Nidhi Company

A Nidhi Company is registered under the Companies Act, 2013 and governed by the Ministry of Corporate Affairs (MCA) and Nidhi Rules, 2014. It must fulfill specific criteria, such as having at least 200 members and maintaining a minimum of INR 20 lakhs as net-owned funds within 120 days of incorporation.

Nidhi Companies aim to promote thrift and savings among their members by restricting deposit acceptance and providing loans exclusively to them. Their operations adhere to RBI regulations and annual reporting obligations.

What is a Nidhi Company?

A Nidhi Company is a type of non-banking financial company (NBFC) registered under Section 406 of the Companies Act, 2013 in India. Its primary objective is to encourage members to save and benefit mutually by accepting deposits and granting loans, fostering financial stability within a community.

Purpose of Nidhi Companies

Nidhi Companies play a crucial role in promoting savings among members through deposit-taking and lending, restricted to their members only. The term “Nidhi” translates to “treasure” in Hindi, reflecting their core mission. While not directly regulated by the Reserve Bank of India (RBI), these entities operate under NBFC guidelines concerning deposit activities.

Benefits of a Nidhi Company

1. Ease of Formation: Nidhi Company Registration process is quick and straightforward, facilitating swift establishment.
2. Exemption from RBI Regulations: Unlike banks, Nidhi Companies formulate their own operational rules, reducing regulatory burden.
3. Lower Risk: By restricting operations to members, Nidhi Companies mitigate financial risks, ensuring stability.
4. Encouraging Savings: These companies instill a culture of saving among members, fostering financial prudence.
5. Cost-Effective Registration: The registration process for Nidhi Companies is streamlined, making access to financing and business loans easier.
6. Effective Fund Management: Nidhi Companies typically adopt a net-owned funding system, optimizing business resources.

Requirements for Nidhi Company Registration

To register a Nidhi Company in India, the following requirements must be met:

• Minimum 7 members
• Minimum 3 directors
• Maximum 200 members
• Minimum paid-up capital of Rs. 10 lakhs
• Net Owned Funds of Rs. 20 lakhs within 120 days
• Maintain 10% of deposits in unencumbered term deposits
• Maintain a net owned fund to deposit ratio of 1:20

Documents Required for Nidhi Company Registration

The essential documents for Nidhi Company Registration include:

• PAN and Aadhar card of promoters and members
• Passport-sized photographs of promoters and members
• Identity and address proofs of promoters and members
• Proof of registered office address
• NOC from premises owner (if applicable)
• Property documents or rent agreement (if applicable)
• Form DIR-2 with director consent
• Digital Signature Certificate (DSC) & Director Identification Number (DIN)
• Director specimen signatures
• Subscriber sheet duly signed
• Company Registration Questionnaire

Process for Nidhi Company Registration

The registration process for a Nidhi Company involves several steps:

1. Application for DSC & DIN

The first step for a Nidhi Company Registration is for the directors to acquire the Digital Signature Certificate and apply for the Director’s Identification Number issued by the Ministry of Corporate Affairs. Directors who already have the DIN can skip the process. The DSC is essential for all e-filling processes.

2. Memorandum of Association & Articles of Association

Drafting of Memorandum of Association & Articles of Association is essential for establishing the purpose of the Nidhi Company. These are necessary things in an organization and should be filed with the registrar of the companies.

3. Name Approval

The Nidhi company seeking registration needs to obtain approval over the entity’s name through the Ministry of Corporate Affairs. The chosen name must be unique and should not be copied from the name of any other company or trademark. The objective and business nature should be reflected through the name selected for such entities. They need to propose at least three names out of which MCA chooses the appropriate one. The application for approval is sent through PART A of the SPICe+ application form.

4. Incorporation Application

After the name is approved by the MCA, the company can begin the process of incorporation. For incorporation, you must go to the MCA official website and fill out the SPICe+ application form. After filling out the application form online, divided into two parts, PART A & PART B, any one director has to sign it. The signed application form must be submitted online along with the other required documents attached to it.

5. Certificate of Incorporation

The form is sent to the registrar of companies, who is responsible for looking at the application. A thorough check is made to be sure that all the documents and the form being filled and submitted correctly and in the right manner. If everything is alright, a certificate of incorporation is issued to the applicant for Nidhi Company Registration. A unique Corporate Identification Number is provided to the Nidhi Company by the ROC.

6. Nidhi Company License

Following its incorporation, a business must apply for a NIDHI Company license by fulfilling criteria about member count, net assets, term deposits, and other conditions outlined in the Companies Act of 2013. The company has four months from the date of its incorporation as a NIDHI Limited Company to file an application to the Central Government using form NDH 4. This time frame may be extended with the regional director’s consent if necessary.

Nidhi Company Mandatory Compliance

After incorporation, Nidhi Companies must adhere to mandatory compliance requirements:

• File Form NDH-1 annually
• File Form NDH-2 if member count falls below 200
• File half-yearly returns (Form NDH-3)
• Hold quarterly board meetings and annual members’ meetings
• File annual financial statements (Form AOC-4) and annual returns (Form MGT-7)
• Maintain regular books of accounts
• File income tax returns by September 30th each year
• Ensure rental income from lockers does not exceed 20% of total revenue

Prohibited Activities for Nidhi Companies

Nidhi Companies are prohibited from engaging in the following activities:

• Chit funds
• Hire-purchase finance
• Leasing finance
• Insurance business
• Securities business
• Accepting deposits or lending funds to non-members

Nidhi Company Registration Fees

The registration fees for Nidhi Companies range between Rs. 10,000 to Rs. 15,000, excluding professional fees, depending on additional services like DIN application, DSC, GST registration, etc.

Timeline for Nidhi Company Registration

The registration timeline typically spans 30-45 days, contingent on timely document submission and correct filing procedures.

Why Corporate Raasta Consulting?

Corporate Raasta Consulting ensures swift and efficient Nidhi Company Registration within the stipulated timeframe through expert guidance. With a strong track record and experienced professionals, we navigate all procedural complexities to secure necessary licenses for business operations.