Nidhi Company Registration

Nidhi Company

Overview

Nidhi Company is a sort of Non-Banking Financial Company (NBFC) that does not need any Reserve Bank of India (RBI) license. Nidhi Companies are limited companies established for developing the habit of economy and savings amongst its members. It borrows and lends from members only. The main reason why the Nidhi Company is so popular among the business communities is that Nidhi Company is very simple and cheap to register.

Nidhi Companies mostly work in the southern part of India. Besides, it should have “Nidhi Limited” as the last words of its name.

You can Apply for Nidhi company registration online through MeraLegal and get Nidhi company license in 15-20 working days. Nidhi company is considered as a suitable replacement for credit co-operative society and is easy to run with fewer compliances.

Advantages

Some of the advantages of forming a Nidhi Company in India are as follows:

• Limited Liability

  Liability of Directors and shareholders of the Nidhi Company is restricted according to the Companies Act, 2013. In case the company suffers from any loss or faces a financial crisis in the course of its business activity, the personal assets of any of the Directors or members are not at risk of being held by banks, creditors, and government. The responsibility of the members is only for the unpaid amount on shares owned by them and not more than that. Shareholders are not answerable for the liabilities and debts of the company.

• Separate Legal Entity

  One of the best benefits of a Nidhi Company is that it is different from that of its members. A company is a separate entity having its own rights & responsibilities.

• Simple Registration Process

  Nidhi Company originally can be registered by at least seven persons by following the specified limited formalities of the Companies Act, 2013, and Nidhi companies Rules, 2014.

• Cost-Efficient

  Registering Nidhi Company is very cost-efficient. The minimum capital required is 5 lakh, for registration of Nidhi Company.

  To register Nidhi Company, check www.meralegal.com, where you will find a reasonable price for registration of the Nidhi Company and get the registration of Nidhi company in less time.

• Limited Regulations

  Nidhi companies comply with the Nidhi Rules, 2014, declared by the Central Government in terms of its activities. Rules enforced on Nidhi Company by Reserve Bank of India (RBI) are very restricted.

• Lower rate of credit

  The loans given to the members are at a much lower rate of interest than the market rate. This eventually brings a lot of savings to the members.

• Helps in saving the funds

  The goal of Nidhi companies is to encourage the habit of savings and thrifts among the lower and middle sections of society. These small sections of the population contribute to the funds and use the loan from the Nidhi Companies as and when needed.

• No outside involvement

  The Nidhi Companies are formed, controlled, and give benefits to their members only. The outsider will not be permitted to get engaged in Nidhi company operations in any situation. Be it working with the Nidhi companies or depositing money with them or even using loans from Nidhi. There would be no external interference in the management as well.

• Cheaper to borrow

  As a member, one can borrow money at a low rate, respect to the rate at which banks give money. This can be the most significant benefit in times of need because different people in the mutual benefit society are likely to need funds at different times.

• Fewer Complications

  Borrowing and lending to known persons, where the procedure is fixed, is much less difficult than dealing with banks or in an informal environment. A Nidhi Company allows its members to access the value of their money and achieve lower interest rates when they need money themselves.

Regulator of Nidhi Companies

Nidhi Company is a part of the Non-banking financial sector. According to the Companies Act,2013, NBFCs are governed and registered by the Reserve Bank of India. However, in this scenario, Nidhi Company is an exception. It has a different regulating rule by the name of Nidhi Rules,2014. Registration of Nidhi Company is done under Section 406 of the Companies Act,2013. RBI has excluded Nidhi Company Registration and operation from its key requirements as it deals with the members and shareholders. However, RBI maintains its rights to issue regulations for matters relating to the deposit-taking activities of Nidhi Companies.

Prohibition of specific activities in a Nidhi Company

The Nidhi Companies have to follow specific restrictions that are enforced on them in terms of their operations. Following are certain under which Nidhi Company cannot deal, accept deposits and lend funds

• Chit Funds
• Insurance company
• Hire-purchase finance
• Securities Business
• Leasing of finance
• Cannot Furnish funds to any other person except members.
• Non-acceptance of deposits from any other person except members.

Checklist

Before beginning the procedure of Nidhi Company Registration, the following checklist must be taken care of:

• Number of shareholders or members

  The minimum number of members or shareholders needed to form a Nidhi Company must be minimum 7. Directors can also hold shares in a Nidhi Company.

• Number of directors

  There must be a minimum of 3 directors to form a Nidhi Company. The directors must be of 18 years or above.

• Capital Requirement

  The minimum capital needed to form a Nidhi Company is Rs. 5 lakhs or more. Moreover, please note that Nidhi Companies cannot issue preference shares.

• DIN for Directors

  DIN can be submitted along with the company registration application form, i.e., SPICE -32. However, a maximum of 3 Directors can get DIN along with SPICE 32. In case an individual already has a DIN number, then he is required to give the said number.

• Registered Office

  The company’s registered office does not have to be a commercial premise. Even a rented home can be the registered office, as long as a NOC is received from the landlord.

• The object of the Nidhi Company

  The primary and only objective for which a Nidhi Company must be formed should be "developing the habit of saving and thrift among its members, taking deposits from, and lending to, its members only, for their mutual benefit."

Process of a Nidhi Company Registration

Though the registration process of a Nidhi Company is easy, still help from a professional is advised to complete the several complicated forms and submit them within time. Moreover, the government websites and language are a bit on the rough side, too.

MeraLegal is an expert in Nidhi Company Incorporations, with the experience of over 8 years in the field and has registered more than 500 Nidhi Companies successfully. Our services are distributed all over India.

• Step 1: Appeal for Digital Signature Certificate(DSC)

  As the process is entirely online, therefore all those authorized signatories/directors who require to sign the incorporation documents online must apply for Digital Signature Certificate.

• Step 2: Apply for Director Identification Number(DIN)

  DIN can be submitted together with the application form for registration of the company, i.e., SPICE -32. Although, a maximum of 3 Directors can acquire DIN along with SPICE 32.

  If the applicant is already having a valid DIN and the particular given has been modified on the application date, and the declaration to this effect is included in the application, identity and address proof need not be attached.

• Step 3: Apply for Business Name Approval through RUN

  For the Business name approval step, an application is submitted in the specified Form RUN (Reserve Unique Name) with the Ministry of Corporate Affairs. Please note that at least 2 names are suggested at the time of incorporation.

  Also, a signed declaration by all the shareholders and directors must be attached while filing of the RUN.

• Step 4: Drafting and submitting final incorporation documents

  After name approval, one requires KYC and other specified documents of Directors & Shareholders. Also, various consent forms and online e-documents like SPICE form along with AOA, MOA, and AGILE require to be registered to the Ministry of Corporate Affairs (MCA).

• Step 5: Receiving Certificate of an incorporation and opening Bank Account

  After approval of incorporation documents, you will get your Certificate of Incorporation, including your Company Identification Number (CIN) as well as PAN and TAN of your company. After this, you can open a bank account on the name of your company and can start your business.

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Documents Required For Nidhi Company

In India, Nidhi company registration is done with proper identity and address proof. Identity and address proof will be necessary for all the directors and the shareholders of the company to be registered. Documents that are approved by MCA for the online Nidhi company registration process are as follows:

How can we assist in getting registration?

Our services include the following:

• Guaranteed Name approval from the Ministry of Corporate Affairs (MCA)
• TAN and PAN
• Trusted by more than 4,00,000 customers
• Filling of company incorporation e-forms with the MCA
• DSC and DIN for subscribers and directors
• Business plan guidance
• Drafting objective, Article of Association (AOA), and Memorandum of Association (MOA)
• Corporate drafts set, legal agreement, letters on requirement basis.

Compliances After Nidhi Company Registration

After successfully registering the Nidhi Company, make sure that you follow with these conditions to avoid cancellation of your registration or fines. To know the post compliances naturally related to Nidhi Companies, the following table will help you:

• Form NDH-1

  This form requires to be submitted within 90 days from the end of every financial year.

• Form NDH-2

  This form is used to seek MCA to allow extension of time if a Nidhi Company is unable to add 200 members in its first financial year.

• Form NDH-3

  This form is used to file half yearly returns.

• Form MGT-7

  This form is used to file Annual Returns.

• Form AOC-4

  To register financial statements and other related documents

• Income Tax Return

  Needs to be submitted by 30th September

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Frequently Asked Questions ?