Nidhi Company Registration

NIDHI COMPANY

Description: Nidhi company is an NBFC (Non-Banking financial company). Company which is formed with the object of cultivating the habit of thrift and savings among the members and receiving from and leading to the members for their mutual benefits.

Benefits of Nidhi Company:

• Easy of fund: Nidhi Company is the safest and the cheapest way of inviting deposits from the general public. You just need to take them as registered members.
• Less Regulations: Nidhi companies are governed under Nidhi Rules, 2014. The Central Government is the regulating authority controlling its activating and operating. Guidelines imposed by the RBI on Nidhi are very few.
• Micro Banking: Nidhi provide banking services to the remote and rural public of India which still is based in far-off locations and is, hence, devoid of accessing finance from national banks and NBFCs.
• Low capital Requirement: Ministry of Corporate Affairs (MCA) commands that the minimum capital requirement of Rs. 5 lakhs for Nidhi. Within the next fiscal year, the company’s capital has to be raised than the initial capital.
• Liability is Limited: Liability of Directors and shareholders of the Nidhi Company is limited.
• Better Credit Co-operative Society: Once a Nidhi company has been registered, the members can avail of all the benefits of credit co-operative society.
• Better Creditability: Nidhi companies enjoy better credibility as opposed to any other members based organization like Trusts, Cooperative Societies or NGOs.
• No External Involvement: Nidhi Companies take funds from their members and further provides loans to their members only. All transactions are don within this group only.

Documents required:

• MOA-Memorandum of Association.
• AOA-Article of Association.
• DIN of Directors.
• Property documents/Rent agreements/Lease agreements.
• NOC of owner/landlord.
• PAN of members.
• Address of members.
• Identity Proof.

Restrictions on Nidhi Company: The following are some of the restrictions a Nidhi Company is subject to under Nidhi Rules, 2014. As per Rule 6 of Nidhi Rules, 2014, a Nidhi Company shall NOT:

• carry on the business of chit fund, hire purchase finance, leasing finance, insurance or acquisition of securities issued by anybody corporate;
• issue preference shares, debentures or any other debt instrument by any name or in any form whatsoever;
• open any current account with its members;
• acquire another company by purchase of securities or control the composition of the Board of Directors of any other company in any manner whatsoever or enter into any arrangement for the change of its management, unless it has passed a special resolution in its general meeting and also obtained the previous approval of the Regional Director having jurisdiction over such Nidhi;
• carry on any business other than the business of borrowing or lending in its own name: Provided that Nidhi which have adhered to all the provisions of these rules may provide locker facilities on rent to its member’s subject to the rental income from such facilities not exceeding twenty per cent of the gross income of the Nidhi at any point of time during a financial year.
• accept deposits from or lend to any person, other than its members;
• pledge any of the assets lodged by its members as security;
• take deposits from or lend money to anybody corporate;
• enter into any partnership arrangement in its borrowing or lending activities;
• issue or cause to be issued any advertisement in any form for soliciting deposit: Provided that private circulation of the details of fixed deposit Schemes among the members of the Nidhi carrying the words “for private circulation to members only” shall not be considered to be an advertisement for soliciting deposits.
• Pay any brokerage or incentive for mobilising deposits from members or for the deployment of funds or for granting loans.Checklist Nidhi company registration online in India
  • minimum of 200 members within the time span of one year from commencement.
  • And, the company should have an equity share capital of at least Rs 5 lakhs, for Nidhi limited company registration. This entire equity share capital amount has to be paid up and the Net Owned Funds (NOF) must increase to Rs 10 lakhs within the time period of one-year from registration.
  • Minimum of 10% of its outstanding deposits must have un-encumbered term deposits.
  • The prescribed Net Owned Funds (NOF) to deposits ratio must be 1:20 where 10% of the total deposits should be in a fixed deposit account of any national bank.
  • This includes free reserves and equity share capital and excludes accrued losses and intangible assets.

   

  Registration Process

  • Applying for DIN and DSC: The Directors of the Nidhi Company must apply for DIN (Director’s Identification Number) and DSC (Digital Signature Certificate). The Ministry of Corporate Affairs issues the DIN and DSC is a digital signature utilized for all e-filing procedures. This step could be avoided for the Director already has DIN and DSC.
  • Approval of the Name: The director is required to select and propose 3 different names to the Ministry of Corporate Affairs for their Nidhi Company. Out of the suggested 3 names, only one shall be accepted for the Corporation through MCA. The suggested names should be unique and must not match to the names of other already registered corporations, according to Rule 8 of the Company Act. The approved name would remain valid for 20 days only.
  • MoA and AoA: The MoA and AoA must be filed to the ROC (Registrar of Companies) with the subscription statement.
  • Certificate of Incorporation (CIN): After fulling all the conditions the Register issues the incorporation certificate which declares that a corporation was formed and it mentions the company identification number (CIN) also.
  • PAN, TAN and Bank Account: The directors are required to apply for PAN and TAN. The PAN and TAN are received within 7 working days. Also, the directors must get a bank account opened by means of submitting the Certificate of Incorporation, MoA, AoA, and PAN to the bank.

  Simple and Transparent Services after Registration:

  • Basic: Nidhi company registration with PAN and TAN.
  • Standard: Nidhi company registration with PAN and TAN and Issuance of share certificates to 100 shareholders.
  • Premium: Nidhi company registration with PAN and TAN and Issuance of share certificates to 100 shareholders, Nidhi status and filing.