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Overview
Register A Nidhi Company In India
Nidhi Companies are special business entities in India that are created to inculcate the habit of thrifting and saving between the company’s members. Nidhi companies are permitted to make borrowings from their members and also lend capital to their members. Hence, the amount that is contributed to a Nidhi company comes only from the members or stakeholders. Therefore, Nidhi companies are mainly promoted for savings, especially in women from the middle class and poor backgrounds. It creates a legal scape for some sense of liability to conduct official business rather than resort to unofficial lending. Thus, Nidhi Companies also act as a conduit to promote eradication of black money circulation for internal loans and lending. Registering a Nidhi Company in compliance with all the required laws is simple. We ease your job by completing all formalities and documentation work as well as apply to the MCA in accordance with the corresponding guidelines.
The Speciality of Registering a Nidhi Company
A Nidhi Company is a registered Limited Company involved in receiving deposits while lending funds to the members of the company. The business of a Nidhi Company does come under the scrutiny or jurisdiction of the Reserve Bank of India, since it is of a similar nature as that of an NBFC. However, since Nidhi Companies deal only and only with its shareholders’ or members’ funds, the Reserve Bank of India has given an exemption to all Nidhi Companies from the core provisions of the RBI Act and any other rules and regulations applicable to an NBFC.
Restrictions Of A Nidhi Company
Carry out any kind of business other than the one of borrowing or lending in its own name; provided that the Nidhi companies that have followed all of the provisions of these rules can provide locker facilities on rent to the members subject to rental income from such facilities not exceeding 20% of the gross income of the said Nidhi company at any point of time during the financial year.
Requirements
To register and incorporate a Nidhi Company in India, the first step to be taken is to incorporate a Limited Company under the rules of The Companies Act 2013. This implies that a minimum of 3 Directors and 7 shareholders are required to register the Limited Company. During the incorporation of a Nidhi company, care must be taken to make sure that the objective of the Limited Company mentioned in the Memorandum of Association is, “To cultivate the habit of thrift and savings amongst the members, receiving deposits from, and lending to, the members-only, for their mutual benefit.”
Once the incorporation of the Limited Company is complete,, the Nidhi Company must meet all of the following criteria within a period of one year from its commencement:
- Not have less than 200 members or shareholders
- Have Net Owned Funds (NOF) of Rupees 10 lakh rupees or more
- Have unencumbered term deposits of not less than 10% of the outstanding deposits
- Have a ratio of Net Owned Funds to deposits of not more than 1:20
If the Nidhi Company is not able to meet the above requirement within a year, the Company may apply to the Regional Director in Form NDH-2 for extension of time within 30 days from the closure of their first financial year. If after the second financial year the Nidhi Company is still not able to meet the requirements of a Nidhi Company, then they shall not accept any further deposits from the commencement of the second financial year up until it complies with all of the provisions for functioning as a Nidhi Company. They shall also be held liable for the penal consequences of such default.
Requirements
To register your business as a Nidhi Company, you require the following:
Procedure
01
Apply for a Company Name
File an application for your business’ Name as a NIDHI Limited Company. You can get approval from the company SPICE + PART A Application procedure and then proceed with registration. Alternatively, you can reserve your company’s name through the SPICE incorporation. If the first name is rejected due to non-compliance or an already existing name, one of the two alternative suggestions given will be chosen.
02
Prepare the forms and file the company incorporation documents with the MCA
These essential documents consist of a Simplified Proforma for Incorporating a Company (SPICE+), the Memorandum of Association, Articles of Association labeled as INC e-form 32, eMOA and eAOA, AGILE PRO & INC 9 respectively. All the aforementioned need to be attested or executed along with the digital signatures of the directors and shareholders.
03
Processing of the Documents
The Company Registration Centre or CRC will process these documents and duly approve of the registration, upon which the following will be issued:
- Certificate of Incorporation
- DIN allotment
- Mandatory issue of PAN
- Mandatory issue of TAN
- Mandatory issue of EPFO registration
- Mandatory issue of ESIC registration
- Mandatory issue of Profession Tax registration (Applicable States)
- Mandatory Opening of Bank Account for the Company and
- Allotment of GSTIN (if so applied for)
Documentation
To have your business registered as a Nidhi company, the following documents are to be furnished with digital signatures of the concerned parties.
Documents Signed By Shareholders
- Application for Digital Signature Certificate (DSC)
- INC-9 Declaration by the Director and Shareholders
Documents Signed by all directors
- Consent to Act as Director: Form DIR-2
- Details of DIN
- Declaration of DIN (If DIN is allotted previously)
Address of the Registered Office
- Address Proof: Electricity bill / Tax Paid receipt
- No objection letter from the owner of the company property if leased
ID & Address from Directors and Shareholders
Shareholders and Directors have to submit their identity proof and latest address proof
- Acceptable Documents
- Primary ID: Permanent Account Number (PAN) (Mandatory in case of Indian Nationals) PASSPORT (Mandatory in case of Foreign Nationals)
- Additional ID: Aadhaar Card or Driving License or Passport or Voter ID
- Latest Address Proof: Telephone Bill, electricity bill, bank statement or bank passbook with the latest entry not older than 60 days
Additional Documents
The following documents may be required for registration on a case to case circumstance:
- NOC for the usage of a brand name from its trademark owner
- Resolution and NOC from an existing Company / LLP for the use of a name similar to their company
- Declaration for complying with sectoral regulatory compliance
Certificate Of Commencement
The stakeholders need to apply for the Certificate of Commencement of Business within a period 180 days of receiving the Certificate of Incorporation.
