NIDHI COMPANY REGISTRATION

 

Basic information

 

Nidhi Company is a company registered under the Companies Act, 2013, which has a sole objective of cultivating the habit of thrift and savings amongst its members. Nidhi companies can take deposit or lend money to its members only. Therefore, the funds contributed for a Nidhi company are only from its members and used only by the shareholders of the Nidhi Company.

 

Nidhi Company is a class of NBFCs and RBI is empowered to issue directions to them in matters relating to their deposit acceptance activities. However, in recognition of the fact that these Nidhi Company deals with it’s shareholder-members only, RBI has exempted Nidhi Companies from the core provisions of the RBI Act, 1934 and other directions applicable to Nidhi Companies. Therefore, Nidhi Company is an ideal entity to take deposit from and lend to a specific group of people (that is within the members of the Company only).

 

Advantages of Nidhi Company Registration

 

1. Separate Legal Entity: Nidhi Company is a legal entity and a juristic person established under the Act. Therefore, it has legal capacity and can own property and also incur debts. The members of a Nidhi company have no liability towards debts of a Nidhi company.

 

2. Easy Management: No other approvals except the approval of members is required for any change management of a Nidhi Company. The Board of Management controls the activities of the Nidhi Company.

 

3. Uninterrupted Existence: A Nidhi company has 'perpetual succession', that is continued or uninterrupted existence until it is legally dissolved. A Nidhi company, being a separate legal person, is unaffected by the death or other departure of any member but continues to be in existence irrespective of the changes in membership.

 

4. Going Concern: A Nidhi company being a juristic person, can acquire, own, enjoy and alienate property in its own name. No member can make any claim upon the property of the Nidhi Company as long as it is a going concern.

 

5. Better Credibility: A Nidhi company enjoys better credibility when compared to Mutual Benefit Organizations. Nidhi Companies are registered and monitored by the Central Government. Mutual Benefits Organization are on the other hand governed and monitored by State Governments.