A producer company can be defined as a legally recognized body of farmers/ agriculturists with the aim to improve the standard of their living and ensure a good status of their available support, incomes and profitability. Section 465(1) of the Companies Act, 2013 (‘Act’) provides that the provisions relating to a Producer Company under the Part IXA of the Companies Act, 1956 shall continue to apply. Thus, under the Act, a Producer Company can be formed by 10 individuals (or more) or 2 institutions (or more) or by a combination of both (10 individuals and 2 institutions) having their business objective as specified under the Act.

An farmer producer company is a hybrid between private limited companies and cooperative societies, registered under the Act. They have democratic governance and each member or producer has equal voting rights irrespective of the number of shares held.

Pre-Incorporation Checklist:

1. 1. Any 10 or more producers (individuals) can join together to form a producer company
   2. Or, any 2 or more producer institutions can form a producer company
   3. A minimum authorized capital of Rs. 5 lacs is required to incorporate a producer company.
   4. There should be a minimum of 5 directors (maximum of 15) in a producer company.
   5. It can never be converted into a public company however it can be converted into a multi-state co-operative society.

One of the objectives for the formation of the producer company must be the procurement, production, harvesting, grading, pooling, handling, marketing, selling or export of the product or import of goods and services for the benefit of the members.