Farmer Producer Company

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Section 581C of the Companies Act, 1956 provides for the association of 10 or more people who are producers, two or more producer institutions or a combination of the two for the formation of a producer company. The registrar after being satisfied that all the required documents necessary for registration are complied with, may issue a certificate within 30 days of receipt of such documents. Producer companies are the ones which are limited by shares as the liability of the members is limited to the number of shares purchased by them.

Persons involved in an activity connected with, or related to, primary produce
can own producer companies.
The members must be mandatorily primary producers.
Such companies are also termed as “Companies with Limited Liability” wherein
the liability of the members will be limited to the amount, if any, unpaid on the
shares.
Name of the company shall end with the words ‘Producer Company Limited’.
For the purpose of application of law and administration, the producer company
on registration will be deemed as if it is a private company in keeping with part
IX-A.
There is no limit as to the maximum number of members
Other than the fact such companies are hybrid of companies and co-operatives,
Producer Companies were able to gain momentum ahead of the Co-operatives
mainly because co-operatives are welfare oriented and do not delve on commercial lines.
Further, they are promoted by the States which also means increased state
intervention. Also, it is considered that management under central legislation is
far more liberal than government control.

Farmer Producer Company

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