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Nidhi Company Registration

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Required Documents

4 proposed names for company in order of preference

Quantum of Capital: Both Authorized and Paid up

DIN (Director Identification number) of directors

DSC (Digital Signature) of directors and shareholders

Self attested PAN Card and Aadhar Card copy of all directors and shareholders

Self attested ID Proofs of directors & shareholders (Driving License/Voter ID/ Passport)

Self attested address proof of directors & shareholders (Utility Bill/ Bank Statement/ Bank passbook copy)

Passport size color photo of director & Members in JPEG format

NOC from owner of premises or Rent/ Lease agreement of registered office (if leased/ rented)

Utility bill in name of owner not older than 2 months

Occupation and educational qualification, place of birth and nationality

Mobile no. and email id of directors and shareholders

Declarations and Affidavits from First directors of company in prescribed formats

What we will deliver

DIN for 3 directors

DSC for directors/ subscribers

Name approval of company- RUN WEB FORM/ SPICe+

Memorandum of Association/ Article of Association of Company (e-MOA/e-AOA)

Certificate of Incorporation

Mandatory PAN of Company (e-PAN Card)

Mandatory TAN of Company (e-TAN letter)

Mandatory ESIC/EPFO Registration (using new SPICe+ form)

Professional Tax Registration (in case of Maharasthra)

Mandatory Opening of Bank Account

GST Registration (if required)

Shop and Establishment Registration (Chargeable separately)

A Nidhi Company is a company registered under the Companies Act, 2013 basically with a motive of cultivating the habit of thrift and savings amongst its members. Nidhi Companies are allowed to take deposits from their members and lend to its members only. Thus, the funds contributed into a Nidhi Company come only from its members. Nidhi Company is governed by Section 406 of the Companies Act, 2013 and Company Nidhi Rules, 2014.

The word “Nidhi” in Nidhi Company has roots in the word “Nidhi”, a word commonly found in the Hindi vocabulary that means “treasure”.

Nidhi Company is a class of NBFC as such the activities of a Nidhi Company do fall under the purview of RBI and RBI has power to issue necessary directions for them regarding their deposit acceptance activities. However, as Nidhi Companies only deal with its member’s money only, RBI has exempted Nidhi Companies from the core provisions of the RBI and other regulations applicable to a NBFC.

Eligibility Criteria

Minimum 3 director

Minimum 7 shareholders

Director and Shareholder may or may not be the same persons

Minimum capital requirement is Rs. 5 Lakhs

DIN of the directors

Digital Signature of shareholder and directors

Required Documents

4 proposed names for company in order of preference

Quantum of Capital: Both Authorized and Paid up

DIN (Director Identification number) of directors

DSC (Digital Signature) of directors and shareholders

Self attested PAN Card and Aadhar Card copy of all directors and shareholders

Self attested ID Proofs of directors & shareholders (Driving License/Voter ID/ Passport)

Self attested address proof of directors & shareholders (Utility Bill/ Bank Statement/ Bank passbook copy)

Passport size color photo of director & Members in JPEG format

NOC from owner of premises or Rent/ Lease agreement of registered office (if leased/ rented)

Utility bill in name of owner not older than 2 months

Occupation and educational qualification, place of birth and nationality

Mobile no. and email id of directors and shareholders

Declarations and Affidavits from First directors of company in prescribed formats

Step by Step Procedure of Nidhi Company Registration

STEP 1

Verification of documents provided by you

STEP 2

Application for Name Approval (online RUN WEB Application on MCA Portal)

STEP 3

Obtaining DSC (Class-2) and DIN as required above. However, in new companies DIN can be obtained within SPICe + facility

STEP 4

Incorporation of company along with filing of e-MOA and e-AOA

STEP 5

Providing you Certificate of Incorporation

What we will deliver

DIN for 3 directors

DSC for directors/ subscribers

Name approval of company- RUN WEB FORM/ SPICe+

Memorandum of Association/ Article of Association of Company (e-MOA/e-AOA)

Certificate of Incorporation

Mandatory PAN of Company (e-PAN Card)

Mandatory TAN of Company (e-TAN letter)

Mandatory ESIC/EPFO Registration (using new SPICe+ form)

Professional Tax Registration (in case of Maharasthra)

Mandatory Opening of Bank Account

GST Registration (if required)

Shop and Establishment Registration (Chargeable separately)

Benefits of Nidhi Company Registration

  • Limited Liability

    Liability of directors and members is limited to the extent of capital invested by them. As such, in case of losses, the directors and members cannot be called upon to pay liabilities of the company out of their personal assets.

  • Good option to motivate savings

    The Nidhi Company takes deposit from its members at attractive interest rates which motivate its members towards savings.

  • Simplified Registration Process

    Nidhi Company is not required to obtain license from RBI unlike NBFC. Nidhi companies have to incorporate themselves as a public company with the MCA. Incorporation cost is also not high. The expenses incorporation of Nidhi Company is approx 25000-30000 including Government fees that vary state to state.

  • Easy loan processing & sanction

    Since, the Nidhi Company lends funds to members only, the entire process of loan approval becomes easier as compared to banks & NBFCs. Members of Nidhi Company can take loan from its own company at cheaper interest rates as compared to NBFCs.

  • Easy mechanism for accepting deposits

    Public companies need to follow various compliances for inviting deposits from public. But Nidhi Company is free from those compliances. It can easily get deposits from public simply by making them members.

  • Lesser Regulations

    Nidhi Companies are governed by Nidhi Rules, 2014. Though activities of Nidhi Companies are regulated by Central Government but the compliances are lesser as compared to NBFCs.

  • Low Capital Required

    Nidhi Company can be initiated with a minimum capital of Rs. 5, 00,000. Within a year of incorporation, the capital shall be increased to Rs. 10, 00,000 or more.

  • Micro level banking

    Nidhi Companies plays an important role in fulfilling the needs of middle and low-income groups by providing them financial assistance with minimum formalities. Specially, these help in providing banking services in rural/remote areas.

Frequently Asked Question

What are the requirements to be fulfilled for registering a Nidhi Company?

Following conditions should be fulfilled for registering a Nidhi Company:-

  • A Nidhi Company shall be registered as a Public Company
  • The words “Nidhi” shall be stated as a part of the name of the company
  • A Nidhi Company shall not  be eligible to issue preference shares
  • Minimum Paid up equity share capital of Rs. 5 Lakhs
  • The object of the Nidhi Company shall be only to receive deposits from and lending to its members only for their mutual benefits and that of cultivating the habit of thrift and savings among its members
  • Minimum 7 Members
  • Minimum 3 Directors

What are the requirements to be complied by Nidhi Company after incorporation?

After incorporation of the Nidhi Company, it must meet all of the following conditions within a period of 12 months:-

  1. It must have 200 or more members (shareholders)
  2. It must have Net Owned Funds (NOF) of Rs. 10 Lakhs or more
  3. It must have unencumbered term deposits of 10% or more of the outstanding deposits
  4. It must have a ratio of Net Owned Funds to Deposits of not more than 1:20

What is Net Owned Fund (NOF)?

Net Owned Fund = Paid up Equity Share Capital + Free Reserves – Accumulated Losses- Intangible Assets (as per last audited Balance Sheet)

What is the term “unencumbered term deposits” in relation to Nidhi Companies?

Every Nidhi shall invest and continue to keep invested, in unencumbered term deposits with a Scheduled commercial bank (other than a co-operative bank or a regional rural bank), or post office deposits in its own name an amount which shall not be less than ten per cent of the deposits outstanding at the close of business on the last working day of the second preceding month.

Who can become member of a Nidhi Company?

A Nidhi Company shall not admit a body corporate, trust or minor as a member.

What are the compliances to be made in case the Nidhi Company fails to fulfill membership requirements within 12 months of incorporation?

If the company fails to comply with the minimum member criteria, it shall within 90 days from the close of the first financial year, apply to the Regional Director in Form No. NDH-2 for extension of time and the Regional Director may consider the application and pass orders within 30 days of the receipt of the application.

If even after the second financial year, the Nidhi Company is unable to comply the membership requirement, then it shall not accept any further deposits from the commencement of the second financial year till it complies with the provisions for operating as a Nidhi Company and be liable for penal consequences.

Can a Nidhi company lend to an outsider?

No, a Nidhi Company cannot borrow funds or lend to an outsider who is a non-member.

Are there any limits for accepting deposits from members?

A Nidhi Company can accept deposits not more than 20 times of its NOF as per the latest audited financial statements.

Whether Nidhi has to take RBI License or RBI Act applicable on it?

Nidhi Companies are not required to take RBI license for incorporation. RBI has exempted the Nidhi Companies from the core provisions of the RBI Act and other directions applicable to NBFCs. The provisions of Section 45-IA (Compulsory Registration with RBI), Section 45-IB (Maintenance of Liquid Assets), Section 45-IC (Creation of Reserve fund) have been exempted for Nidhi Companies. However, R.B.I can issue direction to Nidhi Companies.

What are the restrictions imposed on the Nidhi Companies?

Nidhi Companies have been prohibited from performing the following activities:

  • Leasing finance, insurance, chit fund, hire purchase finance, lotteries or acquisition of securities issued by any body corporate.
  • Issue of preference shares, debentures or any other debt instruments by any name or in any form
  • Open a current account with its members (though it can open a savings account)
  • Accept deposits from or lend to any person, other than its members
  • Pledge or sell any of the assets lodged by its members as security for a loan
  • Take deposits from or lend money to a body corporate
  • Pay any commission or incentive for mobilizing deposits from members
  • Advertise in any form for inviting deposits. However, private circulation of the details of fixed deposit scheme among the members only is allowed and will not be considered as advertisement.
  • Entering into any partnership arrangement for carrying out lending and borrowing activities
  • Carry on a business other than borrowing and lending to its members. Provided that Nidhis may provide locker facilities to its members subject to the condition that locker rental income shall not exceed 20% of the gross income of Nidhi Company at any point of time during the financial year.

What are the statutory compliances to be made by a Nidhi Company?

Following are the statutory compliances for Nidhi Company:

Form NDH-1

A Nidhi Company must submit the list of members in Form NDH-1 within 90 days from the end of every financial year, duly certified by a CS/CA/CMA in practice.

Form NDH-3

A half yearly return in Form NDH-3 to be filed with ROC duly certified by a CS/CA/CMA in practice.

Annual Filings

  • Annual Return with MCA in Form MGT-7
  • Financial Statements in Form AOC-4
  • Income Tax Return by 30th September of the following financial year

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