Nidhi company is a kind of NBFC(Non-Banking Financial Company), which is formed to lend and borrow money from its members. It works on the principle of mutual benefit. Nidhi company is easy to form as it does not require to receive a license from Reserve Bank of India.
Nidhi company registration is a lengthy process and requires specific eligibility criteria.
What is Nidhi Company?
The registration of a Nidhi Company is done based on the rules of Companies Act 2013. Nidhi company requires a minimum of three directors and seven shareholders. The objectives and functions of a Nidhi Company are to encourage the habit of saving among its members. It receives deposits from the members and lends the money only to its members. All these have to be mentioned in the Memorandum of Association at the time of incorporation.
What are the features of Nidhi Company Registration?
The features of Nidhi company are-
Minimum documentation and formalities;
Secured investment;
Not governed by any committee or trust;
Easy and flexible loans as compared to traditional banks;
Provides financial growth of the middle and lower-middle-income group of people.
What are the advantages of Nidhi company registration?
The advantages of Nidhi company registration are-
Fulfil the needs of middle and Low-Income Groups
The investments made in the Nidhi company fulfils the needs of the middle and low-income group by providing them with financial help.
Loans with minimum eligibility criteria
Nidhi company helps small wagers to obtain loans with minimum eligibility criteria.
No External Involvement
The company takes its funds from its member and further provides the credit to its member, which states that there is no external involvement in the working process.
Limited Liability
The directors are benefitted as they have limited liability, and their assets are safe from any debt.
Perpetual Succession
It has never-ending existence because it cannot be dissolved by the death or insolvency.
Better Credibility
It is regulated by the Ministry of Corporate Affairs, so it is considered more trustworthy.
Separate Entity
It can acquire property and incurs debts on its name.
What are the minimum requirements for Nidhi Company Registration?
The minimum requirement for registration of Nidhi Company is-
What are the documents required for Nidhi Company Registration?
What is the procedure for registration of Nidhi Company?
Apply For DSC
The first step is to obtain a Digital Signature Certificate by filing the SPICe+ form
Name approval
Select an appropriate name for the company and get is approved by the Ministry of Corporate Affairs. The name has to be unique, and it should not resemble any other registered company.
Submission of MOA & AOA
After the name has been selected, MOA & AOA has to be submitted with all the objectives clearly stated to the Ministry of Corporate Affairs.
Incorporation certificate
After verifying all the documents, the incorporation certificate will be issued by the MCA. It usually takes 10-15 days to get the incorporation certificate.
What are the post-registration compliances?
The post-registration compliances you need to follow are-
Apply for companies PAN to carry out financial activities
After PAN, you are required to open a bank account in your company's name for all the future transaction
Which activities are prohibited by Nidhi Company?
The activities that are prohibited by the Nidhi Company are-
Advertisement for funds
Lottery
Chit funds
Insurance
Leasing
Accepting deposits or lending funds to outsiders
Entering into partnership
Sell assets of its member for providing loans
Conclusion
Nidhi Company works on the concept of mutual benefit. It is easy to form Nidhi Company as it does not require to receive a license from the Reserve Bank of India. It accepts deposits from the members and lends the money only to its members.
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