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 word is basically a Sanskrit” word which means a reservoir of funds or a treasure. In a modern world Nidhi Company is a type of Finance Company which is registered and regulated by the Govt. of India through Ministry of Corporate Affairs (MCA). These 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 Companies deal with it’s shareholder-members only, RBI has exempted Nidhi Companies from the core provisions of the Reserve Bank of India 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).

 

 

What is the Nidhi Company ?

 

 

A Nidhi Company is a closely held public Company started initially with 7 members/ subscribers and 3 Directors which carry solely the business of providing loans to its members only and borrow therefrom, accepting the deposits from the members and promoting the habit of savings among the its members only for their mutual benefit and therefore Nidhi Company is also known as Mutual Benefit Company or Mutual Benefit Society. A Nidhi Company is required to increase the number of its members more than 200 within a first year after its incorporation and needs to file the return thereof half yearly with the Ministry of Corporate Affairs (MCA) under the Companies Act, 2013.

 

As per the provisions of Companies Act, 2013, every Nidhi Company ensure;

 

          1. Not less than two hundred members;
          2. Net Owned Funds of ten lakh rupees or more;
          3. Unencumbered term deposits of not less than 10 % of the outstanding deposits
          4. Ratio of Net Owned Funds to deposits of not more than 1:20

 

What will you receive in Company registration package ?

 

 

  1. DIN of 3 Directors
  2. DSC of 7 Promoters
  3. Name Reservation
  4. MOA & AOA
  5. Incorporation Certificate
  6. Directors Appointment
  7. PAN & TAN
  8. GST Registration
  9. Post Incorporation compliances
  10. Filing of Declaration of Commencement of Business

 

 

 

Advantages of Private Limited Company Registration

 

1. Separate Legal Entity (Management & ownership is separate):

 

Nidhi Company is a legal entity and a juristic person established under the Companies Act, 2013. Hence, a company has a wide range of legal capacities and the members (Shareholders/Directors) of a company have no personal liability to the creditors of a company for company's debts.​​​​​​​

 

2. Perpetual succession gives longest business life:

 

Nidhi Company has 'perpetual succession', which means uninterrupted existence until it is legally dissolved. A company being a separate legal person, is unaffected by death or other departure of any member and it continues to be in existence irrespective of changes in ownership.​​​​​​​

 

3. Easy financing activities amongst members of the Company internally:

 

Nidhi Companies can provide loans to its members only and borrow from only its members, accepting the deposits from the members no outsiders or third party is involved in lending and borrowing activities hence risk of borrowing is not there. Further, under the Companies Act, 2013, a Nidhi Company is not required to comply with the rules relating to Acceptance of Deposits.​​​​​​​

 

4. Easy share transfer process:

 

Securities can be easily transferred in a company through Demat facility since all the public companies now compulsorily required to convert all of its securities from physical form to Demat (Electronic balance) Form. The signing, filing and transfer of share transfer instruments/ forms and issuance of physical share certificates is now done away with which makes transfer process fastest and transparent.​​​​​​​

 

5. Owning Property in own name:

 

A Company being an artificial person, can acquire, own, and alienate, property in its own name. The property owned by a company could be machinery, building, intangible assets, land, residential property, factory, etc., No shareholder can make a claim upon the property of the company - as long as the company is a going concern.

 

What are the minimum requirements for Registering a Company in India?

 

  1. Minimum 3 Directors
  2. Minimum 7 Shareholders *
  3. There is no minimum capital requirements
  4. DSC of all the promoter - shareholders of proposed Company
  5. DIN of the proposed Directors
  6. Unique Name for the proposed Company
  7. Registered office Address of the Company

* (The Directors and Shareholders can be the same or different persons.)

 

 

What is next after registration of Company ?

 

  1. Appointment of 1st Auditors
  2. Opening of Bank Accounts
  3. Filing of Declaration for Commencement of Business in form INC-20A
  4. Filing of half yearly returns of Nidhi Company in form NDH-1
  5. Minutes of Board meeting and their committees
  6. GST registration of the Company
  7. Trade Marks Registration
  8. Share Certificates to the subscribers
  9. Statutory Registers preparations
  10. Filing of Form AOC-4
  11. Filing of Form MGT-7

 

What is the procedure for Company registration ?

 

Step 1: Obtain the DSC Tokens of all the shareholders

Step 2: Apply for Name Reservation

Step 3: Prepare and filing of Form Spice Form INC-32 for incorporation

Step 4: Obtain the Certificate of Registration

Step 5: File Form INC-20A for Declaration of Commencement of Business

 

The entire process for registration of Company will take at least 7 to 15 working days from the receipt of all the necessary documents and filing with the ROC.

 

What Documents are required for Company Incorporation ?

 

  1. Copy of PAN Card of all Directors & Promoters
  2. Passport size photograph of Directors & Promoters
  3. Copy of Voter identity card/ Passport/ voting ID card of Directors & Promoters
  4. Copy of Rent agreement (If rented property)
  5. Electricity/ Gas bill/ Water Bill/ Electricity Bill/ Bank Statement for Office of Company
  6. Copy of Index II or Property Tax Receipt (If owned property)
  7. Landlord NOC (Format will be provided)

 

 

Precautions to be taken while name reservation

 

  1. Meaningful: The name of your company should have some meaning even though more than two words combination is used. The name taken by the promoters of the Company should not be able to be challenged by anyone.

 

  1. Unique: It should not create resemblance with the existing Company or LLP names or even the Trade Marks (either registered or in the process of registration).

 

  1. Activity reflecting: In the name of your proposed Company, activity or main business object should be reflected or represented.

 

Should not be illegal / offensive: The name of your company should not be against law. It should not be abusive or against the customs and beliefs of any religion.