Registration of Farmer producer company

At A2Z FINEDGE, we provide exceptional taxation compliance and filing services tailored to help farmers and agricultural entrepreneurs establish Farmer Producer Companies (FPCs). With a team of experienced Chartered Accountants (CAs), Company Secretaries (CSs), MBAs, lawyers, and advocates, we ensure a seamless registration process for your FPC. Here’s an in-depth guide to understanding Farmer Producer Companies and the registration process.

What is a Farmer Producer Company?

A Farmer Producer Company (FPC) is a legal entity formed under the Companies Act, 2013, specifically designed to benefit farmers by promoting collective farming and providing better market access for their produce. Unlike traditional companies, FPCs prioritize the economic and social welfare of their members while maintaining profitability.

Objectives of a Producer Company

1. Enhancing Income: Empowering farmers to earn better returns through collective bargaining and market access.
2. Market Linkages: Establishing direct connections with buyers, reducing dependency on intermediaries.
3. Input Supply: Ensuring timely availability of quality seeds, fertilizers, and other inputs.
4. Value Addition: Promoting processing, packaging, and branding of agricultural products.
5. Capacity Building: Training members on modern farming techniques, technology, and financial literacy.
6. Infrastructure Development: Facilitating the creation of warehouses, cold storage, and logistics facilities.

Regulatory and Legal Framework

1. Companies Act, 2013:
• Governed under Section 581A to 581ZT of the Companies Act, 1956 (now integrated into the Companies Act, 2013).
2. Registrar of Companies (RoC):
• Registration and compliance oversight by the RoC.
3. Reserve Bank of India (RBI):
• If financial activities such as lending are undertaken, compliance with RBI norms is mandatory.
4. Income Tax Act, 1961:
• Eligible for tax benefits and exemptions under specific provisions.

Activities of a Producer Company

1. Production:
• Cultivation, harvesting, and processing of agricultural or horticultural produce.
2. Procurement and Marketing:
• Selling produce directly in domestic and international markets.
3. Processing:
• Activities such as drying, sorting, grading, and packaging to add value.
4. Storage:
• Establishing warehouses and cold storage units for safe preservation.
5. Financial Services:
• Offering loans and credit facilities to members for agricultural activities.
6. Insurance:
• Providing crop insurance and risk management services.
7. Welfare Activities:
• Promoting education, healthcare, and sustainable practices for members.

Advantages of a Farmer Producer Company

1. Legal Recognition:
• Operates as a legal entity, ensuring better credibility.
2. Tax Benefits:
• Eligible for exemptions under Section 10(1) of the Income Tax Act.
3. Market Access:
• Easier access to domestic and international markets.
4. Government Support:
• Eligible for subsidies and grants under agricultural and rural development schemes.
5. Limited Liability:
• Members’ liability is limited to their shareholding.
6. Economic Empowerment:
• Enables farmers to gain collective bargaining power.

Minimum Requirements for Capital and Membership Structure

1. Capital Requirement:
• As per the Companies Act, 2013, there is no minimum paid-up capital requirement for forming a Farmer Producer Company. However, the authorized capital should be planned adequately to meet operational and future expansion needs.
• The minimum Authorized Capital for a Producer Company is Rs. 5 lakh. However, the Authorized Capital can exceed Rs. 5 lakh as specified in the Memorandum of Association.
2. Membership Structure:
• Minimum of 10 individual farmers or two producer institutions.
• Membership restricted to primary producers such as farmers, agricultural laborers, or producer institutions.

Governance Structure

1. Board of Directors:
• Minimum of 5 and maximum of 15 directors.
• Directors are elected by members and serve specific terms.
2. Chief Executive Officer (CEO):
• Appointed by the Board to manage daily operations.
3. General Body:
• Comprises all members and is responsible for key decisions such as budget approval and policy formulation.

Points to Keep in Mind Before Registration

1. Clear Objectives:
• Define the activities and goals of the FPC.
2. Member Eligibility:
• Ensure all members meet the criteria of being primary producers.
3. Capital Planning:
• Allocate sufficient funds for operations and future growth.
4. Infrastructure:
• Assess the need for facilities such as warehouses and cold storage.
5. Compliance Awareness:
• Familiarize with ongoing statutory compliance requirements.

List of Documents Required for Registration

1. Identity Proof of Members:
• PAN Card, Aadhaar Card, or Passport.
2. Address Proof of Members:
• Utility Bill, Bank Statement, or Voter ID.
3. Registered Office Address Proof:
• Rent Agreement or Property Ownership Documents.
• NOC from Property Owner.
4. Digital Signature Certificate (DSC):
• Required for all directors and authorized signatories.
5. Director Identification Number (DIN):
• Mandatory for all directors.
6. Proposed Name of the Company:
• Unique name approved by the Ministry of Corporate Affairs (MCA).
7. Memorandum of Association (MoA) and Articles of Association (AoA):
• Drafted documents outlining objectives and governance.

Detailed Process for Registration

1. Name Reservation:
• Submit the proposed name through the RUN (Reserve Unique Name) service on the MCA portal.
2. Digital Signature and DIN:
• Obtain DSCs for directors and apply for their DINs.
3. Drafting MoA and AoA:
• Prepare and finalize the Memorandum and Articles of Association.
4. Filing Incorporation Application:
• File the SPICe+ form along with required documents for incorporation, PAN, and TAN applications.
5. Verification and Approval:
• The Registrar of Companies reviews the application and issues a Certificate of Incorporation upon approval.
6. Post-Incorporation Compliance:
• Obtain GST registration, open a bank account, and adhere to other statutory requirements.

Compliance Requirements

1. Annual Filing:
• Submit financial statements and annual returns to the RoC.
2. Tax Filings:
• File income tax returns and ensure compliance with TDS regulations.
3. Board Meetings:
• Conduct regular board meetings and maintain minutes.
4. Audits:
• Mandatory statutory audits by a qualified Chartered Accountant.
5. Other Filings:
• File GST returns and comply with agricultural sector-specific regulations.

Frequently Asked Questions (FAQs)

1. What is the minimum number of members required to form a Farmer Producer Company?
• A minimum of 10 individual farmers or two producer institutions is required.
2. Can an FPC engage in non-agricultural activities?
• No, the primary focus must remain on agricultural or allied activities.
3. Are tax benefits available for Farmer Producer Companies?
• Yes, FPCs are eligible for specific exemptions under the Income Tax Act.
4. What is the role of the CEO in an FPC?
• The CEO is responsible for managing daily operations and implementing policies set by the board.
5. How long does the registration process take?
• The process typically takes 15-20 working days, depending on document verification.
6. Can foreign nationals be members of an FPC?
• No, membership is restricted to Indian primary producers or producer institutions.
7. Is there any government support for FPCs?
• Yes, FPCs can avail of subsidies, grants, and loans under various government schemes.

Why Choose A2Z FINEDGE?

• Expert Guidance: Our team of professionals ensures a smooth registration process.
• Comprehensive Services: From drafting documents to compliance, we handle everything.
• Transparent Pricing: Clear and competitive pricing without hidden charges.
• Timely Execution: Efficient and timely completion of registration and compliance requirements.
• Post-Registration Support: Assistance with ongoing compliance and governance.

Contact Us Today!

Ready to register your Farmer Producer Company. 

Call or email us today. Let A2Z FINEDGE simplify your registration journey and help you achieve your agricultural goals!