Nidhi Company

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    Nidhi Company

    Nidhi Company Registration Online

    A Nidhi Company is a specialized form of Non-Banking Financial Company (NBFC) recognized under Section 406 of the Companies Act, 2013. Its operations are governed by the Nidhi Rules, 2014, and it is regulated by the Ministry of Corporate Affairs (MCA). Unlike other NBFCs, a Nidhi Company does not require a license from the Reserve Bank of India (RBI) for its core activities, which are defined under Rule 3(1)(da) of the Nidhi Rules, 2014. 

    These activities include accepting monetary deposits and lending to its members against tangible collaterals like gold and property mortgages. Members can save and borrow from their own company, ensuring a community-based approach to finance. 

    Nidhi Company Registration Requirements

    When you’re setting up a Nidhi Company, there’s a clear checklist to follow. It’s all about getting the right documents and following the rules. This checklist helps you get organized and make sure you don’t miss any steps

    To register a Nidhi Company, you have to meet certain prerequisites:

    • Minimum of 7 shareholders and 3 directors.
    • A minimum capital of ₹5 lakh.
    • Directors must have a Director Identification Number (DIN).
    • Digital Signature Certificates (DSC) for all directors.
    • The company name must include “Nidhi Limited”.
    • The address of the registered office is required.

    Stepwise Procedure for Nidhi Company Registration Online

    You have to first incorporate your business as public limited, then only you can apply for NIDHI company licence. Following the prescribed time period under the NIDHI Rules, 2014. 

    Follow the step by step process on NIDHI Company registration Online. 

    STEP 1 – Documentation Gathering 

    It’s imperative to gather all the necessary legal NIDHI company registration documents before applying. These documents form the bedrock of the registration process and must be compiled meticulously. The list includes identity and address proofs of the members and directors, Memorandum of Association (MoA), Articles of Association (AoA), and proof of the registered office. It’s essential to ensure that no document is missing, as any lapse could lead to delays in the registration process.

    STEP 2 – Unique Name Selection

    Choosing a unique name for your Nidhi Company is a critical step. The name should not only reflect the essence of your business but also comply with the regulatory requirements set forth in the Companies Act and the Trademark Act. It should stand out and must not be in conflict with existing company names or trademarks.

    STEP 3 – Name Reservation 

    After selecting a suitable name, the next step is to reserve it through the Registrar of Companies. This reservation ensures that the chosen name is not taken by another entity during the registration process. Utilizing the RUN service or the SPICe+ application PART A, you can secure your company’s name and move forward with confidence.

    STEP 4 – Filing for Incorporation 

    With the name secured, you can proceed to the incorporation phase. This involves filling out the SPICe+ application on the MCA’s official website, which is divided into PART A for name reservation and PART B for the incorporation process. The application, along with the necessary documents, is submitted to the Registrar of Companies for approval.

    STEP 5 – Certificate of Incorporation 

    Upon submission, the Registrar of Companies will scrutinize the application and attached documents. If everything is in order, the ROC will issue a Certificate of Incorporation, which serves as definitive proof of the Nidhi Company’s legal existence. Additionally, a Corporate Identification Number (CIN) is assigned, marking the company’s unique identity.

    STEP 6 – Nidhi Company Licensing 

    The final step involves obtaining the Nidhi Company license. This requires filing an application in form NDH-4 to the Central Government, detailing compliance with the conditions related to membership, net funds, and term deposits as prescribed in the Companies Act. Once the government is satisfied with the compliance, it will grant the license and publish a notification in the official gazette.

    NIDHI Company Registration Documents

    You need to file the SPICe+ application, in order to register a NIDHI company. For this, you need necessary documents attached in the digital format. 

    The list of all documents required for NIDHI Company Registration:

    For members:

    • Identity proof (PAN, Aadhar)
    • Address proof (Utility bills, bank statements)
    • Passport-sized photographs

    For premises:

    • Proof of registered office (Lease agreement, ownership documents)
    • No Objection Certificate (NOC) from the owner

    Legal drafts:

    • MoA and AoA of the company
    • Proof of compliance with Nidhi Rules, 2014

    Advantages of Nidhi Company:

    • Easy to form and manage
    • Low cost of compliance and regulatory requirements
    • Promotes savings habit among members
    • Loans can be obtained at lower interest rates compared to other financial institutions
    • Can operate in rural and semi-urban areas

    • The minimum capital requirement for a Nidhi Company is Rs. 5 lakhs.

    • A minimum of 200 members are required to start a Nidhi Company.

    • Only one branch is allowed to be opened in a district. However, there is no restriction on the maximum number of branches within a state.

    • The time required to register a Nidhi Company can vary, but it typically takes about 15-20 days for the relevant authority to issue the Certificate of Incorporation once all the necessary documents are submitted. However, the entire process, including document preparation and submission, may take up to 45 days. It’s important to have all your documentation ready and follow the prescribed steps to ensure a smooth registration process.

    • Members can secure loans from a Nidhi Company by pledging assets such as Fixed Deposit Receipts, National Saving Certificates, Insurance Policies, and other government securities. Loans against these securities must not exceed the duration of the securities or one year, whichever is shorter.

    • No, Nidhi Companies are restricted to dealing only with their registered members. They cannot lend to or accept deposits from non-members.

    • A Nidhi Company can declare dividends only if it has transferred an equal amount to the General Reserve, there has been no default in payment of matured deposits and interest, and it has complied with all the rules applicable to Nidhi Companies.

    • Yes, it is mandatory for a Nidhi Company to appoint an auditor. An individual auditor can serve for one term of five consecutive years, while an audit firm can be appointed for two terms of five consecutive years. After completing their term, they are eligible for reappointment only after a cooling-off period of two years.

    Nidhi Company