What are the incorporation requirements for Nidhi Company?

To start a Nidhi Company in India the first step is to incorporate a Limited Company, under the Companies Act, 2013.

Hence, a minimum of three Directors and seven shareholders will be required to start the Limited Company incorporation process.

  • Get DIN and DSC for minimum 3 directors.
  • Get name approval in the form of public limited company with adding word Nidhi Limited in INC-1 File documents with Registrar of Companies, for incorporation in INC-7, DIR-12 and INC-22.
  • File documents with Registrar of Companies, for incorporation in INC-7, DIR-12 and INC-22.

Every company should ensure the following within 1 year.

  • Minimum members must not be less than 200.
  • Minimum net owned fund should be at least Rs.10, 00,000.

Loans provided by Nidhi company

A Nidhi shall provide loans only to its members.

  • two lakh rupees, where the total amount of deposits of such Nidhi from its members is less than two crore rupees;
  • seven lakh fifty thousand rupees, where the total amount of deposits of such Nidhi from its members is more than two crore rupees but less than twenty crore rupees;
  • twelve lakh rupees, where the total amount of deposits of such Nidhi from its members is more than twenty crore rupees but less than fifty crore rupees
  • fifteen lakh rupees, where the total amount of deposits of such Nidhi from its members is more than fifty crore rupees

Share capital and allotment of Nidhi Company

Every Nidhi Company shall issue equity shares of the nominal value of not less than ten rupees each.

No service charge shall be levied for issue of shares.

Every Nidhi shall allot to each deposit holder at least a minimum of ten equity shares or shares equivalent to one hundred rupees.

Objectives of Nidhi Company:

Nidhi Company is a company incorporated as such with an objective of:

  • Cultivating the habit of thrift;
  • Saving amongst its members;
  • Receiving deposits from its members
  • Lending money to it members.
  • Rule 4 of NIDHI Rules 2014 provides that:
  1. A Nidhi Company should be incorporated as a public company under the Companies Act, 2013 (“the Act”) with paid up equity capital of five lakh rupees.
  2. After the Act came into effect no Nidhi company should issue preference shares.
  3. If preference shares are issued prior to commencement of the Act, they shall be redeemed as per the terms of their issue.
  • Nidhi Company is created with the objective of cultivating the habit of thrift and saving amongst its members.
  • It shall have the words “Nidhi Limited” as part of its name.

REGULATIONS OF NIDHI COMPANY

  1. Nidhi company does not involve the process of regular business corporations
  2. The process itself is not as complicated.
  3. Once you have started your Nidhi Company, you can be assured of a successful venture resulting in effective growth.

RBI and Nidhi Company:

The RBI review Committee recommended that any company engaging in a Nidhi based business as defined above should have the word ‘Nidhi’ added to the company’s name.

Existing companies that function similar to the activities of a Nidhi company as defined by the RBI directives will also have to add the word ‘Nidhi’ after their registered name.

The reason for such a directive is to apprise the general public to differentiate between a regular finance investment company and a Nidhi company.

Investing Nidhi Companies in India

  • Nidhi companies in India are permitted to engage in private circulation of loan and investment schemes among members only. No advertisement shall be made for mobilization of Nidhi investments and resources.
  • No brokerage or incentives will be allowed to be paid for mobilizing deposits from members or granting loans.

Investing In Nidhi Company:

  • A Nidhi company is a good investment due to an effective and secure mechanism of financial management in place.
  • Starting a Nidhi company is beneficial for long term gains due to the nature of investments and procedures.
  • As there is not much scope of mismanagement of funds due to every member being an authority, thus Nidhi’s are transparent in operation to the point of having the potential for good ROI.

Nidhi Statutory Compliances

Every company incorporated as Nidhi Company shall file their return of Statutory Compliances in NDH-1 within the 90 days from the end of the financial year.

PENALTY:

In case of any default or non-compliance by Nidhi Company the every officer of the Nidhi Company who is in Default shall liable for punishment with fine of Rs. 5,000 for first contravention and in case of continuous of default then penalty shall be Rs. 500 for every day of default.

Why Nidhi Company:

  1. Separate Legal Entity
  2. Better Credibility
  3. Limited RBI Regulations
  4. Help in channelizing small savings
  5. Lower rate of credit
  6. No outsider intervention

Mutual Benefit or Nidhi Company

  • An association that offers benefits to its members.
  • Under the benefit plan, no regular premiums are paid.
  • Instead, assessments are made with each loss as it occurs.

Rules for directors:

  • Director of the Nidhi Company shall be member of the company
  • Director shall hold office up to 10 year
  • Director of the Nidhi Company shall be member of the company
  • Director shall hold office up to 10  year
  • Director shall be eligible for reappointment only after expiring of 2 year from the date of cessation of directorship.
  • If the tenure period is extended by central govt. then shall be retired after expiry of such extended period.
  • The person appointed as director shall not be disqualified from being appointed as director and comply with the provision of section 152(4) of The Companies Act 2013.
  • Every Nidhi Company shall file their Half Yearly return In the prescribed form NDH-3 along with fee within 30days form the conclusion of each half year and return shall duly certified by CS in Practice or CA in Practice

Nidhi V/S Chit funds

  1. Nidhi Company is that the variety of Non-Banking monetary Company (NBFC) which might take a deposit and lend cash to its members.
  2. Nidhi Company has been exempted from the banking company of Asian nation (RBI) provisions, and thus no RBI license isn’t obligatory.
  3. Nidhi Company is Associate in Nursing NBFC which might take a deposit and lend cash to its members.
  • Chit Fund solely settle for installments over a hard and fast amount of your time that is paid by its members
  • Chit Fund Company is additionally called the committee
  • Chit Fund Company is additionally referred to as the committee wherever fastened installment is paid by the members over a precise amount of your time.

Requirements for registration of a Nidhi Company?

  • A Nidhi company is registered as a Public Limited Company. Hence, the requirements for incorporation of a Nidhi company covered a minimum of three Directors and Seven Shareholders.
  • However, the MOA of a Nidhi company must state that the primary objective of the proposed company is to nurture and promote a habit of thriftiness and savings among its members, and accept deposits from or lend loans only to its members, for the mutual benefits of them.
  • However, the MOA of a Nidhi company must state that the primary
  • Are the deposits with the company safe and secured?
  • Yes, because Government of India/Ministry of Corporate Affairs/RBI has framed the laws/rules to ensure the security and safety of deposits and Nidhi companies must strictly abide by the rules and regulations framed by the Central Government.

Do I need to present personally for incorporation of Nidhi Company? 

  • The entire procedure is 100% online and you don’t have to be present at our office or any other office for incorporation.
  • A scanned copy of documents has to be sent via email.
  • They get the company incorporation certificate from MCA via courier at their business address.