Producer Company

A Producer Company is a body corporate that blends the mutual-benefit ethos of a cooperative with the legal standing and governance of a limited company, formed by primary producers to carry on the production, procurement, processing and marketing of their produce. It is registered with the Registrar of Companies under the Ministry of Corporate Affairs, and its name must end with the words "Producer Company Limited". Farmer Producer Organisations (FPOs) most commonly adopt this structure.

Legal basis

Producer Companies are governed by Chapter XXIA (Sections 378A to 378ZU) of the Companies Act, 2013, inserted by the Companies (Amendment) Act, 2020 with effect from 11 February 2021. This replaced the earlier Part IXA of the Companies Act, 1956, which had continued to apply until then. A Producer Company is treated as a private limited company for compliance, but it is not subject to the 200-member ceiling.

Who can form one

Under Section 378C, any of the following may incorporate a Producer Company:

• Ten or more individuals, each being a producer;
• Two or more producer institutions; or
• A combination of ten or more individuals and producer institutions.

Membership is restricted to primary producers engaged in activities such as agriculture, horticulture, animal husbandry, floriculture, sericulture or handloom. It must have a minimum of five and a maximum of fifteen directors.

Permitted objects

Section 378B limits activities to production, harvesting, procurement, grading, pooling, handling, marketing, selling and export of members' primary produce, along with processing, supply of inputs and machinery, and technical, financial and welfare services. Members hold only equity shares, generally vote on a one-member-one-vote basis, and may transfer shares only to other active members with Board approval.