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.
