Producer Company

OVERVIEW

A producer company can be described as a legally recognized body of farmers/ agriculturists with the aim to improve the standard of their living and certify a bright status of their available support, incomes, and profitability. Under Companies Act 1956, a Producer Company can be formed by 10{or more} individuals or 2{or more} institutions or by a combination of both (10 individuals and 2 institutions) own their business objective as one of the following:

• Procurement
• Production
• Harvesting
• Grading
• Pooling
• Handling
• Marketing
• Selling, or
• Export

For their benefit of the primary producers of the Members or import of goods or services.

Following are the benefit of the producer Company.

1. The members of the producer company at first will collect the value for the produce pooled and supplied as determined by the directors. This amount will be given out behind time in the form of cash/ kind/ equity shares.
2. The members of the producer company will be sanction to receive bonus shares in the same proportion to the shares held by them.
3. The surplus may be given as a promotion bonus* to the members of the producer company.

Following are the disadvantages of the producer company.

1. The difficulty of Formation: The promotion of a company is not an uncomplicated task. A number of stages are entailed in company promotion.
2. Separation of Ownership and Management: The ownership and management of the public company is dissimilar
3. Factory System: The company form of entity leads to big-scale production.
4. Speculation in Shares: The joint-stock companies facilitate supposition in the shares at stock exchanges.

Legal Requirements 

Any of the following combinations of producers can incorporate a producer company:

• 10 or more producers (individuals); or
  • 2 or more producer institutions; or
  • Combination of the above two (10+2).

After registration as Producer Company the provision of companies act U/s 581 C (1), the Producer Company shall become a body corporate as if it is a private limited company then provisions of a private limited company will apply.