How to Register a Nidhi Company
A Nidhi company refers to a type of entity in the non-banking finance sector, recognized under Section 406 of the Companies Act, 2013. Their primary business is borrowing as well as lending funds between their members. They are also regarded as Benefit funds, permanent funds, Mutual benefits and Mutual Benefit Funds companies. The Ministry of Corporate Affairs governs these entities in India and reserves the right to issue directions related to deposit acceptance activities. The core object of these entities is to foster the habit of thrift and reserve funds amongst its serving members. The concept of Nidhi Company is quite popular in the southern region of India. Important Facts of Nidhi Companies
- No RBI consent is required to form the Nidhi company in India. Therefore, it can be incorporated very easily.
- Nidhi Companies are incorporated as Public Companies.
- They must affix "Nidhi Limited" at the end of their name.
- Nidhi Companies' undertakings are quite similar to NBFCs, and so they fall under the ambit of the Reserve Bank of India.
- The core objective of Nidhi Company essentially revolves around in-house lending and borrowing activities with no third-party intervention whatsoever.
- Nidhi Rules, 2014 permits Nidhi to facilitate locker facilities to its members on rent. The rental income should not surpass 20% of the Company's overall income at any instance during the financial year.
What are the minimum requirements that are to be fulfilled for the registration as a Nidhi Company?
There are certain requirements which are to be fulfilled by a company in order to to be registered as a Nidhi Company. The requirements may be summed up as follows: The company must be incorporated as a Public Limited Company under the Companies Act.
The company should have a minimum of 7 shareholders.
The company should have a minimum of 3 directors.
The company should have a minimum of Rs.5 lakh of equity capital.
The company should have a minimum of 200 members.
The company should have Net Owned Funds worth Rs.10 lakh or more.
The name of the company should end with 'Nidhi Limited'.
The objective of the company should be lending and borrowing of funds among the members only.
The company must have unencumbered term deposits of 10% or more of the outstanding deposits.
The company should have a Net Owned Funds to deposits ratio of 1:20 or less.
The Director Identification Number (DIN) of all the directors has to be provided.
Prohibition Activities in Nidhi Company
The Nidhi Companies have to abide by certain prohibitions which are imposed on them in terms of their activities. These activities can be listed as follows:
Nidhi Companies cannot deal with chit funds.
Nidhi Companies cannot deal with hire-purchase finance.
Nidhi Companies cannot deal with leasing of finances.
Nidhi Companies cannot deal with insurance business.
Nidhi Companies cannot deal with securities business.
Nidhi Companies cannot accept deposits from any other person except members.
Nidhi Companies cannot lend funds to any other person except members.
Created & Posted by (Twinkle)
Accountant at TAXAJ
TAXAJ is a consortium of CA, CS, Advocates & Professionals from specific fields to provide you with a One-Stop Solution for all your Business, Financial, Taxation & Legal Matters under One Roof. Some of them are: Launch Your Start-Up Company/Business, Trademark & Brand Registration, Digital Marketing, E-Stamp Paper Online, Closure of Business, Legal Services, Payroll Services, etc. For any further queries related to this or anything else visits TAXAJ
TAXAJ Corporate Services LLP
Address: 1/11, 1st Floor, Sulahkul Vihar, Old Palam Road, Dwarka, Delhi-110078
Related Articles
Guidelines & Compliances for a Nidhi Company in India
Guidelines & Compliances for a Nidhi Company in India Points Covered in this Video: What is Nidhi Company? Benefits of Nidhi Company Pre-Requisites for Nidhi Company Registration Process of Nidhi Company Requirements for Registration of Nidhi Company ...
Detailed analysis of a Nidhi Company & its compliances
All about Nidhi Company Registration Nidhi Company is a type of Non- Banking Financial Company (NBFC). It is formed to borrow and lend money to its members. It inculcates the habit of saving among its members and works on the principle of mutual ...
All About Nidhi Company That You Must Know
What is Nidhi company? It requires less capital compared to other kind of NBFC. The typical meaning of Nidhi is ‘fund’, ‘finance or treasure’. Nidhi Company is incorporated with the object of developing the habit of thrift and save and reserve the ...
Nidhi Company- Meaning, Key Features, advantages & Registration
Nidhi Company- Meaning, Key Features, advantages & Registration Nidhi Company is an NBFC (Non-Banking Financial Company). Nidhi in simple terms means a company which is formed with the object of cultivating the habit of thrift and savings amongst the ...
Where to Register Proprietorship Firm
Documents Required for Sole Proprietorship Registration in India Sole Proprietorship is the most accessible form of business done in India since any specific laws don’t govern it. Under sole Proprietorship's, the compliance’s are minimal and easy to ...