Nidhi Company Registration

What is a Nidhi Company?

The acronym Nidhi is National Initiative for Developing and Harnessing Innovations. A Nidhi Company is a type of Non-Banking Financial Company (NBFC) in India. It comes under the provisions of section 406 of the Companies Act, 2013 and is governed by the Nidhi Rules, 2014.

Nidhi Companies are monitored by Ministry of Corporate Affairs (MCA) and the Reserve Bank of India (RBI) issues directions and guidelines on deposits and transactions.

The major function of a Nidhi Company is to work for the welfare of its members through: Savings Drops and to lend loans to its members only. It can only function for its own members and it is impotent when it comes to dealing with outsiders. In other words, Nidhi is a company which has been incorporated with the object of developing the habit of thrift and reserve funds amongst its members and also receiving deposits and lending to its members only for their mutual benefit.

Nidhi Company Registration in India

Nidhi Company Registration in India proves to be a smart option for those entrepreneurs who aim to work towards an easy, successful and structured business model.

Inorder to begin a Nidhi Company, the registration procedure prescribed by the Ministry of Corporate Affairs should be adhered to. After registration, the company is required to comply with the Nidhi Rules 2014, they cannot:

Doing business with non-members

1. Advertising deposit schemes publicly
2. Non-lending and borrowing financial transactions among members

With GarudaMudra, if you need some expert advice, you get the services and support of consultants who will help you with a swift and hassle-free incorporation of your company to get your company registered in no time.

Benefits of Nidhi Company Registration

There are many advantages of starting a Nidhi Company, which is why entrepreneurs prefer it to other types of companies:

Easy Access to Loans

They are Central Government Recognised Nidhi Companies and considered by banks. As soon as you’re registered, it’s very easy to find loans and funding.

Perpetual Existence

The corporation survives even if one of its directors dies.

Simple Incorporation

Registration process is easy and same as other company registration process in India.

Separate Legal Identity

Your Nidhi Company is an independent corporate entity after registration which can buy and hold property, invest, and deal in its name.

Limited Liability

Members enjoy limited liability. If the company incurs losses, the personal properties of members are protected.

Nidhi Company Registration in India: Eligibility for Nidhi Registration in India

To register a Nidhi Company, certain eligibility requirements you must fulfill:

1. Minimum 3 Directors (including at least 1 resident director in India)
2. Minimum 7 shareholders
3. Minimum ₹ 10 Lakh Equity Share Capital (As per Nidhi Amendment Rules, 2022)

Rules of Incorporation

1. Should be listed as a Public Co.
2. Paid-up Capital Should be Minimum 10 Lakh.

Cannot issue preference shares

1. Primary aim should be to encourage savings and thrift among members
2. Reads as “Nidhi Limited” at the end of its name

Share Capital & Allotment

1. Each share shall have a face value of not less than ₹10.
2. No service fee can be charged on the allotment of shares.

A minimum of 10 equity shares (or investing ₹100 in the shares) is mandatory to apply for the issue.

Membership Rules

1. No company or trust may be a member
2. At least 200 members must be Akanivent
3. Membership is prohibited for minors (though, the deposit can be made in the name of the minor if applicant is one of the guardians)

Net-Owned Funds

Minimum ₹20 Lakhs Net Owned Funds in accordance with Nidhi Amendment Rules, 2022

Interest Rates

1. 7.5% spread to highest deposit rate is ceiling for loan rates
2. Shall be computed on a declining balance method

Director Rules

1. Any director must also be a shareholder
2. Serve for 10 years in a row
3. Can be re-appointed only after two-year period
4. Should be subject to Nidhi Rules and not disqualified for appointment

Documents Required for Nidhi Registration

1. Director Identification Number (DIN)
2. PAN of directors and shareholders
3. Proof of directors and shareholders’ residential
4. Digital Signature Certificates (DSCs)
5. Passport-size photographs
6. Aadhaar or other ID proof
7. Rent agreement/lease deed (in case office is rented)
8. Evidence of ownership (in case of owned office)
9. NOC from landlord
10. Memorandum of Association (MoA)
11. Articles of Association (AoA)
12. MCA registration form

Nidhi Registration Process

Step 1: Apply for DSC and DIN

For e-filing, Directors has to obtain Digital Signature Certificate (DSC) and Director Identification Number (DIN).

Step 2: Draft MoA & AoA

Draft and file MoA (Goals & Objectives) and AoA (Internal rules} with the RoC.

Step 3: Business Name Approval

Suggest 3 different names to MCA through SPICe+ (Part A). MCA nods and the best man is selected.

Step 4: File Incorporation Application

Fill SPICe+ (Part A & B) online along with all attachments digitally with DSC and submit to MCA.

5: CoI (The Certifice of Incorporation )

If approved RoC provides a certificate of incorporation and a unique CIN.

Step 6: Making Application For Nidhi License

On or before 120 days of incorporation, apply for Nidhi License in Form NDH-4 to the Central Government.

Post-Registration Compliance for Nidhi Companies

Once incorporated, every Nidhi is required to comply with the following strict regulations:

1. Cannot acquire another company
2. No current accounts on behalf of members
3. Cannot control another company’s management
4. Cannot borrow from or lend to non-members
5. Cannot pledge members’ assets
6. chit funds, insurance, hire-purchase business shall not be able to be operated.
7. Cannot advertise deposits publicly
8. Commissions/brokerage can not be paid on deposit/loan

How We Help in Nidhi Company Registration

Here, at GarudaMudra, all kind of help is provided by us for Nidhi registration such as:

1. Business name search
2. Getting DSC & DIN for the directors
3. Drafting MoA & AoA
4. Filing incorporation application with accuracy
5. Coordinating with MCA till approval

You can soon own your very Nidhi Company with our help – without any hassles, allowing you to grow your business.