producer company

The Companies (Amendment) Act 2002 vides notification no. S.O. 135 (E) inserted part IX – A of the Companies Act, 1956 ( hereinafter referred to as “the Act” ) and presented the idea of Producer Company[1]. In the year 2002 a specialist committee drove by noted economist Y.K Alagh framed legislation for incorporation of a producer company, and transformation of inter-state cooperative society into a producer company and its reconversion into cooperative society.

It aims at upliftment of rural producers for following reasons:

  • Rural producers have been at a potential impediment given their restricted assets, resources, educational and access to advanced technology.
  • In Indian context the farmers disposes of his produce in unprocessed form there is no plough back of surpluses from value addition to the farm.
  • Agribusiness enterprises are progressively searching for direct tie up with the farmers to source the agricultural produce required by them.
  • Therefore companies (Amendment) act 2002 part IX-A is a step in this direction.


“Producer” means any person engaged in any activity connected with or relatable to any primary producer such as-

1. Produce of farmers of agriculture including animal husbandry, horticulture, floriculture, pisiculture, viticulture, forestry, forest products, revegetation, bee-raising and farming plantation products and produce from any other primary activity or service which promotes the interest of farmers or consumers.

2. Produce of persons engaged in handloom, handicraft and other cottage industries.

3. Any other product resulting from any of the above activities or any by- products thereof.

4. Any product from an ancillary activity that would promote any of the above activities or any thing ancillary thereto.

5. Any activity which is intended to increase the production of anything referred to in (1) to (4) above.

“Producer Company” means a body corporate having objects or activities as specified and registered as producer company under the act.

“Producer” institution means a producer company or any other institution having only producer or producers or Producer Company or producer companies as its members whether incorporated or not having objects referred to in section 581 B and which agrees to make use of services of the Producer Company or producer companies as provided in its articles.

The Constitutional Provision

The entry 44 of list 1 (union list) of seventh schedule of the Constitution of India carries legislation for incorporation, regulation of corporations.

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