Registration of FPOs as Trust, Cooperative Society, and Non-Profit Organization #FPO #Agriculture

1. Registration of
FPO
Centre for Aquatic Livelihood Jaljeevika
Submitted by
Aiswarya Santhosh
Student Intern
National Academy of
Agriculture Research
Management

2. Registering Farmer Producer Organizations Under Cooperative Society’s Act
A Producer Organisation (PO) is a legal entity formed by primary producers, viz. farmers, milk
producers, fishermen, weavers, rural artisans, craftsmen. A PO can be a producer company, a
cooperative society or any other legal form which provides for sharing of profits/benefits among the
members. It is one type of PO where the members are farmers. Small Farmers’ Agribusiness
Consortium (SFAC) is providing support for promotion of FPOs.
a. Cooperative Societies Act/ Autonomous or Mutually Aided Cooperative
Societies Act of the respective State
b. Multi-State Cooperative Society Act, 2002
c. Autonomous Cooperative Societies’ Act existing in different states
Producer Organisation can be registered under any of the following legal provisions:

3. Producers come together to form
a society.
There should be at least 10
members, all aged above 18 years.
The last word in the name of the
society should be Limited, if its
registered with limited liability.
The Registrar holds the final decision
making power in identifying the
background of the members, their
residence etc.
B
D
A
FPO as a
Society
C
01
02
03
04
Formation of Producers’ Organisation as Society

4. Rights and Liabilities of the
members
If the liability of a
member is not
limited by shares,
then they will have
as many votes as
prescribed by the
bye laws of the
society.
If the liability of a
member is
limited by shares,
then each
member can
have only one
vote.
Management of the Society
The management
of a society is done
by a governing
body that includes
Chairman,
Secretary,
Treasurer,
Members of the
Committee etc.
Registered
societies act as
body corporate
with perpetual
succession and
common seal like
a company.

5. Availing for Loans
A society can lend money to its members and also other registered societies with due permission.
The ones with unlimited liability cannot extend loan without the registrar’s permission.
Overseeing Affairs
The management of the society is carried out by the governing body and the board of directors and
overall monitoring is done by the Registrar.
Dissolution of the society
If 75% of members of a society apply for the dissolution, the Registrar can dissolve it.
Any member can appeal against this within 2 months upon which the decision will be confirmed by the
appellate authority.

6. Application of Company’s Act to Societies1
Inputs like seed and fertilizers:
Distribution of inputs like fertilizers &
pesticides.
Agriculture credit: To meet the agriculture
credit needs of its members
Agriculture implement hiring: The farmers cannot
alone hire hi-tech agriculture implements required
for farming and hence the societies run hiring
centres.
Processing services like sorting grading etc. is also
carried out by these societies.
Storage facility for the farmers: The farmers are
provided with warehouse facilities and receipts against
which the farmers can get the loan to meet immediate
needs.
 The provisions of the
Companies Act are not
applicable to then
registered societies. The
primary agriculture
cooperative society being
a registered cooperative
society gives credit and
input facilities to its
members.
 Facilities extended by the
primary agriculture
societies are:

7. 1.
2. 3.
Role of State Government
Financial support of
NABARD is available as
Producer Organisation
Development Fund for
producers organisation.
Primary Agriculture
Cooperative Societies can
avail for loan from State
Cooperative Banks.
When loan is taken from
SCB or DCCB, financial
support from NABARD is
not taken.

8. Registering Farmer Producer Organisation as a Non-Profit Society
A society is an association of persons united
together by mutual consent to deliberate, determine
and act jointly for a common objective and collective
purpose. As per the Societies Registration Act
1860 a society can be formed by minimum 7
members who are 21 years and above.
•Charitable assistance
•Creation of military orphan fund and other welfare activities in some states
•Promotion of science, literature and fine arts
Purpose of the Society A meet with expert program organised by Hahnemann Society

9. Documents Required for the Incorporation of Society
1. Memorandum of Association: It acts as constituency of the society and should contain
a) Name of the society
b) Objective of the society
c) Name of all the members in the governing body
d) A copy of the rules and regulations should be filed along with the memorandum
2. Rules and Regulations of Society
a) Condition for admission of members and their liability for fine, forfeiture etc.
b) Termination of membership upon resignation and death.
c) Appointment and removal of trustees.
d) Information to be provided in the bye laws, dissolution of the society etc.

10. Bye Laws of the Society
01
02
03
04
Business hours of the society,
transaction of business.
Mode of custody, application and investment,
arrangement for day to day transactions,
expenditure, staff to be employed etc.
Matters of member enrollment,
removal, special privileges etc.
Conduct of the general meeting
and procedures, management of
society’s business etc.

11. Sources of Funds for Society
 Mobilisation of the funds can be via
donations, gifts, grants and loans.
Book Keeping by Society
The society needs to maintain:
1. Cash book 2. General ledger
It also has to finalise accounts and get it
audited by a chartered accountant.
Membership of Society
 Members should be 21 years as on joining the society.
 The members should subscribe to aim and
objective of society and should have deposited the
membership fee.
Cancellation of Membership
 Cancellation of membership may take place when the
member resigns, and upon acceptance of the
resignation letter by the society, or up on death of the
members.
 Upon non-payment of dues.
Functions of Governing Body of Society
 Manages the affairs of society as per bye laws.

12. Registering Farmer Producer Organisation as Non Profit
as Registered Trust
The producer organisation can be registered under the Trust Act as charitable trusts. A person
who creates a trust is called ‘settlor’, then the person to whom the property is transferred on is
called a trustee and the person for whose benefit the property is transferred is called the
beneficiary.
Private Trust: Its mainly for
charitable or religious purpose
and not for commercial activities
Public Charitable Trust: It
benefits the public at large.
Types of
Trust

13. Purpose of Establishing a Public Charitable Trust
 Relief of poverty and distress
 Education
 Medical relief
 Provision of facilities for recreation and leisure
 For general public utility
Law Governing Public Charitable Trust
 No national law to govern public charitable trust (Only broad principles of India Trust Act
1882)
 Many states have their own Public Trust Acts.
Registration of Trust
The registration of the trust requires documents such as, Application of registration to the
official in the respective region where the trust is to be established, Copy of trust deed, Affidavit
and Consent letter.

14. Trust Deed
Contains aim and objective
and mode of management of
trust. It also includes the
appointment and removal of
trustees etc.
It should contain the
minimum and maximum
number of trustees.
The trust deed should be
signed by the settlor and
trustees in presence of 2
witnesses.
The trust deed should be
executed on a non- judicial
stamp paper, the value of
which would depend on the
valuation of the property.
The trust needs
minimum 2 trustees in
its board of
management.

15. Sources of Funds for the Trust
Funds for the trust can be mobilized through donations, gifts, grants, loans etc.
Book keeping
The trust should keep
1. Cash book 2. General Ledger
It should also keep the final account and get them verified by a chartered accountant.
Business Activities
 The profits attained from business activities that aim to attain the objectives of the Trust are
exempt from taxation.
 Income of a non-profit organisation from letting out halls, rest houses or auditoriums does not
amount to business.
Taxation of the Trust
The income of the producers organisation registered as trust is not exempt from income tax.

16. Advantages of Trust
Simple
registration
process.
Simple record
keeping and
regulations.
Less
interference
from regulators.
Exemption from
tax due to
charitable
nature of
operations.

17. Tax exemption is
possible up to extend
where income tax
department excepts
the trust activities as
charitable.
Inappropriate for profit
compared to
financially sustainable
organisations like
producers’
organisation.
No system for equity
investment/ownership
and hence unattractive
to commercial
investors.
Organisations
registered under
Societies’ Registration
Act and Trust Act are
considered as
unincorporated bodies
and hence cannot
collect savings from
public.
Disadvantages of Trust

18. Documents for the Registration of Producer Company as a Trust
 Detail of all the Trustees of the Trust with their address and PAN.
 Certified true copies of the Trust’s Registration Certificate.
 Certified true copies of Laws and bye-laws of the Trust.
 Copy of income tax registration certificate.
 Audited Balance Sheet and Income & Expenditure account with Audit Report for last
three years.
 The original copy of Trust Deed proving the creation of the Trust.

19. FPO Strengthening
and Development
Cluster
identification
Diagnostic
Study
Feasibility
Analysis
Baseline
Assessment
Business
Planning
Mobilisation
of Farmers
Organising
&
Formalising
Resource
Mobilisation
Systems
Development
Business
Operations
Assessment
and audit

20. Conclusion
• The first week task of the Jaljeevika project has helped in identifying the
formation, functioning, activities and significance of FPO/FPCs in the web of
rural livelihood.
• The various ways in which a FPO can be registered as cooperative society,
trust, non-profit organisation, their advantages and disadvantages have been
looked into thoroughly.
• The FPO strengthening and development process has been evaluated.

21. Thank you