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The Government of India through an amendment in the Companies Act, 1956 by the Companies (Amendment) Act, 2002 incorporating a new part IXA dealing with Producer Company in the Companies Act, 1956 based on the recommendations of the Y.K. Alagh Committee. The Amendment Act came into force w.e.f. 6th February, 2003 vide Notification no. 135(E) dated 5th February, 2003.The producer companies are incorporated with the Registrar of Company (RoC). The objective was to formulate a legislation that would enable incorporation of cooperatives as companies and conversion of existing.


Part IXA which was introduced by the Companies (Amendment) Act, 2002 in The Indian Companies Act, 1956 deal with Producer Company consist of twelve chapters and 46 sections covered from section 581A to 581ZT.


Producer Company means a body corporate having objects or activities specified in section 581B and registered as a producer company under the Companies Act, 1956.

Every producer company should deal basically with the produce of its active member for carrying out any of its objects. The objects of the producer company, as per section 581B, may be relating to all or any of the following matters, namely:

(a) Production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of primary produce of the Members or import of goods or services for their benefit:

Provided that the Producer Company may carry on any of the activities specified in this clause either by itself or through other institution;

(b) Processing including preserving, drying, distilling, brewing, vinting, canning and packaging of produce of its Members;

(c) Manufacture, sale or supply of machinery, equipment or consumables mainly to its Members;

(d) Providing education on the mutual assistance principles to its Members and others;

(e) Rendering technical services, consultancy services, training, research and development and all other activities for the promotion of the interests of its Members;

(f) Generation, transmission and distribution of power, revitalisation of land and water resources, their use, conservation and communications relatable to primary produce;

(g) Insurance of producers or their primary produce;

(h) Promoting techniques of mutuality and mutual assistance;

(i) Welfare measures or facilities for the benefit of Members as may be decided by the Board;

(j) Any other activity, ancillary or incidental to any of the activities referred to in clauses (a) to (i) or other activities which may promote the principles of mutuality and mutual assistance amongst the Members in any other manner.

(k) Financing of procurement, processing, marketing or other activities specified in clauses (a) to (j) which include extending of credit facilities or any other financial services to its Members.

Every Producer Company shall deal primarily with the produce of its active Members for carrying out any of its objects specified in this section.  


Section 581C of the Companies Act, 1956 lays down the provision relating to formation and registration of producer company. Any ten or more individuals, each of them being a producer or two or more producer institutions or a combination of ten or more individuals and producer institutions, desirous of forming a producer company having its objects, specified in section 581B and otherwise complying with the requirements of this part and the provisions of this Act in respect of registration, may for an incorporated company as Producer Company under this Act.

A producer company can be incorporated only for the objects as given in section 581B of the Companies Act, 1956 and for no other purpose, whether directly or indirectly.

The Following steps involved in the formation of Producer Company:

1. Applicant:

Any of the following combination of producer can incorporate of Producer Company:

- Any ten or more individuals, each of them being a producer

- Two or more producer institutions

-  A combination of ten or more individuals and producer institutions

2. Filing of Name Application:

Select few suitable names which should indicate as for as possible the main objects of the proposed producer company with Producer Limited Company as the last words of the name of such company. File an application in Form-1A along with a fee of Rs. 1000/-as per the mode of payment. The application shall be made to the Registrar of Companies (ROC) of the State in which the registered office of the producer company is proposed to be situated.

(Note: The provisions as regard the selection of name, as are applicable in terms of section 20 of the Companies Act, 1956 read with Emblems and Names (Preventions of Improper Use)  Act, 1950 shall mutatis mutandis apply to producer company.)

On receipt of communications from the ROC intimating that the name applied for is available, get the Memorandum and Articles of Associations of the company drafted and printed. The Memorandum and Articles of Associations should be prepared in accordance with section 581F and 581G respectively.

3. Stamping of Memorandum and Articles of Associations:

The Memorandum and Articles of Association of the company should got be printed and stamped by the appropriate authority (Collector of Stamp) in accordance with the requirement of the Indian Stamp Act, 1899 either electronically or physically. Thereafter, the Memorandum and Articles of Associations should be signed by the requisite subscribers, i.e. ten or more individuals, each of them being a producer or two or more producer institutions or a combination of ten or more individuals and producer institutions.

Each subscriber to the memorandum shall write in his/her own hand, his/her father/husband’s name, occupation, address and the number of shares subscribed for by him/her. The signature of all the subscribers shall also be witnessed. The witness shall also sign and write in his own hand, his name, his father’s name, occupation and address.

4. Dating of Memorandum and Articles of Associations:

After stamping of Memorandum and Articles of Association it will be then dated. The date must be a date of stamping or later than the date of their stamping and not a date prior to the date of their stamping.

5. Object of the Producer Company:

The object clause of the memorandum of association of the producer company must specify all or any of the matters specified in section 581B. The objects given in memorandum of associations which are not consistent with objects mentioned in section 581B will not be considered by ROC.

6. Appointment of First Directors:

The first directors of the producer company are named in the Articles of Association of the Company who will hold office till directors are appointed within a period of 90 days of the registration of the producer company.

However, in case of an inter-state co-operative society which has been registered as Producer Company under section 581J, the first director should be appointed within a period of 365 days of the date of registration as Producer Company.

The minimum and maximum number of directors of the producer company should be 5 and 50. Their tenure is for a minimum period of 1 year and the maximum period of 5years.

7. Filing of Documents and Forms electronically with Registrar of Companies:

(i) First form is Form-1, which is required to be filed with following attachment:

(a) Memorandum and Articles of Association duly stamped, signed and dated.

(b) Power of Attorney, duly stamped and executed by all the subscribers, authorizing  any one of them or any other person to follow up the matter with the ROC.

(c)A statutory declaration in E-form -1 (on Stamp Paper) as prescribed in the Companies (Central Government’s) General Rules and Forms (Amendment) Rules, 2006 declaring compliance of all and incidental matters regarding formation of companies (Section 33(2)).                       

(Note: 1. Stamp duty on e-Form-1, Memorandum of Association and Articles of Association can be paid electronically through the MCA portal and in such case submission of physical copies of the uploaded e-Form-1, MoA and AoA to the office of ROC is not required.

2. Payment of stamp duty electronically through the MCA portal is mandatory in respect of the States which have authorised the Central Government to collect stamp duty on their behalf. In respect of the States from whom the authorization is yet to be received, the company will continue to pay outside the MCA portal.

3. In case, stamp duty is not paid electronically through MCA portal, it is required to deliver simultaneously the original stamped physical copies of the uploaded e-Form-1, MoA and AoA along with a copy of challan/receipt in the concerned office of ROC failing which such e- Form shall be put into “Waiting for User Clarification” in terms of Regulation 17 of the Companies Regulations, 1956.)

(ii) Filing of Form-18 containing notice of situation of registered office of the proposed company.

(iii) Filing of Form-32 containing particulars of first directors of the proposed producer company.

8. Registration and Filing Fee:

Promoters must make sure to remit to the ROC, along with the above forms/documents, th prescriber registration fee and fee for filing of forms as per the rates contained in the Schedule X to the Companies Act, 1956. The fee is to be paid electronically as per the mode of payment discussed earlier.

9.  Certificate of Incorporation:

After the ROC fully satisfied, that all the requirements of this Act have been complied with in respect of registration and matters precedent and incidental thereto, he shall within 30 days of the receipts of documents required for registration, register the memorandum, articles and other documents, if any, and issue a Certificate of Incorporation under this Act.

The Registrar (ROC) shall issue the Certificate of Incorporation (COI) bearing a Corporate Identification Number (CIN) consisting of 21 digits within 30 days of the receipt of the document required for registration.

10. Reimbursement of Promotional Expenses:

The Producer Company may reimburse to its promoters associated with the promotion and registration of the Company, all other direct costs, associated with promotion and registration of the company including registration, legal fees, printing of the Memorandum and articles of association and the payment thereof shall be subject to the approval at  its first general meeting of the members.

On, registration, the producer company shall become a Body Corporate as if it is a private limited company. The liability of its member shall be limited by the Memorandum to the amount, if any, unpaid on the shares respectively held by the members.

For the purpose of application of the Companies Act, it shall be deemed as if it is a private company but the limit to the number of members as is applicable to private company shall not apply to the producer company. (Section 581C).


CS Ajay Mishra

Published by

Ajay Mishra
(Company Secretary)
Category Corporate Law   Report

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