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. Under Companies Act 1956, 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 one of the following:-
Procurement, Production, Harvesting, Grading, Pooling, Handling, Marketing, Selling or Export of the primary produce of the Members or import of goods or services for their benefit.
The Income Tax Act, 1961 under section 10(1) exempts the agricultural. However, the exemption for such agricultural income shall sometimes differ on the basis of the kind of agricultural activity undertakes.
The members of the Producer Company are primary producers, and are in need of financial assistance from time to time. A special provision is made by the Act 61 of Producer Company of giving loans.
A producer company is a legal entity and a juristic person established under the Act. Therefore, a producer company has wide legal capacity and can own property and also incur debts.
A producer company being a juristic person, can acquire, own, enjoy property in its own name. No member can make any claim upon the property of the producer company as long as it is a going concern.
The members will initially receive the value for the produce or products pooled and supplied as the directors may determine. This amount is given out later either in cash or in kind or by equity shares.
A producer company can accept deposit in the form of RD/FD, and give maturity as well as distribute loans to its farmer/agriculturist members time to time, and charge reasonable interest from them.
It became easy, just follow these steps to get your work done