A Producer Company is a special type of company formed under Section 581A to 581ZL of the Companies Act, 1956 (still applicable through Companies Act, 2013), designed to benefit farmers, producers, and agricultural workers.
It is a hybrid of a cooperative society and a private limited company, primarily aimed at empowering primary producers (farmers, milk producers, handloom weavers, fishermen, etc.) by giving them a structured platform for collective business.
A Producer Company must be registered with the Registrar of Companies (ROC) and consist only of “Producer Members” engaged in primary production or related activities.
Separate Legal Entity :
Producer Company is a legal entity and a juristic person established under the Act. Therefore Producer Company form of organization has wide legal capacity and can own property and also incur debts. The members (Shareholders/Directors) of Producer Company have no liability to the creditors of Producer Company for such debts.
Perpetual Existence :
Producer Company has 'perpetual succession', that is continued or uninterrupted existence until it is legally dissolved. Producer Company, being a separate legal person, is unaffected by the death or other departure of any member but continues to be in existence irrespective of the changes in membership.
Borrowing Capacity :
Producer Company enjoys better avenues for borrowing of funds. It can issue debentures, secured as well as unsecured and can also accept deposits from the public, etc. Even banking and financial institutions prefer to render large financial assistance to Producer Company rather than partnership firms or proprietary concerns.
Easy Transferability :
Shares of Producer Company limited by shares are transferable by a shareholder to any other person. Filing and signing a share transfer form and handing over the buyer of the shares along with share certificate can easily transfer shares.
Owning Property :
Producer Company being a juristic person, can acquire, own, enjoy and alienate, property in its own name. No shareholder can make any claim upon the property of the company so long as the company is a going concern.
Limited Liability :
Limited Liability means the status of being legally responsible only to a limited amount for debts of Producer Company. Unlike proprietorships and partnerships, in a limited liability company the liability of the members in respect of the company's debts is limited.
Producer Company Incorporation –
G K B & Associates can incorporate a Producer Company in 14 to 20 days, subject to ROC processing time.
Obtaining DSC & DIN –
Digital Signature Certificate(DSC) and Director Identification Number(DIN) is required for the proposed Directors of the Producer Company. DIN and DSC can be obtained for the proposed Directors within 2-3 days.
Name Approval –
A minimum of one and a maximum of two proposed names must be submitted for RUN (Reserve Unique Name) to the MCA. Subject to availability, naming guidelines and MCA processing time, Name Approval can be obtained in 2 to 3 business days.
Company Incorporation –
Incorporation documents can be submitted to the MCA along with an application for incorporation. MCA will usually approve the application for incorporation in 5-7 days, subject to their processing time.
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