Nidhi Company is a type of Non-Banking Financial Company (NBFC). It is formed to borrow and lend money to its members. It inculcates the habit of saving among its members and works on the principle of mutual benefit. These companies typically operate in the southern part of the country.
Producer Company is a company registered under the Companies Act, 2013, which has the objective of production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of primary produce of the Members or import of goods or services for their benefit. Produce are things that have been produced or grown, especially by farming. Therefore, a Producer Company deals primarily with agriculture and post harvest processing activities.
Over 85% of the Farmers in India are small and marginal farmers with land holdings of less than 2 hectares. This fragmentation in farmers and farm lands, leads to disorganization and it is not viable for Indian farmers to adopt the latest technologies. By organization of these farmers into producer companies, economies of scale can be unlocked and the livelihood of farmers can be improved. Thus the concept of producer company is aimed at empowering farmers by creating clusters of farmers organized as a Producer Company.
The Companies Act defines Producer as any person engaged in any activity connected with or relatable to any primary produce (Produce: “things that have been produced or grown, especially by farming”). A Producer Company is thus a body corporate having an object that is one or all of the following:
production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of primary produce of the Members or import of goods or services for their benefit. Further, the Producer Company must deal primarily with the produce of its active Members and is allowed to carry on any of the following activities by itself or through other entities – on behalf of the members.
processing including preserving, drying, distilling, brewing, vinting, canning and packaging of produce of its Members manufacture, sale or supply of machinery, equipment or consumables mainly to its Members providing education on the mutual assistance principles to its Members and others rendering technical services, consultancy services, training, research and development and all other activities for the promotion of the interests of its Members; generation, transmission and distribution of power, revitalisation of land and water resources, their use, conservation and communication relatable to primary produce; insurance of producers or their primary produce; promoting techniques of mutuality and mutual assistance; welfare measures or facilities for the benefit of Members as may be decided by the Board; any other activity, ancillary or incidental to any of the activities which may promote the principles of mutuality and mutual assistance amongst the Members in any other manner; financing of procurement, processing, marketing or other activities which include extending of credit facilities or any other financial services to its Members.
The process of registering a Producer Company is similar to that of a Private Limited Company. Digital Signature (DSC) and Director Identification Number (DIN) must be obtained first for the proposed first Directors of the company. Once, Digital Signature (DSC) and Director Identification Number (DIN) are obtained, an application for name reservation is to be filed with the relevant Registrar of Companies (ROC). There is a requirement under the Act that the name of a producer company must end with the words “Producer Limited Company”. Once, the suggested name is approved by the Registrar of Companies (ROC), an application for incorporation is to be filed in the prescribed format for the incorporation of the Producer Company. Once the Registrar is satisfied with the application and the required documents filed for incorporation of Producer Company, he will approve the same and issue Certificate of Incorporation.
The following are the benefits enjoyed by a Producer Company:-
As mentioned above the Producer Company consist of individuals who are primary producers, and thus, are in need of financial support from time to time. Hence, a special provision under the companies acts 1956 was passed for giving loans to producer members. A Producer Company can provide financial assistance to its members through:-
This isn't required. The entire process is now automated and handled online. You will receive the DIN numbers and Certificate of Incorporation by e-mail from Ministry of Corporate Affairs (MCA).
Expect it to take 35 to 40 days to complete the entire procedure. This will, however, depend on whether you have all your papers in order and the workload of the RoC.
Every company has two parts to its name. The first part is unique. For example, 'WIPRO' or 'MERCEDES-BENZ'. The second part describes the business activity of the company. For example, 'Legal Solutions' or 'Technologies'. This second part must be as descriptive as possible. The name of the company must end with 'Producer Company Limited'.
All companies are legal entities by themselves. Therefore, they have a continuous existence. The only way a producer company can cease to exist (other than shutting it down voluntarily) is if the annual compliances are not met or if the creditors/courts force its closure.