What are the Nidhi Company Registration Requirements?

A Nidhi Company is required to be registered under Section 406 of the Companies Act, 2013 and Companies (Nidhi Companies) Rules, 2014. These entities are quite popular in the southern part of the country. The word Nidhi means Treasure in Hindi. The company is basically formed with the purpose of:-

·         Encouraging the habit of saving amongst the members

·         Receives deposits from its members only and can, in turn, lend only to its memberships.

·         The main objective behind Nidhi Company Registration is to cultivate in its members the spirit of mutual benefit.

Nidhi Companies are Non-Banking Financial Corporations and therefore the Reserve Bank of India is authorised to issue deposit acceptance directives to these companies though the companies are not required to receive a mandatory license from the apex bank. Hence the Nidhi company registration is relatively easy.

What is the Process of Nidhi Company Registration?

a.       The first is to meet the minimum requirement criteria. For Nidhi Company Registration, there needs to be at least 7 members on board with 3 of them designated as Directors of the Company. The start-up equity share capital needs to be minimum INR 5 lakh. The Nidhi Company cannot indulge in chit funds, issue of preference shares, lease finance, hire or purchase finance, provide insurance or securities related business. The word ‘Nidhi Ltd.’ Needs to be added to the name of the company

b.       After obtaining the Digital Signature Certificate and Director Identification Number, application needs to be filed for the name of the company with the Ministry of Corporate Affairs.

c.       Once the name is approved, the Forms along with the required documents need to be submitted to the Ministry for incorporation. Forms SPICE is submitted along with the attachments of INC 9 by all subscribers of the MoA and Form DIR 2 is to be filed by the Directors.

d.       The approved Nidhi Company needs to fulfil certain obligatory requirements within a year of Nidhi Company Registration to validate its existence as a Nidhi.

·         Should have at least 200 members on board

·         Net owned funds need to be minimum 10 lakh rupees.

·         Ratio of net owned funds to deposits cannot be more than 1:20.

Documents required for Nidhi Company Registration in India: The mandatory documents that need to be submitted along with the application are:-

·         Identity proofs of the Directors and the Shareholders

·         Ownership document or the lease agreement of the registered address of the company

·         No objection certificate from the landlord in case of rented place

·         Address proof of the Directors and the Shareholders

·         Photos of the Directors and shareholders

·         PAN card photocopies of the Directors and the shareholders

·         The Digital Signature  Certificate of the authorised persons and Directors

·         Director Identification Number of the directors

·         Memorandum of Association and Articles of Association of the Company

What is the importance of Nidhi Company Registration in India?

 Typically there are three valid reasons for Nidhi company registration.

a.       Nidhi Company Registration gives the entity an individual legal existence. In other words it means that the company can acquire assets in the said name, purchase or sell assets as well as take loan on its name. Legally it can file a case against any other entity; similarly have a case registered against its name too.

b.       Funds are available for mutual benefit and are lent at much lower interest rates compared to other lending institutions in the market.

c.       The other reason for Nidhi Company Registration is the benefit that members get in terms of limited liability which is directly proportional to the value of contribution or investment of the member.  

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