COMPANY LIMITED.
2. Preparation of MOA and AOA:
As there are minimum 10 subscribers therefore, MOA & AOA of Producer Company shall always be physical MOA & AOA and accordingly, the requirement of filing SPICE MOA and AOA is dispensed with while incorporation of the Producer Company.
3. Preparation of E-form SPICE:
Applicant has to fill in the information in the e-form “Spice+” along with following attachments: – Consent to act as Directors along with copy of proof of identity and residential address. NOC from the owner of the property and proof of office address (Rent Agreement/Conveyance Deed, etc.) along with the copy of the utility bills (not older than two months).
4. Filing of forms with Ministry of Corporate Affairs:
Once all the forms are ready, upload all three documents i.e., Spice+, Agile Pro and INC-9 as linked forms on MCA website and make the payment of the same. If there is some error or mistake in the SPICE Forms, MCA allow correction in forms maximum 2 time.
5. Certificate of Incorporation
Incorporation certificate shall be generated with CIN, PAN & TAN details over it
What are the tax advantages for a farmer-producer company?
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.
