A Farmer Producer Company (FPC) is a specialized type of company under the Companies Act, 2013, designed to enhance the collective power and income of farmers through collective action. It operates with a focus on agricultural production and related activities.
1. Definition and Nature
- Definition: An FPC is a type of Producer Company established under the Companies Act, 2013, with the primary objective of serving the interests of its farmer members.
- Nature: It combines the benefits of a company with cooperative principles, providing a legal structure for collective action and mutual benefit among farmers.
2. Members Required
- Minimum Members: At least 10 individual farmers or producer entities.
- Maximum Members: No upper limit on the number of members.
3. Registration
- Mandatory: Registration under the Companies Act, 2013.
- Process:
- Digital Signature Certificate (DSC): Obtain DSC for all directors.
- Director Identification Number (DIN): Obtain DIN for all directors.
- Name Approval: Apply for name approval through the MCA portal.
- Incorporation Form: File Form SPICe+ (Simplified Proforma for Incorporating a Company Electronically) with the Registrar of Companies (RoC) along with the Memorandum of Association (MOA) and Articles of Association (AOA).
- Certificate of Incorporation: Upon approval, the RoC issues a Certificate of Incorporation.
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4. Licenses
- Registration Certificate: Required for legal operation under the Companies Act, 2013.
- GST Registration: Mandatory if the FPC’s turnover exceeds ₹40 lakhs (₹20 lakhs for North-Eastern states).
- Other Licenses: Additional licenses may be required depending on specific activities such as food processing or trading.
5. Taxation
- Income Tax: FPCs are taxed at 25% for companies with a turnover up to ₹400 crores and 30% for those exceeding ₹400 crores, plus applicable surcharge and cess. They are eligible for tax exemptions on income derived from agricultural activities.
- GST: Applicable based on the nature of transactions. FPCs engaged in trading or providing taxable services must comply with GST requirements.
6. Audit
- Statutory Audit: Mandatory annual audit of financial statements by a qualified Chartered Accountant.
- Internal Audit: May be required based on the size and complexity of the company.
7. Accounting Rules
- Bookkeeping: Maintain accurate records of all financial transactions.
- Financial Statements: Prepare Profit & Loss Statement, Balance Sheet, and Cash Flow Statement annually.
- Cash Flow Management: Essential for effective management of resources.
- Filing Requirements: File annual financial statements and annual returns with the RoC.
8. Scope and Types
- Scope: Suitable for farmers and producer groups focusing on collective production, processing, and marketing of agricultural produce.
- Types:
- Primary Producer Companies: Directly involved in agricultural production and related activities.
- Secondary Producer Companies: Involved in processing and marketing activities.
9. Banking Norms
- Separate Bank Account: Required to open a current account in the name of the FPC.
- KYC Norms: Banks require proof of identity, address proof, incorporation certificate, MOA, AOA, and PAN of the company.
10. Regulations
- Compliance with Companies Act: Adherence to the Companies Act, 2013.
- Farmer Producer Companies Rules: Follow specific rules for FPCs issued by the Ministry of Corporate Affairs.
- Cooperative Principles: Operate based on cooperative principles of mutual benefit and democratic control.
11. Additional Information
- Funding and Support: FPCs can avail various government schemes and subsidies designed for agricultural and rural development.
- Governance: Governed by a Board of Directors elected by the members. Decisions are made based on democratic principles, ensuring equal voting rights for all members.
- Membership Benefits: Members benefit from shared resources, collective marketing, better prices for their produce, and access to technology and training.
Key Points in the Companies Act, 2013 Relevant to FPCs
- Section 378A: Defines a Producer Company and outlines its objectives, such as production, harvesting, procurement, grading, marketing, and consumption of agricultural products.
- Section 378B: Provides the rules for the formation of a Producer Company, specifying the minimum number of members required.
- Section 378C: Outlines the types of activities that a Producer Company can undertake.
- Section 378D to 378ZU: Cover various regulatory requirements, governance, and operational aspects, including compliance, reporting, and other obligations.
Advantages
- Collective Power: Enhances the bargaining power of farmers through collective action.
- Shared Resources: Pooling of resources and sharing of costs reduces individual financial burdens.
- Government Support: Eligible for various government schemes and subsidies.
- Tax Benefits: Potential tax exemptions on income derived from agricultural activities.
Disadvantages
- Complex Management: Requires effective management and coordination among members.
- Regulatory Compliance: Adherence to regulatory requirements and accounting norms can be complex.
- Limited Profit Distribution: Profits must be reinvested into the company to further the objectives of the FPC.
Conclusion
A Farmer Producer Company provides an effective structure for farmers to collectively manage production, processing, and marketing of agricultural produce. It offers significant advantages in terms of resource pooling, market access, and government support, although it requires careful management and regulatory compliance.
For assistance with your Farmer Producer Company registration and compliance needs under the Companies Act, 2013, contact WynSwell. We offer comprehensive services across India to help you navigate the regulatory landscape effectively and focus on your agricultural objectives.
