Introduction:-
A Nidhi company, also known as a mutual benefit company, is a type of non-banking financial institution in India that facilitates savings amongst its members. These companies primarily deal with lending and borrowing money amongst their members. The Nidhi company registration concept is a way to cultivate the habit of saving and thrift amongst its members.
Key Steps for Nidhi Company Formation:-
Step 1: Minimum Members Requirement
The first step in forming a Nidhi company is ensuring that it has at least 200 members within a year of its incorporation. Additionally, a Nidhi company should have a minimum of 7 members to begin the registration process.
Step 2: Minimum Capital Requirement
A Nidhi company must have a minimum capital of Rs. 5 lakhs to get started. This amount is essential to establish and run the company effectively.
Step 3: Incorporation of Company
The Nidhi company needs to be incorporated as a public company under the Companies Act, 2013. The process involves obtaining Digital Signature Certificates (DSCs) and Director Identification Numbers (DINs) for the directors.
Step 4: Name Approval
Select a unique name for your Nidhi company. Make sure the chosen name is compliant with the naming guidelines provided by the Ministry of Corporate Affairs.
Step 5: Memorandum and Articles of Association
Draft the Memorandum of Association (MOA) and Articles of Association (AOA) that outline the company's objectives, rules, and regulations. These documents are vital for the proper functioning of the company.
Step 6: Application for Nidhi Company Registration
Submit the necessary documents, including MOA, AOA, and other required forms to the Registrar of Companies (RoC) along with the prescribed registration fees.
Step 7: Obtaining the Certificate of Incorporation
Once the Registrar is satisfied with the provided documents, they will issue the Certificate of Incorporation. This is a crucial document, as it legally establishes the Nidhi company.
Step 8: Commencement of Business
After obtaining the Certificate of Incorporation, the company must commence its operations within one year.
Key Requirements for Nidhi Company Formation:-
- Directors: A Nidhi company must have at least 3 directors. Each director should have a valid Director Identification Number (DIN).
- Membership: As per the Nidhi Rules, a minimum of 200 members is required.
- Net Owned Funds: The net owned funds of the company should be at least Rs. 10 lakhs.
- Branches: A Nidhi company can open branches only after it has earned a profit for three consecutive years.
- Restrictions on Loans and Advances: Nidhi companies can only provide loans and advances to their members.
Conclusion:-
Nidhi companies play a crucial role in promoting thrift and savings habits amongst individuals. By following the steps and meeting the requirements outlined above, you can successfully form and register a Nidhi company in India.