Requirement after Nidhi Company Registration
- The number of members/subscribers of the Nidhi Company must be at least 200 by the end of the first year
- Net Owned Fund require to be more than Rs. 10 lakhs.
- The ratio of the Net Owned Fund to Deposit should be over and above 1:20.
- Unencumbered deposits should be more than 10% of outstanding deposits.
PROCESS OF NIDHI COMPANY REGISTRATION/How to open a NIDHI Company
Step 1: Approval of the Name through ‘RUN’ facility
You require to select three different names on the MCA website for the Nidhi Company. Only one out of three will be accepted for the Company by MCA. The selected names must be different and not resembling the names of other already existing companies. The approved name will remain valid for twenty days only according to Rule 8 of the Company Act. A Nidhi Company should have as a part of its name “Nidhi Limited” as the last words. For instance, Swayam Nidhi Limited.
Step 2: Applying Digital Signature Certificate (DSC)
The Directors who may also be the applicant or promoter of the Nidhi company are required to apply for the Class 2Digital Signature Certificate (DSC). The Ministry of Corporate Affairs (MCA) issue DSC. DSC is used for all e-filing purposes. The step can be bypassed for the Directors, who already hold DSC.
Step 3: Filing of SPICE32 Form
After the name approval and the getting the DSC, SPICE32 Form needs to be filled with the following documents. The MoA and AoA are to be filed with the Registrar of Companies (ROC) with the subscriber’s information. Memorandum of Association (MoA) and Articles of Association (AoA) must specify charity as the principal object of registering a Nidhi company.
- PAN Card of the Subscribers/members
- ID Proof of First Directors/promoters
- Address Proof of First Directors/ promoters
- Address Proof of Registered Office (Sale Deed/Rent Agreement)
- Consent and Declaration from the first Director in form DIR-2
- Less than two months old Utility Bill of Registered Office (Electricity/ Gas/Telephone)
- NOC from the Owner of Registered Office.
- Self-Declaration from the First Directors/Subscribers in the INC-9 form
Step 4: Approval and Certificate of Incorporation
It needed between 15-25 days to register a Nidhi company and receive the registration certificate. This certificate certifies that a company has been formed and it states the company identification number (CIN). The registration certification is proof that the Nidhi Company came into existence and all the formalities related to the registration of the Nidhi Company has been finished.
Step 5: TAN, PAN, and Bank Account Finally, you require to apply for TAN and PAN. The TAN and PAN are ordinarily received within seven working days. Next, you need to open a bank account by submitting the CIN, MoA, AoA, and PAN to the bank.
BENEFITS OF REGISTERING A NIDHI COMPANY
The primary goal behind forming a Nidhi Company is to assist its members in saving money and meeting their financial obligations occurring from time to time easily. By staying economical, they grow self-sufficient and would face future liabilities that may arise.
There are so many advantages of registering a Nidhi Company. Some are mentioned below:
Liability of members and Directors is limited. Therefore, in case the company bears any loss and faces financial difficulty in the course of its principal business pursuit, the individual assets of Directors and members are not in danger of being seized by lenders, banks, and government.
Nidhi companies enjoy more high-grade reliability in comparison to other organizations such as NGOs, Trusts, and Cooperative Societies.
A better opportunity for Savings
One of the main purposes of Nidhi Company is to promote the practice of saving among the members. This is how it accomplishes its additional goal of remaining reciprocally helpful.
Easy Access to Public fund
The members of the Nidhi Company can get a loan at a lower rate from its own company rather than lending from banks and other NBFCs. Furthermore, the process of getting the loan and other services are far faster and convenient.
Ease of Fund
Nidhi is the most reliable and most affordable way of attracting deposits from the general public. It would be best if you got them registered as members.
Nidhis offer Rural banking services to the remote communities of the nation, which yet is far-away and therefore without NBFCs and national banks.
Better Option than Credit Co-operative
The small financer most prefers Nidhi company as this is a near replacement of credit co-operative society. Once a Nidhi company is registered, you can avail of all the advantages of credit co-operative society and get the benefit of double deposit.
Lending and borrowing to known persons, i.e., to its members, is less complicated than dealing with banks, where the system is solidified.
Nidhi companies obey the Nidhi Rules, 2014. The Central Government is the body regulating its activities. Regulations required by the RBI on Nidhi are limited.
Low Capital Requirement
MCA dictates the minimum capital obligation of Rs. Five lakhs for Nidhi. Also, within one year, the capital shall be rise to at least Rs. Ten lakhs.
Easy Registration Process
To register Nidhi company is a simple process. Nidhi Companies don’t need to obtain a license from RBI.
Low Registration Fees
Nidhi Company is governed by Nidhi Company Rules as well as the Companies Act of 2013. The Fees, DSC & Other Expenses are approx. Rs. 25-30,000. These include Government fees that vary from State to State.
Meeting the wants of middle or lower-income groups
Nidhi Companies play an essential role in meeting the needs of middle and low-income groups by giving them financial guidance with minimum formalities and documentation.
Loans with minimum eligibility criteria
The small wage earners are ordinarily incapable of getting loans from conventional banks because they don’t satisfy the eligibility norms. For them, Nidhi Company is an excellent means to obtain loans due to fewer conditions.
No outside involvement
Nidhi Companies accept funds from their members and gives loans to their members only. This implies no external factors are influencing the performance of these companies. The members and investors themselves administer the procedures of the company.
Nidhi Company does not dissolve by the death, insanity or insolvency and, retirement, of its shareholders and members.
Nidhi Company is a separate entity that can acquire assets and contract debts in its name.
Compliances after Nidhi Company Registration
A Nidhi Company required to submit the list of members of the Nidhi Company within 90 days at the end of each financial cycle using this Form.
The Company can apply for an extension to MCA if it has not been capable of adding 200 members in its first financial year.
apart from the above NDH-1 Form, a half-yearly return is also needed to be filed in NDH-3 Form.
A Nidhi Company must use Form MGT-7 to file its Annual Returns with MCA.
- Profit, Loss and Balance sheet
A Nidhi Company must use Form AOC-4 to submit financial statements and other related documents annually.
Nidhi Company must file its Annual Returns by 30th September of the following financial year, like all other companies.
Activities Prohibited for the Nidhi Company
Even though the initial idea of Nidhi companies is to carry out non-banking financial activities, they are forbidden to perform below-mentioned activities:
- Getting deposits or lending funds to persons other than its members
- By investing in securities a company purchase another company
- Advertisements to invite deposits from the public
- Carrying out a business apart from borrowing and lending to its members
- Chit funds, Leasing Finance
- Entering into a partnership relationship to carry lending and borrowing activities
- Hire-Purchase finances
- Issuance of debentures, preference shares, or some other debt instruments
- Lend or accept the deposit from corporates
- (though a Nidhi Company can open a Savings Account) Open a current account along with its members
- Pay commission or incentive for mobilising deposits
- Pledge and kept assets of its members as security
- For a loan sell the assets of its members held as security
Registering a private Nidhi limited company requires the support of CA/CS/Lawyer as the legal procedures are involved in it are complicated process, we make this very simple for you.