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FARMER PRODUCER COMPANY Registration in India
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Starting a Farmer Producer Company in India
A Farmer Producer Company (FPC) is a legally recognized entity formed by farmers to improve their collective economic strength and market access. It operates as a hybrid between a cooperative and a private company, allowing small and marginal farmers to engage in production, marketing, processing, and value addition while ensuring better financial returns. Governed under the Companies Act, 2013, FPCs enable farmers to function as a collective business unit while benefiting from government schemes and financial support.
Key Features of a Farmer Producer Company
- • Only primary producers (farmers, dairy producers, fisherfolk, etc.) can be members, ensuring that the company is owned and controlled by those engaged in agriculture and allied sectors.
- • The liability of members is limited to the amount of unpaid share capital, protecting personal assets, while the company continues to exist regardless of changes in membership.
- • FPCs receive financial aid, subsidies, and tax exemptions from the government to encourage sustainable agricultural practices, value addition, and market linkages for farmers.
What Is A Farmer Producer Company ?
A Farmer Producer Company (FPC) is a legally registered entity formed by a group of farmers to engage in collective farming activities such as production, processing, marketing, and distribution of agricultural products. Governed under the Companies Act, 2013, an FPC allows farmers to operate as a business unit while benefiting from limited liability, financial support, and government schemes. It helps in improving farmers' bargaining power, reducing costs, and ensuring better market access for their produce.
Eligibility Criteria for Farmer Producer Company Registration in India
- ✔ Minimum 10 Farmers or 2 Producer Institutions:An FPC must have at least 10 individual farmers or 2 producer institutions as members to be registered.
- ✔ Primary Producers as Members : Only farmers, agricultural producers, dairy farmers, fisherfolk, or other primary producers can form an FPC.
- ✔ Maximum 15 Directors : The company can have a minimum of 5 and a maximum of 15 directors to manage operations.
- ✔ No Direct Trading with Non-Members : The company primarily serves its farmer-members and cannot engage in direct trading with the general public.
- ✔ Mandatory Use of 'Producer Company' in Name : The name of the company must include "Producer Company Limited" to indicate its nature.
- ✔ Limited Liability Structure : Members have limited liability, meaning their personal assets are not at risk beyond their shareholding.
- ✔ Mandatory Use of 'Producer Company' in Name : The name of the company must include "Producer Company Limited" to indicate its nature.
Silent Features
Farmer-Centric Organization
Limited Liability Protection
Separate Legal Entity
Profit Distribution Among Members
Government Support & Tax Benefits
Perpetual Existence
Advantages of a Farmer Producer Company
A Farmer Producer Company is a widely preferred business structure in India due to its numerous benefits. Here’s an overview:
- Better Market Access : FPCs help farmers get better prices by eliminating middlemen and connecting directly with buyers
- Financial Support : Government grants, subsidies, and easy access to bank loans boost growth and sustainability.
- Limited Liability : Members are only responsible for their share capital, reducing personal financial risks
- Bulk Input Purchase : Farmers can buy seeds, fertilizers, and equipment in bulk at lower costs.
- Better Bargaining Power : Collective strength improves farmers' ability to negotiate with suppliers and traders
- Tax Benefits :Certain tax exemptions and deductions are available to promote agricultural development..
Disadvantages of a Farmer Producer Company
While a Farmer Producer Company offers several benefits, it also comes with certain challenges:
- Complex Registration Process : The legal and documentation requirements can be lengthy and complicated.
- Initial Capital Requirement : Farmers may struggle to arrange the required funds to start the company.
- Limited Awareness : Many farmers lack knowledge about the benefits and functioning of FPCs.
- Management Challenges : Professional management is needed, which may be difficult for small farmers.
- Profit Distribution Issues : Unequal participation may lead to disputes over revenue sharing.
- Dependency on Government Support :Many FPCs rely on subsidies, which may not always be sustainable.
Documents Required
PAN card of all directors and shareholders.
Aadhaar card, passport, voter ID, or driving license of directors and shareholders..
Utility bills (electricity, telephone, or gas bill, not older than 2 months).
Rent agreement and NOC (No Objection Certificate) from the property owner or ownership documents if self-owned.
Defining the company's objectives, structure, and operational guidelines.
Memorandum & Articles of Association (MoA & AoA) Legal documents defining the objectives and rules of the company.
Step-by-Step Guide The Process
Here are 5 steps to complete your process
Step 1
Obtain a Digital Signature Certificate (DSC)
Step 2
Director Identification Number (DIN)
Step 3
Name Reservation (SPICe+ Part A)
Step 4
Submission of Company Details (SPICe+ Part B)
Step 5
Preparation & Submission of Incorporation Formst
Compliance Requirements for Farmer Producer Companies
Every Farmer Producer Company must comply with annual regulatory requirements set by the Ministry of Corporate Affairs (MCA) to maintain its nonprofit status. These include auditing financial records, filing returns, and adhering to legal documentation. Non-compliance may lead to penalties, revocation of tax exemptions, or legal action.
| Form | Compliance Requirement | Due Date | Penalty |
|---|---|---|---|
| COB Filing | Certificate for Commencement of Business | Within 180 days of incorporation | ₹50,000 for non-compliance |
| DIR-3 eKYC | KYC verification for Director Identification Number (DIN) | On or before 30th September every year | Deactivation of DIN, ₹5,000 late fee |
| ADT-1 | Appointment of Statutory Auditor | Within 15 days of auditor’s appointment | Late fees apply, ranging from 2 to 12 times the standard fee based on delay duration |
| Form MGT-7 | Filing of annual returns | Within 60 days of the AGM | ₹100 per day after due date till the filings is done |
| Income Tax Return | Filing of annual income tax return | On or before 30th September every year | Late fees and penalties as per Income Tax Act |
| AGM Compliance | Conducting Annual General Meeting and recording resolutions | Within 6 months from the end of the financial year | ₹1,000 per day penalty for non-compliance |
| AOC-4 | Filing of financial statements | Within 30 days of the Annual General Meeting (AGM) | ₹100 per day after due date till the filings is done |
| Filing with NABARD or SFAC | Compliance with NABARD/SFAC for FPC benefits and schemes | As per specific scheme guidelines | Possible disqualification from government schemes |
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