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Corporate and Economic Laws · Company Formation and Conversion

Producer Company: Features and Formation under Companies Act 2013

Updated 11 October 2026 · Fact-checked

A Producer Company is a company formed under Part IXA of the Companies Act, 2013 by primary producers or producer institutions to carry on activities such as production, harvesting, processing and marketing of primary produce. Its name ends with 'Producer Company Limited'. To answer questions, identify members, objects, registration route and consequences of conversion.

Understand Producer Company: Features and Formation

A Producer Company is a company, not a society. It gives farmers and other primary producers a corporate form, with limited liability and company-law governance, while keeping a co-operative flavour in how members benefit.

The law sits in Part IXA (the chapter beginning at section 378A). Members are primary producers, or producer institutions. Its objects are production-linked activities such as production, harvesting, procurement, grading, pooling, handling, marketing, selling and export of primary produce, and related services. These objects are listed in section 378B. State this in your own words and do not invent details beyond what you know.

The name must carry the words "Producer Company Limited". For a society converting, the Act says these words form part of its name, with a word or expression showing its identity preceding them.

The Act also lets an existing inter-State co-operative society (objects not confined to one State) convert into a Producer Company. This is the route in section 378J. The society applies to the Registrar, and on registration it is transformed into a Producer Company. From then it is governed by Part IXA, not by the law that governed it earlier.

The key difference from a co-operative society is the legal framework. A Producer Company is registered with the Registrar of Companies and governed by company law. A co-operative society is governed by co-operative law. Do not claim more differences than you are sure of.

Key rules to remember

Name requirement (s. 378J(3))
Identity word(s) + "Producer Company Limited"
On conversion of an inter-State co-operative society, these words form part of its name.
Who may apply (s. 378J(1))
Inter-State co-operative society, objects not confined to one State → application to Registrar
Applies notwithstanding section 378C(1).
Special resolution (s. 378J(2)(a))
Votes in favour ≥ 2/3 of total members of the society
The base is total members, not members present and voting.
Documents with application (s. 378J(2))
(a) special resolution copy; (b) statement of directors/Chief Executive and member list; (c) statement of objects under s. 378B; (d) declaration by two or more directors
Declaration certifies particulars in clauses (a) to (c) are correct.
Registration time (s. 378J(4))
Registrar certifies within 30 days of receipt of application
On compliance with sub-sections (1) to (3).
Eligible co-operatives (s. 378J(5))
Society, federation or union of producers' co-operatives that has extended objects outside the State → eligible
Directly or through a union or federation.
Directors continue (s. 378N(1))
Existing directors continue for 1 year from the date of transformation
Notwithstanding section 378-O.
Vesting (s. 378L)
Assets, rights, debts, liabilities of society → Producer Company
Pending suits and proceedings do not abate.

How to solve Producer Company: Features and Formation questions

Use this method for any question on Producer Companies, whether a theory note or a case-based MCQ.

  1. 1Identify what is asked: features, membership, formation, conversion of an inter-State society, or effects of conversion.
  2. 2Classify the applicant. Is it a fresh company of producers, or an inter-State co-operative society with objects beyond one State?
  3. 3For conversion, check the conditions: application to the Registrar, special resolution of at least two-thirds of total members, and the required statements and declaration.
  4. 4Check the name: it must include "Producer Company Limited".
  5. 5Apply the timeline: Registrar certifies within thirty days of receipt of application, on compliance.
  6. 6State the consequences: transformation, vesting of assets and liabilities, continuity of legal proceedings, employees and directors.
  7. 7Conclude with a direct answer tied to the facts, citing the section where you are sure.

Quickest way: Four-point check for conversion cases

When to use it: Use for case-based MCQs and short notes where a society is converting into a Producer Company.

  1. Who: inter-State society with objects not confined to one State.
  2. Vote: special resolution by at least two-thirds of total members.
  3. Filing: application to the Registrar with resolution, statements and director declaration; 30 days to certify.
  4. After: assets and liabilities vest, suits continue, employees move on same terms, directors stay one year.

Common mistakes in Producer Company: Features and Formation

  • Treating a Producer Company as a co-operative society.

    Members and benefits look co-operative.

    Fix: Remember it is a company registered with the Registrar of Companies and governed by Part IXA.

  • Applying two-thirds to members present and voting for conversion into a Producer Company.

    Confusion with the re-conversion rule, which uses members present and voting.

    Fix: For section 378J, the special resolution must be of not less than two-thirds of total members.

  • Saying any co-operative society can convert under section 378J.

    Students ignore the inter-State condition.

    Fix: The section covers inter-State co-operative societies with objects not confined to one State, plus eligible extended societies under sub-section (5).

  • Forgetting the name requirement.

    Focus is on procedure only.

    Fix: Write that "Producer Company Limited" must form part of the name.

  • Claiming employees get compensation on transfer or that directors leave immediately.

    Assuming a change of employer triggers retrenchment rules.

    Fix: Employees continue on same terms, no compensation arises for the transfer, and directors continue for one year from transformation.

  • Stating that pending suits abate on conversion.

    Students assume a new entity means a fresh start.

    Fix: Under section 378L(9), suits and proceedings continue by or against the Producer Company.

Worked examples

Example 1

Shri Krishi Sangh Society, registered in two States, has 900 members. It wants to become a Producer Company. At a meeting, 570 members vote in favour. Can it make the application with this resolution? Give reasons.

Show the solution
  1. Check eligibility: it works in two States, so it is an inter-State co-operative society with objects not confined to one State.
  2. The special resolution must be of not less than two-thirds of total members.
  3. Two-thirds of 900 = 600.
  4. Votes in favour are 570, which is less than 600.
  5. So the resolution requirement in section 378J(2)(a) is not met.

Answer: No. The society is eligible in principle, but 570 is below the required 600 (two-thirds of 900 total members), so the application cannot be supported by a valid special resolution.

Example 2

An inter-State co-operative society converts into a Producer Company. It has a pending suit, employees on a provident fund scheme, and directors in office. State the effect of conversion on each.

Show the solution
  1. Vesting: under section 378L all assets, rights, debts and liabilities of the society vest in the Producer Company.
  2. Suit: under section 378L(9) the pending suit does not abate; it continues by or against the Producer Company.
  3. Employees: under section 378N(2) they become employees of the Producer Company on the same tenure, remuneration and terms, including provident fund and gratuity benefits.
  4. Compensation: under section 378N(4) the transfer gives no entitlement to compensation.
  5. Directors: under section 378N(1) existing directors continue for one year from the date of transformation.

Answer: Assets and liabilities pass to the Producer Company, the suit continues, employees continue on the same terms without compensation, and the directors remain in office for one year from transformation.

Exam tips

  • In MCQs, check whether the two-thirds is of total members (conversion in) or members present and voting (re-conversion).
  • Quote the 30-day Registrar period and the one-year director continuity when a case gives dates.
  • For differences from a co-operative society, anchor on governing law and registration authority.
  • In case studies, check the inter-State condition first, then the vote, then documents.
  • Cite section numbers only when sure; otherwise state the rule in plain words.

Practice questions from Company Formation and Conversion

Producer Company: Features and Formation in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Producer Company: Features and Formation: frequently asked questions

Who can form a Producer Company?

Primary producers or producer institutions can form one under Part IXA. An inter-State co-operative society with objects not confined to one State can also convert into one under section 378J.

What must the name of a Producer Company contain?

The words "Producer Company Limited" must form part of the name. On conversion of an inter-State society, a word or expression showing its identity precedes these words.

How long does the Registrar take to register a converting society?

On compliance with the requirements, the Registrar certifies registration within thirty days of receiving the application. The society is then incorporated as a Producer Company.

What is the main difference between a Producer Company and a co-operative society?

A Producer Company is a company registered with the Registrar of Companies and governed by company law under Part IXA. A co-operative society is governed by co-operative law. On conversion, the Producer Company is governed by Part IXA to the exclusion of the earlier law.