TRUSTLINK

Discussion Desk - TRUSTLINK

Benefits and Registration of Farmer Producer Company in India

Farmer Producer Organization (FPO)

Producer Companies, also known as Farmer Producer Organizations (FPOs), are unique entities in India that aim to uplift the agricultural community by organizing and empowering farmers. These companies operate under the provisions of the Companies Act, 2013, and are formed by primary producers, including farmers, artisans, and those engaged in related activities. The authorized activities of Producer Companies are defined to support and enhance the socio-economic well-being of their members. Here are some of the authorized activities:

  1. Production and Harvesting:
  • FPOs can engage in the production and harvesting of primary produce such as crops, horticulture, animal husbandry, and pisciculture.
  1. Processing and Manufacturing:
  • FPOs can undertake activities related to processing, manufacturing, and value addition of agricultural produce. This may include activities like sorting, grading, packing, processing, and storage.
  1. Marketing and Distribution:
  • FPOs have the authority to engage in the marketing and distribution of agricultural produce of their members. This involves selling the produce in domestic and international markets to ensure fair prices for farmers.
  1. Providing Inputs:
  • FPOs can supply agricultural inputs such as seeds, fertilizers, pesticides, and machinery to their members. This helps in promoting sustainable and efficient farming practices.
  1. Financial Services:
  • FPOs can provide financial services to their members, including credit facilities, insurance, and other financial instruments to improve the financial well-being of farmers.
  1. Technology Adoption:
  • FPOs can facilitate the adoption of modern and technology-driven agricultural practices. This includes the use of technology in farming, irrigation, and post-harvest management.
  1. Training and Education:
  • FPOs are authorized to organize training programs and educational initiatives for their members. This helps in enhancing the knowledge and skills of farmers, enabling them to adopt best practices.
  1. Infrastructure Development:
  • FPOs can invest in and develop infrastructure related to agriculture, such as cold storage, warehousing, and processing units. This contributes to reducing post-harvest losses and improving overall efficiency.
  1. Quality Control:
  • FPOs can establish quality control measures to ensure that the agricultural produce meets the required standards. This is essential for gaining access to better markets.
  1. Export Promotion:
  • FPOs can engage in export activities, promoting the export of agricultural produce to international markets. This can open up new avenues for farmers to access global markets.
  1. Collaboration and Networking:
  • FPOs can collaborate with other entities, both governmental and non-governmental, to strengthen the agricultural value chain. Networking helps in sharing knowledge, resources, and market linkages.

Pre-Incorporation Checklist

Establishing a Farmer Producer Organization (FPO) involves a systematic process to ensure legal compliance and the effective functioning of the organization. Here’s a pre-incorporation checklist for setting up a Farmer Producer Organisation in India:

  1. Define Objectives and Activities:
  • Clearly articulate the objectives and authorized activities of the FPO. This may include production, processing, marketing, and other related activities.
  1. Membership Criteria:
  • Define the criteria for membership, specifying who is eligible to become a member of the FPO. Typically, it includes farmers and those engaged in primary production activities.
  1. Draft Bye-Laws:
  • Develop the bye-laws or rules and regulations governing the FPO’s operations. Include provisions related to membership, governance structure, decision-making, and distribution of profits.
  1. Board of Directors:
  • Identify and nominate individuals who will serve on the Board of Directors. Ensure representation from different categories of members to promote inclusivity.
  1. Registered Office:
  • Choose a registered office address for the FPO. This is the official address for communication and legal purposes.
  1. Bank Account:
  • Open a bank account in the name of the FPO. Determine signatories and procedures for financial transactions.
  1. Legal Structure:
  • Decide on the legal structure of the FPO, such as whether it will be registered as a Producer Company under the Companies Act, 2013.
  1. Professional Assistance:
  • Seek professional assistance from legal advisors, chartered accountants, or agricultural experts to ensure compliance with relevant laws and regulations.
  1. Name Approval:
  • Check the availability of the chosen name for the FPO and obtain approval from the relevant authorities.
  1. Application for Registration:
  • Prepare and submit the application for registration to the appropriate regulatory body, such as the Registrar of Companies (RoC) for a Producer Company.
  1. PAN and TAN:
  • Obtain Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) for the FPO.
  1. Statutory Compliance:
  • Ensure compliance with statutory requirements such as the Goods and Services Tax (GST), Professional Tax, and any other applicable taxes.
  1. Documentation:
  • Prepare necessary documentation, including the Memorandum of Association (MOA), Articles of Association (AOA), and other relevant records.
  1. Audit and Accounts:
  • Establish procedures for maintaining proper accounts and undergo regular audits as required by law.
  1. Training and Capacity Building:
  • Plan for training and capacity-building programs for members to enhance their skills and knowledge.
  1. Create Awareness:
  • Initiate awareness programs to inform potential members about the FPO and encourage their participation.
  1. Infrastructure Planning:
  • If applicable, plan for any required infrastructure, such as processing units, storage facilities, or transportation.
  1. Market Linkages:
  • Explore and establish linkages with markets, agricultural organizations, and potential buyers for the produce.
  1. Compliance with Government Schemes:
  • Explore and avail benefits from government schemes and subsidies for FPOs.
  1. Insurance:
  • Consider insurance coverage for members, crops, and assets to mitigate risks.
  1. Drafting Minutes of Meetings:
  • Maintain accurate minutes of pre-incorporation meetings and decisions.
  1. Compliance Calendar:
  • Develop a compliance calendar outlining deadlines for statutory filings, meetings, and other obligations.
  1. Record Keeping:
  • Establish systems for proper record-keeping and documentation of all FPO activities.
  1. Community Engagement:
  • Engage with the community and local authorities to build support for FPO initiatives.
  1. Sustainability Plan:
  • Develop a sustainability plan outlining the FPO’s long-term goals and strategies.

 

Any 10 or more producers (individuals) can join together to form a production company but there is no upper limit on the number of members.

Or, any 2 or more producer institutions can form a producer company.

A minimum paid-up capital is 500000 required to incorporate a producer company.

There should be a minimum of 5 directors (maximum of 15) in a producer company.

It can never be converted into a public company however it can be converted into a multi-state co-operative society.

Minimum Director is 5

Documents Required for Incorporation:

  1. Identity and Address Proof:
    • Passport, Voter ID, Aadhaar card, or driver’s license of directors and shareholders.
  2. Address Proof for Registered Office:
    • Utility bills, rent agreement, or ownership documents of the registered office.
  3. Declaration by Directors and Subscribers:
    • A declaration stating compliance with all legal requirements.
  4. Consent to Act as Director:
    • Consent of each person willing to act as a director.
  5. Affidavit and Declaration:
    • Affidavit and declaration by directors regarding non-disqualification.
  6. No Objection Certificate (NOC):
    • NOC from the landlord (if the registered office is on rented premises).
  7. Subscription Sheet:
    • Subscription sheet signed by promoters/members.
  8. Memorandum of Association (MOA) and Articles of Association (AOA):
    • MOA and AOA duly signed by the promoters.
  9. PAN and TAN Application:
    • Application for PAN and TAN of the Producer Company.
  10. Director Identification Number (DIN):
    • Application for DIN for directors.
  11. Certificate of Name Reservation:
    • Certificate obtained after the name is reserved.
  12. Letter of Authority:
    • A letter of authority authorizing a person to submit documents on behalf of the applicants.

 

 

by CA, Vivek Gupta

Leave a comment

Your email address will not be published. Required fields are marked *