Farmer Producer Companies-Major provisions under Companies Act

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farmer producer companies

An institutional framework known as a farmer producer company, or FPC, aims to improve market conditions and empower farmers via collective action. Separate from individuals or groups that band together to pool resources, knowledge, and skills for agricultural activities ranging from production to marketing, an FPC under the Companies Act, 2013. The main objectives of Farmer Producer Companies are to ensure fair compensation for farming communities, improve agricultural productivity, and support the sustainable development of rural areas, all of which are in line with the terms of the Companies Act. Keeping in mind the legislative framework in which they operate and their importance to a range of stakeholders, this introduction highlights the critical role that the FPCs have played in transforming the Indian agriculture industry.

Table of Content

Overview of Producer Companies and Farmer Producer Companies? 

A Producer Company may be seen as an appropriate means of raising the standard of living of people involved in agricultural activities. A Producer Organisation (PO)  is a  lawful body formed  by primary  producers,  “producer” means according  to section  378A (k)  of The Companies  (Amendment) Act, 2020 ‘Chapter  XXIA  (Producer Companies  Part I) or according to section 581A (k) of Part IXA of Indian Companies Act, 1956, as modified in 2013, any person involved in  any task connected with or related to any  primary  produce;  primary  producers like  farmers(growers),  milk producers,  fishermen,  weavers,  rural  artisans,  craftsmen  [2]  and  “primary produce”  means  according  to  the  section378A  (j)  of  The Companies (Amendment) Act, 2020 chapter XXIA (Producer Companies Part I) [3] or section 581A (j) of Part IXA  of Indian Companies Act,  1956, as modified in  2013 

According to the 378A of The Companies (amendment) Act, 2020 act, A body corporate with the goals or duties listed in section 378B that has been registered  as a producer company (PC)  under this Act  or  the Companies  Act, 1956 is referred to as  a producer company  (PC) or A  body corporate with the goals or duties listed  in section 581B  that has been registered  as a  producer company (PC) under Part IXA of Indian Companies Act, 1956, as modified in 2013.

Advantages of Farmer Producer Companies

The following are the benefits of a Farmer Producer Company:

Following  are the  list  of  benefits rendered  by  the  Farmer Producer  Company (FPC) in India: 

  • Deposit Acceptance : The established law permits the Producer Company to accept a deposit in the form of a fixed deposit or a recurring deposit.
  • Loan against Security : Farmer  Producer companies  (FPC)  are  legally  permitted to  function  as lending agencies.  They are entitled to lend credit against fixed deposits, gold, and government securities.
  • Profit Allocation to the Members : The profit or  income generated  by the  farmer producer  company (FPC) remains  within  the  organization  and  is  distributed  among  the  serving members of the FPC.
  • No Taxes on the Agricultural Income : As  such,  no  taxes  are  levied  on  the profit  generated by  the Producer Company. Presently, these entities are exempted from addressing any tax obligations forced by the IT department.
  • Loan Facility to Members : Farmer  Producer  Companies (FPCs)  are legally  eligible to  disburse the credit to the founding members. 


Pre-Incorporation Checklist for Farmer Producer Company in India under Companies Act, 2013

Before incorporating a Producer Company, certain criteria and procedures need to be followed.

The pre-incorporation checklist includes:

Farmer Producer Companies Pre-Incorporation Checklist


  • Membership Criteria: Any 10 or more producers can form a production company without an upper limit on the number of members. Alternatively, any 2 or more producer institutions can come together to establish a producer company.
  • Paid-Up Capital Requirement: A minimum paid-up capital is necessary for the incorporation of a producer company.
  • Directorship Requirements: There should be a minimum of 5 directors and a maximum of 15 directors in a producer company.
  • Conversion and Registration: Producer companies cannot be converted into public companies, but they have the option to convert into a multi-state co-operative society.

Registration Procedure for Farmer Producer Company in India under Companies Act, 2013

The registration process for a Farmer Producer Company is similar to that of a Private Limited Company:

The registration process for a Farmer Producer Company (FPC) almost exactly looks like that of a private limited company:  

Step  1:  Obtain  the directors’  identification  number (DIN)  and  digital  signature certificate (DSC) from  each  director  along  with  self-attested  copies  of  their identifying documents, such as their PAN or Aadhaar card. 

Step 2: The desired company name should be submitted in FORM-1A together  with the required fee to the relevant  state’s RoC  (Registrar of Companies). The RoC  (Registrar  of  Companies)  notifies  about  the  availability  of  the  name whenever it becomes available.

Step 3: Create the essential paperwork, such as the Memorandum of Association  (MoA), which  includes the company’s  objectives or goals  and the share capital that needs to be registered, and the Article of Association (AoA), which includes the company’s bylaws. 

Step 4: filing of additional documents or credentials, such as an affidavit signed by  the  proposed  company’s  subscribers  or  a  statutory  statement  in  Form  1 proclaiming  compliance  with  all  applicable  laws  surrounding  the  formation  of  businesses.  Utility bills,  the  director’s  approval,  and  a  NOC  (No  Objection Certificate) are needed. 

Step 5: After the certificate is issued, the company will become a corporate entity with the same legal status as a private limited company. It cannot ever change its  status to a public limited business


In India’s farming world, Farmer Producer Companies are a big deal. They were created in 2002 to help farmers deal with challenges. FPCs are like a mix of cooperatives and private companies. They enable cooperative business structures. FPCs provide farmers with economic empowerment through democratic government, equal voting rights, and a mutual help orientation. The range of approved activities is wide, ranging from manufacturing and processing to welfare programs and insurance. The registration procedures farmer producer company and pre-incorporation checklist offer a methodical structure for creating these businesses. Although many tax benefits are dependent on agricultural activity, FPCs are essential to improving farmers’ lives, encouraging sustainable practices, and building community wealth.

CS Urvashi Jain is an associate member of the Institute of Company Secretaries of India. Her expertise, inter-alia, is in regulatory approvals, licenses, registrations for any organization set up in India. She posse’s good exposure to compliance management system, legal due diligence, drafting and vetting of various legal agreements. She has good command in drafting manuals, blogs, guides, interpretations and providing opinions on the different core areas of companies act, intellectual properties and taxation.

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