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Nidhi Company Registration


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Nidhi Company Registration

Nidhi Company Registration

Nidhi Company is a form of Non-Banking Financial Company (NBFC). It is made to borrow as well as for lending money to its members. It instructs the habit of saving amongst its members and acts on the principle of mutual benefit. Nidhi Company is not required to obtain the license from Reserve Bank of India (RBI), and thus it is easy to be formed.  It is registered as a public company and must have “Nidhi Limited” as the last words of its name.

Nidhi Company in India 

According to section 406 of the Companies Act of 2013 and the Companies (Nidhi Companies) Rules of 2014 states all the provisions relating to the incorporation and governance of the Nidhi Companies in India.  The rules and directives regarding the Nidhi Companies are also been issued by the Reserve Bank of India. These are mostly related to financial actions and investments by corporations which includes the NBFCs. Because of the reason that the Nidhi Companies are involved in the business of deposits as well as loans through its members only, few exemptions were provided to these corporations, by the RBI.

The interest that is charged at the loans under a Nidhi Company is reasonable. The purposes the loans are sought are, generally for manufacturing/renovation of houses or child’s education, etc. The loans are given against security only. The deposit under Nidhi companies does not earn much interest as when compared to deposits in the organized banking sector.

The lending and borrowing of the Nidhi Companies are carried out by its members, only. Thus, such corporations are also referred to as Mutual Benefit Societies, because they work for the mutual benefit and welfare of every member.

Documents required for Nidhi Company registration 

  • The proof of the registered place of business (Ownership documents/ rent or lease agreement).

  • No Objection Certificate (signed by the proprietor/ landlord).

  • Identity proofs.

  • Address proofs of the members.

  • Photographs of the members.

  • PAN card copies of the members.

  • Digital Signature (DSC).

  • Director Identification Number (DIN) of the directors.

  • Memorandum of Association of the corporation (MoA).

  • Articles of Association of the corporation (AoA).

Forms to be filed

There are two forms that must be filed.

  • INC 9- this is required to be filed by all the subscribers to the MoA.

  • DIR 2- this is required to be filed by all the directors of the corporation, Declaration according to Rule 5 and 6 of Nidhi rules 2014- that is signed by every one of the subscribers.

Compliances for Nidhi Company

  • NDH-1 Form: A Nidhi Company must submit the list of members in 90 days from the end of every fiscal year, in this Form.

  • NDH-2 Form: It could request MCA towards an extension in this Form if it has not been able to add 200 members in its first fiscal year.

  • NDH-3 Form: Also a half-yearly return must be filed in NDH-3 Form.

  • Annual Returns with ROC: The Nidhi Company must also file its Annual Returns with MCA through Form MGT-7.

  • Profit and Loss Statement and Balance sheet: The financial statements, as well as other related documents, must be submitted, annually, in Form AOC-4.

  • Income Tax Returns: Nidhi Company must also file its Annual Income Tax Returns by 30th September of the following fiscal year.

Conditions to be fulfilled for getting ‘Nidhi’ status

In one year of its registration

  1. Nidhi Company must have a minimum 200 members within 1 year from the beginning.

  2. The net owned funds must be 10 lakh rupees or above. 

  3. Unencumbered term deposits are required to be 10% or higher of the outstanding deposits.

  4. The ratio of net owned funds towards deposits should not be above 1:20.

In case the Nidhi Company fulfills all the above conditions, it must file NDH-1 along with set fees within 90 days from the end of the first fiscal year after incorporation. The form should be duly certified through practicing CA/ CS/ CWA.

Extension of another fiscal year could be availed upon submission of NDH-2 towards the Regional Director in 30 days from the end of the first fiscal year.

However, after the second fiscal year, even it does not fulfill the requirements, it cannot accept deposits till it fulfills the provisions, and also fine shall be imposed.

Nidhi Company registration process

Applying for DIN and DSC

The Directors of the Nidhi Company must apply for DIN (Director’s Identification Number) and DSC (Digital Signature Certificate). The Ministry of Corporate Affairs issues the DIN and DSC is a digital signature utilized for all e-filing procedures. This step could be avoided for the Director already has DIN and DSC.

Approval of the Name

The director is required to select and propose 3 different names to the Ministry of Corporate Affairs for their Nidhi Company. Out of the suggested 3 names, only one shall be accepted for the Corporation through MCA. The suggested names should be unique and must not match to the names of other already registered corporations, according to Rule 8 of the Company Act. The approved name would remain valid for 20 days only.

MoA and AoA

The MoA and AoA must be filed to the ROC (Registrar of Companies) with the subscription statement.

Certificate of Incorporation (CIN)

After fulling all the conditions the Register issues the incorporation certificate which declares that a corporation was formed and it mentions the company identification number (CIN) also.

PAN, TAN and Bank Account

The directors are required to apply for PAN and TAN. The PAN and TAN are received within 7 working days. Also, the directors must get a bank account opened by means of submitting the Certificate of Incorporation, MoA, AoA, and PAN to the bank.

eStartIndia is the professional tech-based online legal services providing platform that assists the clients to simplify the procedures of all kinds of registration, implementation, tax concerns and any additional legal compliance and services related to the business in India.

Get a free consultation services for any registration with Our Top-skilled Experts. Visit our website www.estartIndia.com

Step 1

Obtain DSC & DIN -- eStartIndia will apply for Digital Signature Certificate (DSC) and (Director Identification Number) (DIN) (about 2-3 working days)

Step 2

Name Approval -- eStartIndia will apply for company name approval (about 2 – 3 days)

Step 3

MoA and AoA Submission -- eStartIndia will prepare MoA and AoA (about 5 – 7 days)

Step 4

Certificate of Incorporation, PAN & TAN -- eStartIndia will file for obtaining Certificate of Incorporation (CoI), PAN & TAN (about 10 – 15 days)

Step 5

Congratulations! Your work is done. You can download your Incorporation certificate and Incorporation kit from your dashboard after company incorporation. We also send your Incorporation kit & certificate on your registered email.

Package

Basic

23999 /-

    Package Includes:

    • Free Company Name Search & 1 Name Approval
    • Free Experts Advice
    • 3 DSC
    • 3 DIN for three Directors
    • Certificate of incorporation
    • MOA & AOA
    • Shares Certificate
    • Company PAN & TAN
    • Company Incorporation Kit
    • Bank Account Opening Document Support
    • Stamp Duty extra for each state

(All Inclusive)

Standard

25999 /-

    Package Includes:

    Basic Package

    GST Registration

(All Inclusive)

Premium

28999 /-

    Package Includes:

    Basic Package

    GST Registration

    Trademark Filing

(All Inclusive)



FAQs

Who can invest in a Nidhi company?

Only the members of this Company can invest or borrow funds from the company.

Who can become a member of a Nidhi company?

Any natural person (not a corporation or company) can become a member of this Company

What is a DIN?

A DIN or the Director Identification Number is a unique number that identifies the director of a company. When any person is appointed as a company director, the DIN must be mentioned in the relevant documentation.

What is DSC?

A digital signature or a DSC is an electronic signature of a person which is in encrypted form. DSC is used for the signing of e-forms (electronic forms) while filing documents for company registration.

How are the funds procured by a Nidhi company used?

The funds or deposits which are procured by a Nidhi company can be lent only to its individual members as per the rules of the Nidhi Company. Micro-financing or small business lending is the application of funds gathered by a Nidhi company.

Is it mandatory to have a commercial space for a Nidhi company?

No. It is not mandatory to have a commercial or industrial space for this company. A residential address will also serve the purpose.

Are the fund/deposits procured by a Nidhi company secure?

Yes. In this company must abide by the regulations set by the Ministry of Corporate Affairs (MCA) and Reserve Bank of India (RBI) which ensure the safety and security of the funds/deposits procured by a Nidhi company.



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