Farmers Producer Company Registration

About FPC Comparison Post Incorporation Compliances GST, Income tax & Other Laws Compliances in FPC Process of company registration Software Requirements

About Farmers Producer Organization / Company

If someone wants to start a FPO (Farmers Producer Organization), it can be started in many ways like as a cooperative society, company, ngo as society registration act 1860, ngo as trust, ngo as section 8 company etc.

If a FPO (Farmers Producer Organization) is registered under Companies Act, 2013; it is known as Farmer’s Producer Company (often referred to as FPC).

The concept of FPC was started up with a positive intent of giving corporate shape to agri business, giving a bridge to agri entrepreneurs to connect them with main line of business. FPC is hybrid of a FPC & public limited company.

It is an incorporated association means it comes in to existence with some pre-determined process. Like we are natural person, it is an artificial person. It has its own PAN (Permanent Account Number) like we have. Most of the work it can do what we can do as a natural person except natural process. It can contract; It can sue & be sued. Like we are bound with laws of society, it is bound with the laws of Companies Act, 2013. It has its own constitutional documents called Memorandum of Association (MOA) & Articles of Association (AOA).

Minimum 10 people (natural & artificial both) can register a FPC.

For natural persons following documents are required:

  • PAN
  • AADHAR
  • EMAIL ID
  • MOBILE NUMBER
  • ANY ONE OF ELECTRICITY BILL / MOBILE BILL / TELEPHONE BILL / BANK STATEMENT MUST NOT BE OLDER THAN 2 MONTHS*
  • PASSPORT SIZE PHOTOGRAPH

    • For artificial persons following documents are required:

    RESOLUTION FROM BOARD OF ARTIFICIAL PERSON


    For address proof of company:

    If owned premise: ANY ONE OF ELECTRICITY BILL / MOBILE BILL / TELEPHONE BILL MUST NOT BE OLDER THAN 2 MONTHS* ALONG WITH NOC

    If rented premise: ANY ONE OF ELECTRICITY BILL / MOBILE BILL / TELEPHONE BILL MUST NOT BE OLDER THAN 2 MONTHS* ALONG WITH NOC & RENT AGREEMENT

  • Any ten or more individuals each of them being a producer or
  • Any two or more Producer Institutions or
  • Combination of 10 or more individuals and Producer Institutions

Minimum 5 directors are required to register a FPC. At any time, if minimum number of directors falls below 5, there comes a statuary default.

As per Section 165(1) of the Act states that an individual can hold the office of director simultaneously in 20 companies. The number of 20 companies includes the office of alternate directorship. an individual can't be a director in more than 20 companies at a given time. However, the utmost number of public companies during which an individual are often a director simultaneously is 10.

Yes! A natural person can be a director, a member and member & director both.

Members & shareholder are usually same terms. Equity Shareholders are often referred to as members also. Members or Equity Shareholders are owners of the company. Directors are the agents like hand, leg, ears & eyes of the company. The company functions through directors. The directors are usually appointed by shareholders. Since a FPC is closed ended company usually a person is both the director & shareholder. Collectively all directors are called board of directors.

Like at time of registration of property, We pay the stamp duty; in the same way, at time of registration of a company we have inform the capital (funds) that we may infuse for operations now or in future, accordingly decide a upper limit of investment in terms of capital. This amount of capital is called Authorized Capital & we pay stamp duty on it. It is amendable. When we increase we pay additional stamp duty. The part of Authorized capital that has been actually invested in the company is called paid-up capital.

Limited liability means suppose a member subscribed capital of Rs. 100,000/- but paid Rs. 60,000 to the company. The company meets losses & become insolvent / bankrupt. The liability of that member shall be limited to Rs. 40,000/- only be the losses of 4 crores or more or that person may have capability to fulfill the losses from his personal property.

A producer company is a company incorporated under Companies Act 2013 (formerly the Companies Act 1956) and shall carry on following activities as mentioned in section 581B of Companies Act 1956:

  • Production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of primary produce of the Members or import goods for their benefit
  • Processing including preserving, drying, distilling, brewing, venting, 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 interest of its members
  • Generation, transmission and distribution of power, revitalization of land and water resources, their use, conservation and communications 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 referred to in above clauses 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 specified in above clauses which include extending credit facilities or any other financial services to its members

It depends on nature of company like manufacturing company the rate of tax is 15% & other the rate of tax is 22%. After reducing all the expenditures from gross receipt, we calculate Net profit & apply rate of tax on such amount to calculate tax amount.

There are lot means to plan your tax & finance even to secure your family in FPC. For example, salary, directors sitting fees etc. are some of the head, we can plan.

Comparison

S.No. Particulars Producer Company Private Limited Company Public Limited Company
1 No. of Members Any ten or more individuals or two or more producer Institutions or their combinations can from a Producer company without any restrictions on maximum no. of members Any two or more individuals or companies can form a Private Company Any Seven or more individuals or companies can form a Public Company
2 Objects A Producer Company can be established for object specified in section 581B of the act. A Private Limited Company can be set up for any lawful object. A Public Limited Company can be set up for any lawful object.
3 Name of Company A "Producer Company Limited" would form part of its name. A "Private Limited" would form part of its name. A "Limited" would form part of its name
4 Cessation of membership A person ceases to be a member of Producer company
if
  1. He ceases to primary producer
  2. He has any business interest which is in conflict with the business of Producer company
 No specific provision are made for Private Companies occurrence of certain events eg. buy back or transfer of shares, non-payment of allotment or call money, if member gets expired or insolvent, by the order of court etc. Companies until occurrence of certain events eg. buy back or transfer of shares, non-payment of allotment or call money, If member gets expired or insolvent, by the order of court etc.
5 No.of directors Every Producer Company shall have at least five and not more than fifteen Directors Every Private Company shall have at least two and not more than fifteen Directors Every Public Company shall have at least three and not more than fifteen Directors
6 Number of additional or expert directors Total number of additional or expert directors should not exceed one fifth of the total strength of the number of directors on the board No such limit is prescribed for appointment of additional or expert directors. However total number of directors including additional directors shall not exceed the maximum strength fixed for the board after after passing specials resolution. No such limit is prescribed for appointment of additional or expert directors. However total number of directors including additional directors shall not exceed the maximum strength fixed for the board after after passing specials resolution.
7 Vacation of office of directors Directors shall vacate the office on the grounds specified in section 581Q of the Act. Directors shall vacate the office on the grounds specified in section 167 of the Act. Directors shall vacate the office on the grounds specified in section 167 of the Act.
8 Appointment of whole time secretary Every Producer Company having an average annual turnover exceeding Rs.5 Crore in each of 3 financial years shall appoint whole time Company Secretary. Appointment of whole time secretary is mandatory for companies having paid up share capital of rs core. Appointment of whole time Secretary is mandatory for companies having paid up share capital of rs.5 Crore

Post Incorporation Compliances

Filing of Form INC-20A (Intimation of Commencement of Business) within 6 months from the date of incorporation.

  1. Appointment of Auditor (can be appointed for maximum 5 years in one shot).
  2. Filing of Annual Accounts & Audit of company
  3. Filing of Return of ROC
  4. KYC of all director’s DIN

GST, Income tax & Other Laws Compliances in FPC

We all know, every land have multiple laws to collect its revenue & manage the system of nation. There are also various laws like GST Act, State Shop & Establishment Act, Income Tax Act, Custom Duty & lot more. Every law has its rules of applicability. If we fall into ambit of such law, we need to comply it in addition to the companies act, 2013.

It is to be noted that there are lot of legal business activities that may require extra license also. For example, for medical business you need a drug license & for supply of security guards you need PSARA License.

There are lot of situation, you should take GST Registration, some of those are as under:

  1. If you want to sell over e-commerce.
  2. If you want to supply out of the state.
  3. If you want to export.
  4. If supplies by you exceed the basic not taxable limit i.e. 20 lakhs for services & 40 lakhs for goods.
  5. f you are dealing in such supplies which require compulsory registration. Etc.

Yes, If you are not falling in such supplies which require compulsory registration.

The Income Tax Act, 1961, (“the IT Act”) specifically exempts tax on agricultural income under Section 10(1). However, the exemption for such agricultural income shall sometimes vary depending upon the kind of agricultural activity carried on. It is to be noted that though the IT Act does not per-se give any special benefits or exemptions to Producer Companies as such, but depending upon the kind of agricultural activity it carries on, certain tax benefits can be availed. Dividend tax at the applicable rates is required to be paid by the Company at the time of patronage bonus, limited return distribution and the same will be tax free in the hands of the members. Bonus shares will not attract any tax in the hands of the members at the time of allotment, however at the time of sale or redemption necessary provision of capital gain tax shall apply

Process of company registration

  1. Collection of papers
  2. Application of DSC (Digital Signature Certificate)
  3. Application for Name Approval
  4. Post Name Approval, Preparation of Registration documents
  5. Signing of documents from promoters
  6. Application at Government portal for registration
  7. Final approval of company

Software Requirements

For inventory management, GST Returns preparations, financial statements preparation & roc compliance report preparations, software can be usefull.

Register your Producer Limited Company in

21100.30

(including all taxes & government fees" (PAN, TAN, DIN, DSC, 15 Lakhs Authorised Capital, EPF, ESI, LIN, GST & Shielded Certificates all included) * No Hidden Charges.

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