Nidhi Company Registration

A Nidhi Company is a type of non-banking financial institution (NBFC) that promotes savings and provides financial assistance to its members. It operates on the principle of mutual benefit, accepting deposits from its members and lending money exclusively to them. Nidhi Companies are regulated by the Ministry of Corporate Affairs (MCA) and governed by the Nidhi Rules, 2022. To Register a Nidhi Company you must have Seven Members and Rs. 10 Lakh initial Capital.

50000 + clients and counting ...
OVERVIEW

What About Nidhi Company Registration?

Nidhi companies, also known as mutual benefit societies, are non-banking financial institutions (NBFCs) that operate on the principle of mutual benefit. These companies are prevalent in India and are regulated by the Ministry of Corporate Affairs (MCA) and the Reserve Bank of India (RBI)(However these are exempted to getting the RBI License). Nidhi companies primarily aim to cultivate the habit of savings and thrift among their members.
If you are considering establishing a Nidhi company, it is crucial to understand the registration process and the requirements involved. Here is a comprehensive guide to Nidhi company registration in India:

Eligibility Criteria for Nidhi Company Registration:

  • The primary objective should be to encourage savings and lending among members.
  • The company must be incorporated as a public limited company.
  • The minimum paid-up equity share capital must be INR 10 lakhs.
  • The Company must have a minimum of seven members (out of whom three person will be director) to register.
  • All directors must obtain Director Identification Numbers (DIN).
  • All directors & members should be an Indian citizen and above 18 years of age.
  • The company should have a minimum of 200 (Members) shareholders within four months of incorporation&Rs. 20 Lakh Net Own Funds.

Documents Required for Nidhi Company Registration:

To register a Nidhi Company in India, the following documents and information are typically required:

Directors' Documents:
  • Identity Proof: Copy of PAN Card or Passport (for foreign nationals) of all proposed directors.
  • Address Proof: Copy of Aadhaar Card, Voter ID, Passport, or Driving License as address proof for all proposed directors.
  • Photograph: Recent passport-size photographs of all proposed directors.

Registered Office Documents:
  • Ownership Proof: Copy of the Sale Deed, Property Tax Receipt, or any other document establishing the ownership of the registered office premises. If the premises are on rent, a copy of the Rental Agreement and a No Objection Certificate (NOC) from the owner.
  • Address Proof: Copy of the latest utility bill (electricity bill, water bill, etc.) or the Municipal Corporation Khata Certificate in the name of the registered office premises. The utility bill should not be older than two months.

Other Documents:
  • Memorandum of Association (MOA) and Articles of Association (AOA): The MOA and AOA must be drafted and submitted with the necessary clauses specific to Nidhi Companies.
  • Nidhi Company Declaration: A declaration stating that the company will comply with the requirements of the Nidhi Rules, 2022, and will function in accordance with the objectives and regulations applicable to Nidhi Companies.

Nidhi Company Registration Process:

The registration procedure for a Nidhi Company in India involves several steps. Here is a general overview of the process:

  • Obtain Digital Signature Certificate (DSC): The first step is to obtain a DSC for the proposed directors of the Nidhi Company. The DSC is required for online filing of documents during the registration process.
  • Obtain Director Identification Number (DIN): Each director of the Nidhi Company needs to obtain a DIN from the Ministry of Corporate Affairs (MCA). DIN can be obtained by submitting an online application along with the necessary documents.
  • Choose a Unique Name: Select a unique name for the Nidhi Company and check its availability on the MCA website. The name should comply with the naming guidelines provided by the MCA.
  • Draft Memorandum and Articles of Association (MOA/AOA): Prepare the MOA and AOA of the Nidhi Company. These documents outline the objectives, rules, and regulations of the company. They must be drafted in accordance with the Nidhi Rules, 2022.
  • File Form INC-32 (SPICe): Form INC-32, also known as Simplified Proforma for Incorporating Company Electronically (SPICe), is filed with the Registrar of Companies (ROC). It includes details of directors, subscribers, registered office, and the company's capital structure. Along with INC-32, submit the MOA, AOA, and other necessary documents.
  • Nidhi Company Registration Fees: To register Nidhi Company, you have to spend up to rupees 40000/- (Rupees forty thousand) inclusive of professional fees. Pay the prescribed registration fees based on the company's authorized capital. The fees can be paid online through the MCA portal.
  • Obtain Certificate of Incorporation: If all the documents are in order and the Registrar is satisfied, they will issue a Certificate of Incorporation (COI) with PAN, TAN, ESI, and EPF Certificates. The COI signifies the creation of the Nidhi Company and includes the company's unique Corporate Identification Number (CIN).

Post-Incorporation Requirements:
  • Open a bank account in the name of the Nidhi company.
  • Deposit the minimum capital amount as mentioned in the application.
  • Comply with the statutory requirements, such as appointment of an auditor, maintaining books of accounts, conducting annual general meetings, and filing annual returns with the ROC.

Compliance and Regulations:
  • Nidhi companies must comply with the regulations set by the MCA and the RBI.
  • They should follow the Nidhi (Amendment) Rules, 2022, and the Companies Act, 2013.
  • Nidhi companies are not allowed to engage in any other business activities apart from borrowing and lending among members.

Difference Between Nidhi Company and NBFCs

A Nidhi Company and a Non-Banking Financial Company (NBFC) are both types of financial institutions in India but have distinct differences. Here are the key differences between a Nidhi Company and an NBFC:

Nature of Operations:
  • Nidhi Company: Nidhi Companies are primarily formed for cultivating the habit of thrift and savings among their members and providing credit facilities to them. They work on the principle of mutual benefit, with the primary objective of serving their members' financial needs.
  • NBFC: NBFCs are financial institutions that engage in the business of loans and advances, acquisition of shares/stocks/bonds/debentures, leasing, hire-purchase, insurance, or any other financial services defined by the Reserve Bank of India (RBI). They operate in a broader spectrum of financial activities.

Regulatory Framework:
  • Nidhi Company: Nidhi Companies are regulated by the Ministry of Corporate Affairs (MCA) under the Companies Act, 2013 and the Nidhi Rules, 2022. The primary regulatory authority for Nidhi Companies is the Registrar of Companies (RoC).
  • NBFC: NBFCs are regulated by the Reserve Bank of India (RBI) under the Reserve Bank of India Act, 1934. The RBI sets the guidelines and regulations NBFCs must comply with, including capital adequacy requirements, licensing procedures, and prudential norms.

Membership:
  • Nidhi Company: Nidhi Companies have members who contribute to the common pool of funds and collectively benefit from the financial services provided by the company. These members can be individuals or other corporate entities.
  • NBFC: NBFCs do not have the concept of membership like Nidhi Companies. They operate as financial institutions that provide financial services to the general public.

External Shareholders:
  • Nidhi Company: Nidhi Companies do not have external shareholders. The control and management of the company remain in the hands of its members, ensuring a more member-centric approach.
  • NBFC: NBFCs can have external shareholders who invest in the company's equity. These shareholders have ownership rights and can participate in the decision-making process of the company.

Business Activities:
  • Nidhi Company: Nidhi Companies primarily engaged in the acceptance of deposits and lending to their members. They operate at a local level, serving the financial needs of a specific community or region.
  • NBFC: NBFCs engage in a wide range of financial activities, including lending, investment in securities, asset financing, leasing, hire-purchase, insurance, etc. They can operate at a national or even international level.

FREQUENTLY ASKED QUESTIONS

Explore Nidhi Company Registration

1. What is a Nidhi Company?

A Nidhi Company is a type of non-banking financial institution (NBFC) that is primarily established to cultivate the habit of thrift and savings among its members. It is formed for the mutual benefit of its members and operates on the principle of mutual assistance.

2. What are the main objectives of a Nidhi Company?

The main objectives of a Nidhi Company include promoting the habit of savings and thrift, accepting deposits and lending money only among its members, and providing financial assistance for the mutual benefit of its members.

3. Can a Nidhi Company accept deposits from the public?

No, a Nidhi Company cannot accept deposits from the public. It can only accept deposits from its members, and those deposits are utilized for lending money to its members.

4. What is the minimum number of members required to form a Nidhi Company?

To form a Nidhi Company, a minimum of Seven members is required. These members shall only be individuals.

5. Is it mandatory to use the term "Nidhi Limited" in the company name?

Yes, it is mandatory for every Nidhi Company to use the term "Nidhi Limited" as part of its name. This helps in clearly identifying the nature of the company's business.

6. Are there any minimum capital requirements for a Nidhi Company?

Yes, a Nidhi Company is required to have a minimum paid-up equity share capital of Rs. 10 lakh (Rupees Ten Lakhs) at the time of incorporation.

7. What are the regulatory authorities overseeing Nidhi Companies?

Nidhi Companies are regulated by the Ministry of Corporate Affairs (MCA) and are governed by the Nidhi Rules, 2022. The Registrar of Companies (ROC) is responsible for their registration and compliance.

8. Can a Nidhi Company issue preference shares or debentures?

No, a Nidhi Company cannot issue preference shares or debentures. It can only issue equity shares to its members.

9. Can a Nidhi Company engage in any other business activities apart from lending and accepting deposits?

No, a Nidhi Company is specifically formed for the purpose of accepting deposits and lending money to its members. It cannot engage in any other business activities as its primary objective is to promote savings and provide financial assistance to its members.

10. Can a Nidhi Company operate in multiple states?

No, a Nidhi Company cannot operate in multiple states. You must incorporate a new company for each STATE.

FREQUENTLY ASKED QUESTIONS

Explore Nidhi Company Registration

1. How many types of loan in a Nidhi company?

Nidhi company can provide only secured loans for example – gold loan, loan against property, loan against certificate deposits.

2. It is mandatory to write “Nidhi Limited” at the end of the name?

Yes, as per the provision of the law. It is mandatory write down the word” Nidhi Limited” at the end of the company.

3. Who can be member of the Nidhi company?

An Individual natural person can become a member of company who have attained his/her age of 18 years and have valid PAN. No any artificial person like any company, firm, trust, society is eligible to become a member.

4. Who can apply for the loan in Nidhi Company?

Nidhi Company is registered for its members only, therefore only members can apply for the loan as well for deposits.

5. Can a Nidhi Company proceed for Bike Loans or Vehicle Loans?

No, as per Nidhi Rules, 2014 Vehicle Loans are totally prohibited whether in the forms of Bike Loans or otherwise.

6. Can a Nidhi Company Open Branches?

Yes but after completion of 3 years with continuous profits in three years.

7. Can a Nidhi Company Invest its deposit money anywhere?

No, as per Nidhi Rules,2014, Deposits under Nidhi Company can be used only for lending money to its members.