A Nidhi Company is a type of non-banking financial institution (NBFC) that operates in India. It is a unique form of organization that belongs to the non-profit category and primarily deals with lending and borrowing money between its members. The core objective of a Nidhi Company is to encourage thrift and savings among its members and facilitate mutual benefit through financial assistance.
Here are some key characteristics of a Nidhi Company:
- Membership: Nidhi Companies only accept membership from individuals, making it a company for the mutual benefit of its members.
- Limited Operations: The operations of a Nidhi Company are limited to its members, and it cannot engage in any external commercial lending activities.
- No External Funding: Nidhi Companies cannot raise funds or accept deposits from non-members, unlike regular banks.
- Minimum Number of Members: To start a Nidhi Company, it needs a minimum of 200 members within one year of its registration.
- Minimum Capital Requirement: Nidhi Companies need to have a minimum paid-up equity share capital of INR 5 lakhs.
- Net Owned Funds: The net owned funds (equity share capital and free reserves) of a Nidhi Company must be at least 10% of the total outstanding deposits.
- RBI Regulation: Nidhi Companies are regulated by the Ministry of Corporate Affairs (MCA) and monitored by the Reserve Bank of India (RBI) to ensure compliance with the Nidhi Rules, 2014.
Now, let's look at the process to register a Nidhi Company in India:
- Incorporation of the Company: The first step is to incorporate a public limited company under the Companies Act, 2013. The company should have "Nidhi Limited" as part of its name.
- Minimum Requirements: To proceed with the incorporation, you need a minimum of three directors and seven shareholders.
- Capital Infusion: The minimum paid-up equity share capital required is INR 5 lakhs, and it should be infused by the promoters/shareholders.
- DSC & DIN: Obtain Digital Signature Certificates (DSC) and Director Identification Numbers (DIN) for all the directors.
- Name Approval: Apply for name approval with the Registrar of Companies (ROC). Ensure that the proposed name complies with the naming guidelines and includes "Nidhi Limited" as per the rules.
- Incorporation Application: Prepare the incorporation application along with the necessary documents, such as MOA (Memorandum of Association), AOA (Articles of Association), and other required declarations.
- Filing with ROC: File the incorporation application along with the prescribed fees to the ROC.
- Certificate of Incorporation: Once the ROC is satisfied with the application and documents, they will issue a Certificate of Incorporation, and the company becomes a legal entity.
- Post-Incorporation Compliances: After incorporation, you must comply with various post-incorporation formalities, like opening a bank account, issuing share certificates, appointing auditors, etc.
- Nidhi Company Compliance: As a Nidhi Company, you need to ensure ongoing compliance with the Nidhi Rules, 2014, and other relevant laws and regulations.
It is essential to consult with a professional company secretary or a legal advisor to guide you through the registration process and ensure compliance with all the legal requirements.
To register a Nidhi Company in India, you will need several documents and fulfill specific requirements. Here is a list of the necessary documents:
- Identity and Address Proof of Directors and Shareholders:
- PAN Card (mandatory)
- Aadhaar Card or Passport or Voter ID or Driving License (anyone as identity proof)
- Recent utility bill or bank statement (not older than two months) as address proof
- Passport-sized Photographs:
- Passport-sized photographs of all directors and shareholders.
- Director Identification Number (DIN) and Digital Signature Certificate (DSC):
- DIN and DSC for all directors. These are obtained by applying online on the MCA (Ministry of Corporate Affairs) portal.
- Name Approval Application:
- A duly filled and signed INC-1 form for name availability along with the proposed company names.
- Memorandum of Association (MOA) and Articles of Association (AOA):
- MOA and AOA are charter documents of the company that define the company's objectives and rules. These documents must be prepared and signed by the promoters.
- Declaration and Affidavit:
- Various declarations and affidavits related to compliance with Nidhi Rules, 2014, and eligibility criteria.
- Registered Office Proof:
- A copy of the rental agreement or sale deed of the registered office, along with a recent utility bill (not older than two months) as proof of address.
- No Objection Certificate (NOC):
- NOC from the owner of the registered office premises.
- Common Seal:
- A common seal for the company must be obtained.
The registration process for a Nidhi Company typically takes several weeks to complete, depending on how promptly you submit the required documents and the workload of the government authorities involved in the approval process.
The registration and approval primarily involve the following steps:
- Name Approval: The first step is to get the proposed name of the Nidhi Company approved by the Registrar of Companies (ROC). This process may take a few days to a week.
- Filing Incorporation Documents: After name approval, you need to file the incorporation application along with the required documents to the ROC. The ROC will review the documents and, if everything is in order, issue the Certificate of Incorporation. The time taken for this step may vary but typically takes 2 to 4 weeks.
- Obtaining PAN and TAN: After incorporation, you can apply for the Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) for the company. This usually takes a few days.
- Bank Account Opening: Once you have the Certificate of Incorporation and PAN/TAN, you can open a bank account for the Nidhi Company.
- Post-Incorporation Compliances: After the company is registered, you need to comply with various post-incorporation formalities such as issuing share certificates, appointing auditors, etc.
It is advisable to seek professional guidance from a company secretary or a legal expert to ensure a smooth registration process and compliance with all the relevant laws and regulations.
As of my last update in September 2021, the minimum capital requirement for starting a Nidhi Company in India was ₹5,00,000 (five lakh rupees). This amount is subject to change, and it is always advisable to check the latest guidelines issued by the Ministry of Corporate Affairs (MCA) or consult with a professional for the most up-to-date information on Nidhi Company registration.
Please note that starting a Nidhi Company involves compliance with various legal requirements and procedures, and it is essential to follow all the regulations set forth by the MCA to establish and operate a Nidhi Company successfully. It's recommended to seek professional advice to ensure the proper registration and functioning of the company.