Archives: Services

1. What is a Farmer Producer Company (FPC)?

A Farmer Producer Company (FPC) is a special category of company introduced under Section 581A to 581ZL of the Companies Act, 1956, and continued under Companies Act, 2013. It combines the benefits of a cooperative society and a private company, formed by farmers/producers to collectively manage production, processing, marketing, and distribution.

✅ Key Features:

• Producer-owned and producer-managed
• Operates as a Private Limited Company, but with special provisions
• One member = One vote, regardless of shareholding
• Meant for agricultural and allied sectors (dairy, poultry, fishing, etc.)

📘 Legal Reference: Part IXA of Companies Act, 1956 (continued under Section 465 of Companies Act, 2013)

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2. Members / Shareholders

• Minimum members: 10 individual farmers OR 2 producer institutions
• Maximum members: No fixed limit
• Only producers or producer institutions can become members
• Voting is based on participation, not capital
• Members must be engaged in agricultural or related activities

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3. Capital Requirements

• Minimum Paid-up Capital: ₹1 lakh (same as Private Limited)
• Authorized Capital: As decided in MOA (can be increased later)
• Capital raised only from producer members (not the general public)

📌 Can issue:

• Equity Shares
• Bonus shares (from profits, not from reserves)

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4. Directors and Governance

• Minimum Directors: 5
• Maximum Directors: 15
• One-third must retire every year (eligible for reappointment)
• CEO appointment is mandatory, under board supervision
• Independent professionals can be appointed (but not as members)

📘 Governance Style: Hybrid of company and cooperative governance

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5. Registration Process & Cost

Component	Details
Eligibility	Minimum 10 producers or 2 producer institutions
Form	SPICe+ (MCA Portal)
Required Docs	PAN, Aadhaar, land documents, utility bills, photographs, etc.
Processing Time	15–25 days
Cost	₹35,000 – ₹50,000 (varies with professional fees & state)

📌 PAN, TAN, and CIN allotted upon incorporation

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6. Post-Incorporation Compliance

• Board meeting within 30 days
• Appointment of CEO & first auditor (Form ADT-1)
• Bank account in company name
• Issue of share certificates (within 60 days)
• Filing Form INC-20A (declaration of commencement)
• Maintenance of statutory registers
• Filing of ROC annual returns (AOC-4, MGT-7)
• Conduct 4 board meetings annually
• GST registration (if applicable), FSSAI (for food processing), etc.

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7. Benefits of Farmer Producer Company

📊 Financial

• Eligible for equity grants, credit guarantee, and working capital loans
• NABARD, SFAC, NCDC provide funding support
• Access to schemes like PM FME, PM Kisan Sampada, etc.

🧾 Tax

• Income Tax rate: 22% under Sec 115BAA (if opted), otherwise 30% + surcharge & cess
• Agricultural income exempt (if qualifying)
• No MAT under 115BAA
• Eligible for Section 80P deduction in certain cases (if structured as cooperative FPO)

💼 Operational

• Collective marketing & bargaining power
• Bulk procurement of inputs, seeds, fertilizers, machinery
• Better price realization through aggregation & processing
• Shared infrastructure (cold storage, transport, etc.)

🌱 Social

• Empowers small & marginal farmers
• Promotes rural entrepreneurship
• Enhances market access and reduces exploitation

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8. Documents Required for Registration

• PAN & Aadhaar of all members
• Photograph & ID proof of directors
• Land records / 7/12 extract / income certificate showing agricultural activity
• Utility bill of registered office
• NOC from property owner
• MOA & AOA (with main objects focused on producer activities)

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9. Annual Compliance Requirements

Compliance	Form	Frequency
Financial Statements	AOC-4	Annually
Annual Return	MGT-7	Annually
Director KYC	DIR-3 KYC	Annually
Income Tax Return	ITR-6	Annually
Board Meetings	Minutes & Resolutions	4/year
Auditor Appointment	ADT-1	1st year & subsequent reappointment

📌 Audit mandatory irrespective of turnover

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10. Restrictions / Provisions

• Shares can be transferred only to other producer members
• Cannot raise funds from public or issue IPO
• Profits can be distributed as:
  • Patronage Bonus (based on participation)
  • Limited Dividend (on shareholding)
• Voting rights not linked to capital
• Non-compliance may result in cancellation of registration

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11. Ideal For

• Farmer collectives & self-help groups
• Rural entrepreneurs in agriculture & allied sectors
• FPOs/FPCs seeking government grants or credit
• NGOs working in agri value chain development
• State-supported producer organizations (SFAC, NABARD-promoted)

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⚠️ Disclaimer

The above information is provided for general awareness and informational purposes only. While we strive to keep the content accurate and up to date, we do not guarantee the completeness, accuracy, or reliability of any information provided herein. The content should not be construed as legal, tax, or professional advice. We recommend consulting with our customer service team for the most recent and applicable guidance. We shall not be held responsible for any loss or liability arising from the use of this information.