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NIDHI COMPANY

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NIDHI COMPANY

A Nidhi company, is one that belongs to the non-banking Indian finance sector and is recognized under section 406 of the Companies Act, 2013. Their core business is borrowing and lending money between their members.
Nidhi means a company which has been incorporated as a Nidhi  with the object of-Cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit, and Which complies with rules of Chapter XXVI of Companies Rules, 2014.
 The companies doing Nidhi business, viz. borrowing from members and lending to members only, are known under different names such as Nidhi, Permanent Fund, Benefit Funds, Mutual Benefit Funds and Mutual Benefit Company.

ADVANTAGES OF NIDHI COMPANY

  • It has a separate legal entity
  • It has a continuous or uninterrupted existence until it is dissolved legally
  • It is the cheapest and easiest form of NBFC and can be easily formed.
  • It is flexible structure and is a legal entity.
  • It has an easy fund-raising options compare to other entity.
  • It is a Secured lending business between members.
  • Lower and middle-class savings are promoted.

MINIMUM REQUIREMENTS FOR COMPANY REGISTRATION

  • Minimum 7 shareholders
  • Minimum Capital of Rs. 10 lacs
  • The name must be Nidhi Limited.
  • Minimum 3 Directors are required.
  • DIN for all directors

CONDITIONS TO BE FULFILLED FOR GETTING ‘NIDHI’ STATUS

  • Within one year of its registration, Nidhi Company should have minimum 200 members within one year from commencement
  • Unencumbered term deposits must be 10% or higher of the outstanding deposits
  • If Nidhi Company have to satisfy all above conditions, from the end of the first financial year after incorporation.
  • If even after the second financial year, it doesn’t fulfil the requirements, it can’t accept deposits till it complies with the provisions, and also penalty will be imposed.
  • The net owned funds should be 10 lakh rupees or more.
  • The ratio of net owned funds to deposits shouldn’t be more than 1:20
  • Extension of another financial year can be availed from Regional Director.

DOCUMENTS FOR COMPANY REGISTRATION

  • Copy of PAN Card of directors
  • Copy of Aadhar Card/ Voter identity card of directors
  • Utility bills-viz-Electricity/ Water bill (Business Place)
  • Passport size photograph of directors
  • Copy of Rent agreement (If rented property)
  • Landlord NOC (Format will be provided)

STEPS FOR COMPANY REGISTRATION

Incorporation of Nidhi Company limited is similar to incorporation of Public Limited Company. But it requires certain other declarations as well

1. APPLICATION OF DSC AND DIN

All the prospective directors have to apply for Digital signature and DIN. Digital signature is an online signature used for filing and DIN refer to Directors Identification number issued by MCA. If the directors already have DSC and DIN, then this step can be skipped

2. Application for Name approval

Up to 4 name option can be given in 1 RUN (Reserve Unique Name) name approval request. Provide maximum 4 names in order of priority for your company name for approval of MCA of which one will be selected. Names provided should ideally be unique and suggestive of company business.

3. Company Registration Form & MOA & AOA Submission

Once name is approved, one need to get the Memorandum & Articles of Association approved. Here are all the other documents required in order:
  • Copy of Rental Agreement (along with NOC from owner)/Sale Deed
  • Latest Utility Bill
  • Affidavit from director and shareholders
With these ready, you can submit the company registration form INC-32 (also known as Spice).

4. Get incorporation certificate:

Once MOA and AOA are approved, company incorporation certificate is issued by MCA on submission of all the above-mentioned documents to the ROC. On arrival of the company incorporation certificate, your company is registered. Incorporation certification is a proof that company has been created. It also includes your CIN number.

5. Apply for PAN, TAN and Bank account:

The moment company is incorporated, application for PAN & TAN needs to be made with NSDL. Then you need to apply for PAN and TAN Post this, for opening of bank account submit the Incorporation certificate, MOA, AOA and PAN along with resolution with a bank to open your bank account.

Our Package

Company Registration package includes:

  • DSC for one director
  • Drafting of MoA & AoA
  • Company Incorporation Certificate
  • TAN of Company
  • DIN for Two directors
  • Registration fees and stamp duty
  • PAN of Company

Frequently Asked Questions

  • How to start a Nidhi Company?

    For starting a new company, you have to have minimum 3 directors and 7 shareholders and need to register the company as a limited company imder Companies Act,2013

  • Is Nidhi Company a NBFC?

    Section 406 of the Companies Act 2013 govern Nidhi Companies & RBI Act govern NBFC. It belongs to the nonbanking Indian finance sector.

  • Can Nidhi Companies Accepts Deposits?

    Nidhi companies are allowed to take a deposit from its members and lend to its members only. Therefore, the funds contributed for a Nidhi company are only from its members (shareholders) and used only by the shareholders of the Nidhi Company.

  • Can any person other than the members deposit funds into Nidhi Company?

    No, only the members are allowed to deposit, borrow or lend funds

  • Who can become a member of a Nidhi Company?

    Any Individual can become members of the Nidhi.

  • How much deposit can a Nidhi accept from its members?

    Nidhi can accept deposits not exceeding 20 times of its net owned assets.