Problems in Policy: Registering a Producer Company in India

Over the course of the last year, Insha-e-Noor nearly doubled their turnover but not being a registered entity as holding the group back from Corporate and International orders. It was decided that Insha-e-Noor would be registered as a producer company right before I arrived to start my fellowship.

So naturally, it became a part of my Fellowship project to support the registration whoever I could.The registration process started with lots of research and questions: What are the requirements to be a shareholder? How many shares can each member hold? Is there a minimum? A maximum? 

Recognized under the Companies Act of 2013, a producer company “has the objective of production, harvesting, procurement, grading, pooling, handling, marketing, selling, and export of primary produce of the Members or import of goods or services for their benefit.” The term “produce” is defined as something that is produced or grown so most common type of Producer Company are agricultural based ones; however, there are a few handicraft based Producer Companies. The main feature of the Producer Company is that it allows ‘producer members’ to own shares of the company and serve on the Board of Directors similar to a publicly traded company. It was an ideal fit for Insha-e-Noor because the women members would be able to be profit directly from the company in a collaborative. Additionally since share are issued only to ‘producer members’, their husbands or fathers would not be able to make decisions on their behalf. (1)

IeN Corchet
Insha-e-Noor Crochet Members. Photo Credit: Nizamuddin Urban Renewal Initiative

Shifting through many articles and webpages from the Ministry of Corporate Affairs website helped provide clarification about guidelines and processes; however, like many initiatives in the development sector, being the facilitators for the registration on behalf of a community created an additional layer of discussions. What should the value of each share be? Should their share amount be given as a bonus? How do we prepare the Board of Directors for their responsibilities? 

My supervisor, Swati and I tried to approach both concerns in a parallel manner. We held frequent meeting with Insha-e-Noor members explaining the purpose of a Producer Company, the responsibilities of the Board of Directors. We created a framework for which to evaluate criteria for membership and then facilitated a discussion with the members about what they think the criteria should include —  the final list was a combination of both. Once decided, we started organizing data from the last two years and created dozens of spreadsheet outlining each members: daily attendance, meeting attendance, average income, participation in payment cycles. The process was messy, often times the data we needed was missing or the years that we were including in the process shifted; but no matter with enough excel magic, we were able to fix it. 

IeN Registration
Example for Criteria Evaluation Sheet during Insha-e-Noor’s registration process (names and data has been changed)

However, the registration brought its own set of challenges. As we started collecting the required government documents, we realized that many members didn’t have all of the required documents. For some it was the lack of disposable income to open a bank account, for others it was that all the forms of address proof (rental agreement, electricity, phone bill) were in the names of their husbands and fathers, not their own. We started working with the Nizamuddin Urban Renewal Initiative’s existing  Rehnumai Centre to help members create these documents. Although these unexpected challenges delayed the process, they serve as a reminder for the barriers that marginalized communities face and a motivation to continue to creating livelihood opportunities for the women of Nizamuddin Basti. 

As of May 2018, Insha-e-Noor officially signed on with a Chartered Accountant and started the Producer Company Registration Process!  

(1) Government of India. “Reference Section 465(1) of the Companies Act, 2013.” Ministry of Corporate Affairs, 2013.

Minahil earned her Bachelors of Arts in Advocacy and Argumentation from the University at Buffalo where she was a Prentice Family Foundation Western New York Prosperity Fellow and served as the undergraduate Student Association President. After graduation she served at Buffalo City Hall as an AmeriCorps VISTA and on the campaign team for New York State Senate's 60th legislative district. She most recently served as a Haas Institute for Fair and Inclusive Society Fellow at UC Berkeley. Throughout her professional and academic career, Minahil has been interested in working on issues of equity at the intersection of gender, race, and class. After her time as an AIF Clinton Fellow, Minahil plans to attend the Georgetown University Law Center to earn her JD.

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