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NIDHI COMPANY REGISTRATION

Nidhi Company Registration in India: A Comprehensive Guide

A Nidhi Company is a type of non-banking financial company (NBFC) that encourages savings among its members and provides financial support to them. Regulated under Section 406 of the Companies Act, 2013, and governed by the Nidhi Rules, 2014, these companies operate for the mutual benefit of their members and are prohibited from engaging in external business activities.  

This guide will explain the process, benefits, and requirements for registering a Nidhi Company in India.

What is a Nidhi Company?

A Nidhi Company is primarily formed to promote the habit of thrift and savings among its members. It accepts deposits from its members and lends only to its members, making it a member-driven entity.

Key Features of a Nidhi Company

  1. No External Borrowing: Funds are collected only from members and used exclusively for members.
  2. Encourages Savings: Operates as a community savings platform.
  3. No RBI License Required: Unlike other NBFCs, a Nidhi Company does not require an RBI license.
  4. Membership-Driven: Operates solely for the benefit of its members.
  5. Limited Activities:Restricted to borrowing and lending among members.

Advantages of Registering a Nidhi Company

  1. Easy Formation: Simple registration process compared to other NBFCs.
  2. Low Capital Requirement: Initial capital requirement of ₹10 lakhs.
  3. No External Interference:Operates independently without RBI intervention.
  4. Limited Liability:Members’ liability is limited to their investment in the company.
  5. Encourages Savings: Promotes financial discipline among members.

Eligibility for Nidhi Company Registration

  1. Minimum Shareholders: Requires at least 7 members (including 3 directors) to start.
  2. Initial Capital: Minimum paid-up equity capital of ₹10 lakhs.
  3. Unique Name: The company name must include “Nidhi Limited” and comply with the MCA naming guidelines.
  4. Registered Office:A physical office address is required.

Documents Required for Nidhi Company Registration

For Directors and Members

  1. PAN Card (for Indian nationals).

  2. Aadhaar Card.

  3. Address Proof (Bank Statement, Utility Bill, etc.).

  4. Passport-sized Photographs.

For Registered Office

  1. Rental Agreement (if rented).

  2. Utility Bill (not older than 2 months).

  3. NOC (No Objection Certificate) from the property owner.

Additional Documents

  1. Memorandum of Association (MoA).

  2. Articles of Association (AoA).

  3. Digital Signature Certificate (DSC).

Step-by-Step Process for Nidhi Company Registration

1. Obtain DSC and DIN

  • Apply for the Digital Signature Certificate (DSC) and Director Identification Number (DIN) for the proposed directors.

2. Reserve Company Name

  • Use the RUN(Reserve Unique Name)service to reserve a unique name for the company. The name must end with “Nidhi Limited.”

3. Draft MoA and AoA

  • Prepare the Memorandum of Association (MoA) and Articles of Association (AoA), clearly stating the objectives of promoting thrift and savings.

4. Filing for Incorporation

  • Submit the SPICe+ form (Simplified Proforma for Incorporating Company Electronically) with the required documents to the Registrar of Companies (ROC).

5. Obtain Certificate of Incorporation

  • Once approved, the ROC issues a Certificate of Incorporation, officially registering the Nidhi Company.

6. Post-Incorporation Compliance

  • Apply for PAN and TAN.

  • Open a current bank account in the company’s name.

Post-Registration Compliance for Nidhi Companies

1. Membership:

  • Minimum of 200 members must be achieved within one year of incorporation.

2. Net-Owned Funds:

  • The company must maintain a minimum net-owned fund ratio of 1:20 between owned funds and deposits.

3. Annual Returns and Financial Statements:

  • File MGT-7 (Annual Return) and AOC-4 (Financial Statements) annually.

4. Statutory Compliance:

  • Submit annual compliance reports and maintain proper financial records.

5. Prohibition on Specific Activities:

  • Nidhi Companies cannot engage in chit funds, leasing, insurance, or securities businesses.

Cost of Nidhi Company Registration

The cost depends on:

  • Government fees (based on authorized capital).
  • Professional fees for documentation and filing.
  • Other charges, including stamp duty and digital signatures..

Who Should Register a Nidhi Company?

  1. Community groups looking to foster financial savings.

  2. Individuals seeking to create a mutual benefit financial organization.

  3. Entrepreneurs aiming for a member-driven lending and borrowing model.

Conclusion

A Nidhi Company is a perfect choice for community-based financial businesses aiming to encourage savings and provide financial support. It offers the dual benefits of operational ease and legal protection while fostering financial inclusion.

 

Register your Nidhi Company today with professional assistance to ensure a smooth and hassle-free process. Let us help you achieve your vision of financial growth and stability!