The Concept of Producer Company is different from that of Private and Public Companies. This is of utmost benefit for the people involved in the Production of Primary produce or having one or more objectives relating to primary produce.

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 to ensure a good status of their available support, incomes and profitability. The provisions of Producer Company are still governed by Part IX A of the Companies Act, 1956.  Any ten (or more) individuals or 2 (or more) Producer Institutions or a combination of individuals and Producer institutions may join their hands together to form a Producer Company.



“Producer Company means a body corporate having objects or activities specified in Sec 581B and registered as Producer Company under this Act.”



  1. For the purpose of law and administration, the provisions of Private Companies shall be applicable.
  2. Company can provide financial assistance to its members by way of-
  • credit facility in connection with the business of the Company, for a period not exceeding six months.
  • loans and advances, against security specified in articles to any Member, repayable within a period exceeding three months but not exceeding seven years from the date of disbursement of such loan or advances.
  1. After disbursement of fix return to the members, the profits are shared among the members in cash or in kind or by allotment of equity shares, in proportion to their participation in the business of the Producer Company.



  • Provisions of Companies Act, 2013 not applicable instead provisions of chapter IX-A of Companies Act, 1956 are applicable on Producer Companies.
  • The members have necessarily to be primary producers.
  • Name of the company shall end with the words “Producer Company Limited”.
  • There is no upper limit on the number of members.
  • On registration, the producer company shall become as if it is a Private Limited Company for the purpose of application of law and administration of the company. Moreover, it can never be converted into a public company however it can be converted into a multi-state co-operative society.
  • Share capital of a Producer Company shall consist of Equity shares only.
  • Producer Company can carry only activities prescribed under the Act and shall have min 5 and not more than 15 directors.
  • (a) In a case where the membership consists solely of individual members, the voting rights shall be based on a single vote for every Member, irrespective of his shareholding or patronage of the Producer Company;
  • (b) In a case where the membership consists of Producer institutions only, the voting rights of such Producer institutions shall be determined on the basis of their participation in the business of the Producer Company in the previous year, as may be specified by articles:
  • (c) In a case where the membership consists of individuals and Producer institutions, the voting rights shall be computed on the basis of a single vote for every Member.



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