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Nidhi Company Registration
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Nidhi Company Registration in India
A Nidhi Company is a specialized type of Non-Banking Financial Company (NBFC) established under Section 406 of the Companies Act, 2013. Its primary goal is to promote the habit of thrift and savings among its members by accepting deposits from and lending to them for mutual benefit. Nidhi Companies primarily operate on the principle of mutuality and are widely popular in South India, though their popularity is rising across the country due to their simplified structure and focus on member welfare.
Key Features of a Nidhi Company
Mutual Benefit Society:
- Nidhi Companies are formed exclusively for the benefit of their members, facilitating financial support within a close-knit community.
Regulatory Oversight:
- Though classified as NBFCs, Nidhi Companies are exempt from Reserve Bank of India (RBI) licensing requirements. However, they must follow the provisions of the Companies Act, 2013 and Nidhi Rules, 2014.
Limited Activities:
- These companies are restricted to accepting deposits and lending to their members. They cannot engage in activities such as chit funds, leasing, or insurance.
No External Involvement:
- Nidhi Companies can only accept deposits from and lend to their members, ensuring that their operations stay within the member community.
Benefits of Registering a Nidhi Company
- Encourages Savings: A Nidhi Company fosters a culture of savings among its members, contributing to their overall financial stability.
- Simplified Lending: It provides members with easy access to credit at reasonable interest rates, without the complexities of traditional banking systems.
- Limited Liability: The liability of members is restricted to the amount of their shareholding, ensuring their personal assets remain protected from the company’s debts.
- Minimal External Regulation: Since Nidhi Companies are exempt from stringent RBI regulations, they have a more straightforward compliance process compared to other NBFCs.
- Member Addition:The company must ensure it has at least 200 members within one year of registration.
- Net Owned Funds: The company must maintain a minimum net owned fund of ₹10 lakh.
- Ratio Maintenance: Submit annual returns and financial statements to the ROC and ensure compliance with Nidhi Rules, 2014.
Registration Process
Step 1: Obtain Digital Signature Certificate (DSC):
All proposed directors must obtain DSCs to enable electronic filing.
Step 2: Apply for Director Identification Number (DIN):
Each proposed director must apply for a DIN via the Ministry of Corporate Affairs (MCA) portal.
Step 3: Name Reservation:
Submit an application for name approval using the RUN (Reserve Unique Name) service on the MCA portal. The chosen name should include "Nidhi Limited."
Step 4: Incorporation Documents:
Prepare and file the Memorandum of Association (MOA) and Articles of Association (AOA), specifying the company's objectives and operational structure.
Step 5: Incorporation Application:
Submit Form SPICe+ (INC-32) along with required documents, including identity proofs of directors, registered office address, and the company's MOA and AOA.
Forms Required
| S.No | Particulars |
|---|---|
| SPICE + PART A | Name Approval |
| SPICE + PART B | Incorporation Application, License, PAN and TAN |
| INC-9 | An affidavit from each Director and subscriber of the MoA |
| INC-13 | Memorandum of Association (MoA) |
| INC-14 | Declaration from a practicing Chartered Accountant or Company Secretary |
| INC-15 | Declaration by each Subscriber of MOA (On duly notarized Non- judicial stamp paper of Rs. 100/-) |
| INC-22 | Notice of Location of the registered office |
| DIR-2 | Consent of Directors to act on behalf of the Company |
| DIR-3 | Application to ROC to get DIN |
| DIR-12 | Appointment of Directors of the Company |
Compliances
If a Section 8 Company fails to comply with the legal provisions, then the central government may revoke the license issued under the given act.
In case of revocation, the company may get wind-up. Or it may be simply asked to change its name by adding either “Private Limited or Public Limited”.
And the assets remaining after clearing debts and liabilities of such a Company shall be transferred to some other Section 8 Company having similar objects.
If the operations of the Company are found to be conducted fraudulently or in violation of the objects of the Company or unfavorable to public interest then, also, the license can be revoked.
If a company defaults in complying with the provisions of the Act, then it shall, without prejudice to any other action under the provisions of this section, be punishable with a fine which shall not be less than Rs.10 lakhs and may get extend to even Rs.1 crore. The Directors and all other officers of the company, found in default, shall be punishable with imprisonment for a term which may extend to 3-years, or with a fine of not less than Rs.25, 000 that too may extend to Rs. 25 lakhs, or both. Provided that it is proved that the operations were conducted fraudulently.
Then every officer in default shall be liable for action.
Any such order shall not be passed unless the company has been given a reasonable opportunity of being heard.
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