Nidhi Company Registration

Overview

Nidhi company is a type of non-banking financial company (NBFC) in India, which is formed with the objective of cultivating the habit of thrift and savings among its members. Nidhi companies are regulated by the Ministry of Corporate Affairs (MCA) and governed by the Companies Act of 2013.

The main function of a Nidhi company is to provide its members with a platform to save and borrow money from each other. The members of a Nidhi company can be individuals or entities such as trusts, associations, or companies. The company accepts deposits from its members and provides them with loans at a reasonable rate of interest.

Nidhi companies are required to have a minimum of 200 members and maintain a net owned fund of at least Rs. 10 lakhs. They are also required to maintain certain ratios of reserves and investments, and comply with various other rules and regulations set by the MCA.

Nidhi companies are popular in small towns and rural areas of India, as they provide a platform for people to save and borrow money in a convenient and reliable manner.

Minimum Requirement

01

New & Unique Name

In view of name guidelines under the Companies Act, 2013, you must have a new and unique name. A Nidhi company must have the word “Nidhi” in its name.

02

Minimum Seven Persons

Register your company with at least 7 persons to act as the initial shareholders.
Minimum director required is 3 which can’t exceed 15 directors.

03

Registered Address

Company Premises can either be owned or rented.

04

Capital Requirement

At the time of Incorporation minimum capital requirement for a Nidhi company in India is Rs. 5 lakhs, as per the Nidhi Rules, 2014. However, to enjoy the Ndhi Company Status, the minimum paid-up equity capital required is Rs. 10,00,000 help by at least 200 members.

Documents Requirements

Required in Soft Copy Only

Documents of Directors

PAN & AadharCard
Other ID Proof Driving license, Voter Id or Passport
Address Proof Bank Statement or Utility Bills - E.g.- Electricity Bill / Water Bill / Property Tax
Colour Photo
Email id and Mobile Number

Required in Soft Copy Only

Business Address Proof

Address Proof (owned) Sale Deed ( Ownership Documents), Electricity Bill / Propert Tax
Address Proof (Rented) Rent Agreement , Electricity bill, NOC from Owner of the premises

Advantages

Separate Legal Entity

A Nidhi company is a separate legal entity from its members. As per the Companies Act 2013, a Nidhi company is registered as a public limited company, and hence has a separate legal identity. It can own property, sue or be sued in its own name, and can enter into contracts on behalf of the company.

Lower Capital Requirements

The capital requirements for setting up a Nidhi company are relatively lower as compared to other financial institutions. The minimum requirement is Rs. 10 lakhs of net owned funds, which can be accumulated over time from the profits earned by the company.

Flexibility in Lending

Nidhi companies provide loans to their members at lower interest rates than other financial institutions, making it an attractive option for those seeking loans.

Profit-Sharing

Nidhi companies can distribute profits to their members in the form of dividends, which allows members to benefit from the success of the company.

Limited Liability of Members

The liability of the members of a Nidhi company is limited to the amount of their shareholding, protecting them from any potential losses or liabilities of the company.

No RBI Regulation

Nidhi companies are not regulated by the Reserve Bank of India (RBI), which makes it easier for them to operate and expand their business.

Members-Focused Business

Nidhi companies are member-focused businesses, which means that their primary objective is to benefit their members. This results in a close-knit community of members who share a common financial interest.

Encourages Savings

Nidhi companies are primarily meant for promoting savings among their members. By providing a safe and reliable platform for depositing money, Nidhi companies encourage their members to save for their future.

Steps

Step 1

Verification of Documents provided for incorporation by you. And application for DSC.

Step 2

Application for Name approval

Step 3

Drafting of MOA and AOA

Step 4

Application for incorporation of a Limited Company by Filing of SPICE + Form

Step 5

Once SPICE + form got approved , ROC issue Certificate of Incorporation.

Step 6

Obtain Nidhi Company License by filing a return of statutory compliances in Form NDH-1 duly certified by a practising CA or CS or CWA.

Your Takeouts

DIN for 3 Directors

DSC for 3 Directors

Certificate of Incorporation (CIN)

Memorandum of Association and Article of Association

E- PAN of Company

E- TAN of Company

Professional Tax Registration
( In Maharasthra )

GST Registration ( If required seperately chargeble )

Shop and Establishment
Registration

Compliances

To promote transparency, sound governance, and safeguard the interests of all stakeholders, certain compliance requirements and related filings must be fulfilled within established timelines.

Our company assists in fulfilling these obligations with ease and efficiency. Compliance requirements can be broadly categorized into four types

For further details and expert guidance, kindly seek the consultation of our seasoned startup consultants.

One Time Compliances

One Time after incorporation like appointment of Auditor, Declaration for Commencement of business, Issuance of share certificate etc

Event Based Compliances

Change of Directors, Change of regd. Address,Allotment of shares etc.

Regular Compliance

Accounting , Tax Filing , Maintenance of records and registers etc

Annual Compliance

ROC Annual filing, Audit of financial statement, ITR filing etc

Frequently Asked Question

Only companies that have been incorporated as public limited companies are eligible to apply for the NIDHI company licence after one year from the date of establishment, providing they meet the following requirements listed below:
1. Not have less than two hundred members (shareholders)
2. Have Net Owned Funds (NOF) of ten lakh rupees or more
3. Have unencumbered term deposits of not less than ten per cent of the outstanding deposits
4. Have a ratio of Net Owned Funds to deposits of not more than 1:20.

No, a Nidhi company cannot accept deposits from the public. It can only accept deposits from its members and should primarily serve the interests of its members.

No, a Nidhi company can only provide loans and advances to its members. It cannot extend credit or loans to non-members.

No, a Nidhi company cannot issue preference shares or debentures. It can only issue equity shares to its members.

No, a Nidhi company cannot engage in any business activity other than the mutual benefit activities specified in its objectives. It should primarily focus on accepting deposits and providing loans to its members.

No, a Nidhi company cannot be converted into any other type of company. It must continue its operations as a Nidhi company and cannot change its nature or convert into other company types.

A Nidhi company is prohibited from engaging in the following business activities:

Accepting deposits from the public.
Issuing preference shares or debentures.
Providing loans or credit to non-members.
Undertaking any business activities other than the mutual benefit activities specified in its objectives.

No, a Nidhi company cannot acquire another company. Nidhi companies are primarily formed for the purpose of accepting deposits from their members and providing loans to their members for their mutual benefit. They are not permitted to engage in activities such as mergers, acquisitions, or takeovers of other companies. The operations of a Nidhi company are limited to its core objectives and activities as specified under the Nidhi Company Rules and regulations in India.

Members of a Nidhi company can open the following types of deposit accounts:

Saving Deposit Account: For saving surplus funds with nominal interest rates.
Fixed Deposit Account: To earn higher interest rates by depositing funds for a specific period.
Recurring Deposit Account: Regular monthly deposits for a fixed duration, with interest paid at maturity.

Yes, a Nidhi company is permitted to open branch offices. According to the regulations in India, a Nidhi company can establish branch offices in different locations to expand its operations and reach a wider member base.

Yes, it is mandatory for a Nidhi company to appoint an auditor. According to the regulations in India, every Nidhi company is required to appoint a qualified practicing chartered accountant as its auditor. The auditor is responsible for examining and auditing the financial statements and accounts of the Nidhi company to ensure compliance with applicable laws and regulations.

Entities cannot become members of a Nidhi company:

Companies and corporate entities.
Companies and corporate entities.
Non-individuals such as firms, trusts, or partnership firms.
Non-resident individuals or foreign nationals.
Any entity that is not involved in primary agricultural activities or related businesses.

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