Introduction:-
Nidhi Companies, a category of non-banking financial institutions, play a crucial role in empowering communities through financial inclusion. These companies are governed by the Ministry of Corporate Affairs (MCA) in India. The process of Nidhi company incorporation involves adhering to a specific legal framework, ensuring transparency, and maintaining financial stability. This article delves into the key aspects of Nidhi company registration and the legal guidelines that govern them.
Understanding Nidhi Companies:-
A Nidhi Company is a type of mutual benefit society recognized under Section 406 of the Companies Act, 2013. Their primary objective is to encourage savings and thrift amongst their members and provide them with a platform to borrow funds when needed. These companies are formed with the goal of cultivating the habit of saving and utilizing these funds for the mutual benefit of all members.
Legal Framework for Nidhi Company Registration:-
1. Minimum Requirements:
For a company to qualify for Nidhi status, it must meet the following criteria:
- Minimum Members: A Nidhi company must have at least 200 members within a year of incorporation.
- Minimum Capital: The minimum paid-up equity share capital should be INR 5 lakhs.
- Directorship: The company must have at least three directors and a minimum of one lakh equity shares.
2. Name Approval:
Choosing an appropriate and unique name is the initial step in Nidhi company registration. The name must include the term "Nidhi Limited" at the end.
3. Memorandum and Articles of Association:
Drafting and submitting the Memorandum of Association (MoA) and Articles of Association (AoA) to the Registrar of Companies (ROC) is a critical step. These documents outline the company's objectives and rules governing its operations.
4. Application Submission:
The application for Nidhi company registration must be submitted in the prescribed form along with the necessary documents to the ROC.
5. Compliance with RBI Guidelines:
After incorporation, Nidhi Companies must ensure compliance with the Reserve Bank of India's (RBI) guidelines for non-banking financial institutions.
6. Minimum Net Owned Fund (NOF):
As per RBI guidelines, a Nidhi Company must maintain a minimum Net Owned Fund of INR 10 lakhs or higher.
7. Restrictions on Activities:
Nidhi Companies are prohibited from engaging in activities like chit fund, leasing, hire purchase finance, insurance, and acquisition of securities.
8. Loan Disbursement:
Loans can be granted only to members, and the interest rate must be reasonable.
9. Auditing and Reporting:
Nidhi Companies are required to maintain proper books of accounts and undergo regular auditing.
Conclusion:-
Online Nidhi Company Registration incorporation involves a meticulous adherence to legal procedures and regulatory guidelines. By following the prescribed framework, these companies can provide a platform for financial growth and stability to their members. It is crucial to stay updated with any changes in the legal framework to ensure continued compliance and seamless operations.