Nidhi Company

Business Setup | Registrations | Limited Liability Partnership

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‎ MODULES

Benefits

Minimum Requirements

Registration process

Documents Requried

One kind of non-banking financial company that mostly serves the Indian market is called a Nidhi Company. It is governed by the Ministry of Corporate Affairs and falls under the umbrella of Mutual Benefit Societies. A Nidhi Company’s primary goals are to foster a culture of thrift and saving among its members and provide a platform for mutual gain.

Some requirements must be fulfilled in order for a business to be designated as a Nidhi Company. These requirements include having a minimum number of members, a minimum amount of net owned capital, and compliance with particular laws pertaining to lending and deposit-taking. Nidhi Companies are localized organizations that work at the grassroots level to advance financial inclusion and community welfare. They are not allowed to transact with anybody but their members.

Benefits of Nidhi Company Registrations

In India, there are a number of advantages to registering as a Nidhi Company, especially for groups and people who want to encourage saving, frugality, and mutual aid. The following are some benefits of registering a Nidhi company:

1. Encourages Savings and Thrift:

The purpose of Nidhi Companies is to encourage prudent financial practices by cultivating a culture of saves and thrift among their members.

2. Community-Focused Financial Institution:

Nidhi Companies foster a sense of solidarity and support among their members by primarily attending to their financial requirements.

3. Limited Liability:

Members benefit from limited liability, which limits their financial exposure to their investments in the Nidhi Company and protects their personal assets.

4. Easy Formation and Compliance:

In contrast to more intricate financial entities, the formation and upkeep of a Nidhi Company are very straightforward processes. The requirements for compliance are meant to be simple.

5. Mutual Benefit:

Members gain from the community's combined financial power since the money raised is utilized to lend money among members, giving them access to credit at reasonable rates.

6.Access to Credit:

Members of the Nidhi Company have access to credit facilities, which can be very helpful for people and small enterprises that would have trouble getting loans from conventional banks.

7. Easy Formation and Maintenance:

By encouraging entrepreneurship, the creation of jobs, and general financial inclusion, Nidhi Companies frequently aid in the economic development of their local communities.

8. No External Interference:

Nidhi Companies only engage in business with other members and function solely for the benefit of their members. This reduces outside disturbance and concentrates on the community's internal well-being.

9. Regulated Framework:

The Ministry of Corporate Affairs has constructed a regulated framework that Nidhi Companies operate inside, offering a degree of monitoring and guaranteeing adherence to set guidelines.

10. Member Participation:

Members get to actively participate in the Nidhi Company's decision-making process, which promotes community involvement and a sense of ownership.

Minimum Requirements

  • Minimum of seven members are required
  • At least three members must be the directors of the company
  • Minimum of 10 lakh rupees is required for Authorized capital
  • Minimum of 10 lakh rupees is required for share capital
  • Issuing preference shares not allowed
  • The objective of the company should be receiving deposits and lending to its members only.

Nidhi company registration process

To ensure compliance with all applicable rules and regulations, it is important to get professional help from legal and financial professionals during the Nidhi Company registration procedure. The specifics of the procedure could change, therefore it’s important to consult the most recent recommendations provided by India’s Ministry of Corporate Affairs.

1. Minimum Requirements:

Make sure the basic conditions for a Nidhi Company are met, such as having 200 members or more, having a net owned money of at least Rs. 10 lakhs, and meeting other standards.

2. Formation of a Promoters' Group:

At least three people should form a promoters’ group to start the Nidhi Company registration procedure.

3. Incorporate a Company:

Create a public limited company in accordance with the 2013 Companies Act. This company’s main goal will be to instill in its members the value of saving and being frugal.

4. Name Approval:

Select a distinctive name for the Nidhi Company and make sure it is available. Use the Ministry of Corporate Affairs to submit an application for name approval. 


5. Drafting of Memorandum and Articles of Association:

In compliance with the 2014 Nidhi Rules, draft the articles of association (AOA) and memorandum of association (MOA). The goals, policies, and procedures of the Nidhi Company are outlined in these publications.


6. Application for Incorporation:

Send the required documentation and the incorporation application to the Registrar of Companies (RoC). Along with other necessary data, the application should contain information about the promoters, MOA, and AOA.


7. Payment of Fees:

Make the necessary payment to begin the incorporation procedure. The fees are determined by the Nidhi Company’s authorised capital.


8. Obtain Certificate of Incorporation:

The Certificate of Incorporation will be issued by the RoC when they have reviewed the application and any accompanying documentation and are satisfied. The Nidhi Company is officially registered as of this point.


9. Opening of Bank Account:

Create a bank account with the Nidhi Company’s name on it, then fund it with the bare minimum.

10. Appointment of Directors:

At least three directors should be chosen from the promoters’ group. Make sure that, in accordance with the rules, a minimum of one-third of the directors retire by rotation.

11. Application for Commencement of Business:

Submit an application to the RoC requesting the start of operation, ensuring that the Nidhi Company has the necessary net-owned capital and a minimum number of members.


12. Compliance with Nidhi Rules:

Maintain continuous adherence to the Nidhi Rules, 2014, which include holding frequent meetings, keeping a minimum number of members, and following the guidelines.
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Documents required for Nidhi Company

  • Passport size photographs of members
  • Copy of Aadhar Card or Voter ID
  • Copy of PAN Card of the members
  • Email address and phone number
  • Proof of registered place of business
  • Bank statement (not older than two months)
  • No Objection Certificate from the owner of the property

Documents required for Nidhi Company

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