Nidhi Company Registration

Overview

Nidhi Company Registration is a procedure through which the incorporation of type of NBFC called Nidhi can be made possible. Another name of this NBFC is the Mutual Benefit Finance Company. Furthermore, this incorporation takes place under the provisions of Companies Act, 2013.

The business of Nidhi Company is concerned with the acceptance of deposits and lending of money. As compared to the registration processes of other NBFCs, this registration process is an easy one. In respect of taxation and annual compliances, Nidhi companies enjoy the benefit of specific exemptions. Nidhi Company incorporation will invigorate the feeling of savings as well as smart spending in the mind of its members.

Widely known as Nidhi Bank, Nidhi companies endeavours to cultivate the values of thrift amongst their members. Rules related to Nidhi Company suggest that it can proceed further for the transactions within restricted boundaries of work and only with its registered members.

Moreover, it's not wrong to say that these companies acquire from their members and confer to their members. Nidhi company activities come under the ambit of RBI. In this category of NBFC, Directors are free from the shackles of eligibility norms of least qualification. At the end of the name of all the Nidhi Companies, Nidhi Ltd. must be there at any cost.

Key Points Circumscribing Nidhi Company Registration

All the provisions related to governance and establishment of Nidhi companies in the geographical boundaries of India come to light in Section 406 of the Companies Act 2013 and also in the Nidhi companies' rules of 2014.

As Nidhi Companies indulges in the trade of lending money and accepting of deposits by nobody else but by their members only, RBI has provided them with many exemptions.

RBI is responsible for issuing the directives and guidelines for the Nidhi Companies. Primarily, these are concerned with investments and most of the financial activities by companies. (Also comprising the NBFCs)

In the case of Nidhis, deposits earn shallow interest in comparison to deposits in the systematic sector of banking.

As Nidhi Companies are helping all the members by doing their utmost for their mutual benefit along with their welfare, these companies have earned the tag of Mutual Benefit Societies. All the members of Nidhi Companies participate in all the lending and borrowing activities.

About

Nidhi registration is very detailed procedure, which requires keen knowledge, procedure and team of professionals. Each type of Nidhi Company has its tailored requirements be it government or promoter’s. We at YourLegalExpert.in have a full-fledged, dedicated team of professionals. You are required to fill the form and our expert will reach out to you, to know the exact requirement and gather information. Then our experts at YOURLEGALEXPERT.IN will be at your disposal for assisting you with guidance concerning Nidhi Registration and its compliance for the smooth functioning of your financial business in India. Our professionals will assist you in planning seamlessly at the least cost, confirming the successful conclusion of the process. We shall guide you with Do’s and Don’t’s as well.

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BENEFITS OF ESTABLISHING A NIDHI COMPANY

Many people in our country want to deal with financial services, but due to the scarcity of capital, they are unable to take further steps. The principal objective of forming a Nidhi Company is to nurture the belt-tightening habits amongst its members so that by prioritizing saving, they won't face any difficulty in meeting their financial requirements that keep on arising from time to time. Apart from this, many unexplored benefits of establishing a Nidhi Company exists.

Easy Formation Without Any Complexity Involved

The registration process of Nidhi Company relishes freedom from all kinds of complexities. As less documentation process prevails from the beginning to end in Nidhi Company Registration, initiating a Nidhi Company is an easy task. In addition to this, the registration process gets completed within one or two weeks.

Limited Liability

In accordance with the Companies Act, 2013, directors and shareholders are having limited liability. In the game of business, either there will be profit or the company have to incur losses. While performing the business activities, if the company suffers from any loss or even goes through any financial trauma, creditors, banks, and the government have no power to seize the personal assets of any of the shareholders or even the directors.

High Certainty Value

In a developing nation like India, from 9 years old child to 60 years older adult is interested in saving their money. Here, the habit of saving is going in the same line with the central goal of Nidhi Company. Inculcating the habit of saving amongst its members is one of the primary purposes of Nidhi Companies. As it is a going concern establishment and is full of certainty, members would keep on sticking to the good habit of saving.

Few Guidelines

Being governed under the Nidhi Rules, 2014, Nidhi Companies have to follow fewer guidelines imposed by RBI. The monitoring and regulating hat remain in the hand of the Central Government. It empowers them to control the operating part along with all their activities. Even though Nidhi Company falls under the category of NBFC, it rarely follows RBI Regulations. Form your Nidhi Company in India as RBI is not going to create any trouble in your path. Go ahead without putting yourself in any rush-n-hush.

Separate Legal Entity

Being a separate legal entity from its shareholders, directors as well as promoters, Nidhi Company can own property and incur debts on its name. It has got the power to sue anybody or be sued by others. If there will be a requirement for the fund in the company, the company cannot ask its members for any contribution.

Easy Availability of Funds

Nidhi Company is the most secure and most accessible way of accepting deposits from the end of the general public. Only the requirement is that they should be the registered members.

Perpetual Existence

Death or departure of any member is not going to affect a Nidhi Company as it has perpetual existence. Perpetual succession allows the Nidhi Company to continue till the time it gets dissolved legally.

Meeting The Requirements of Lower and Middle Class

Nidhi Companies play a crucial role in fulfilling the demands of people belonging to the category of lower and middle-income society by extending financial support to them without any further lengthy documentation involved.

Ease Of Management

In Nidhi Company, bringing changes is not a matter of worry and concern, unlike other NBFCs.

Nidhi Company Registration Process

Even though the Nidhi Company Registration process is quite simple to follow, help from the professionals may make even the complex of things straightforward. The completion and filing of complex forms become comfortable with the help and advice of professionals.

Also, it would be a time-saving exercise with their support. Sometimes, the government portal and a bit difficult language make things challenging. After gaining expertise in Nidhi Company Registration, we have successfully started many Nidhi Companies under our roof. The Nidhi Company incorporation procedure involves many items submission like

Name Reservation

The first requirement is to select and suggest at least two names to proceed further in the Nidhi Company Registration Process. The names should be given preference wise. If the first name is not desirable, then registrar will accept second name. If both the names are un-desirable then registrar will give second and final chance to apply for two fresh names.

Directors And Members

At least there should be three directors along with the seven members. An individual can be the director, as well as a member. Both can be the same.

The Need for Digital Signature

Nidhi Company Registration Process gathers speed when there is a fulfilment of the primary requirement i.e., digital signature. Also, it's mandatory to get all the submitted forms self-attested.

Articles Of Association and Memorandum of Association (Final Incorporation)

After finishing up the process of name approval, Nidhi Company Registration Application gets submitted along with the Spice Forms, Articles of Association and Memorandum of Association and other forms and declarations.

COI, PAN and TAN & Opening of Your Bank Account

You are likely to receive your Certificate of Incorporation along with PAN and TAN within a week. After that you can submit the respective documents with your choice of Bank and open a Bank Account.

What are Nidhi Companies not Entitled to do?

Nidhi Companies are not entitled to perform the following transactions:

Invite and accept deposits from their own members rather than other members.
Engage in Chit funds business and leasing finance
Lotteries
Going on for any business other than borrowing and lending to its members
Opening the current account with its members
Getting into a partnership arrangement to carry lending as well as borrowing activities
Insurance
Issuing debentures, preference shares, or some other debt instruments
Accepting and lending of deposits from corporate
For mobilization of deposits, pay fee, incentive, and commission
Pay brokerage amount for granting loans to the members
Hire-purchase finances

Mandatory Compliances for Nidhi Company

NDH 1

In this form, A Nidhi Company has to submit the list of Nidhi Company members within the time limit of 90 days at the closure of the financial year.

NDH 2

In this form, A Nidhi Company can make a request to MCA for an extension, in case it has been unable to add 200 members in its first financial year.

NDH 3

Besides the forms mentioned above, A Nidhi Company is also supposed to file a half-yearly return in NDH 3 Form.

NDH 4

For filing an application for a declaration as Nidhi Company and updating of status. For New Nidhi Company – Within 120 days after the expiry of 1 year from the date of its incorporation For existing Nidhi Company – Within 1 year from its date of incorporation OR within 6 months from the date of commencement of Nidhi Rules 2019, whichever is later

Annual Returns With ROC

It's a compulsory thing that a Nidhi Company should file an annual return with the Ministry of Corporate Affairs through Form MGT-7.

Profit, Loss and Balance Sheet

In Form AOC-4, A Nidhi Company has to submit financial statements and other related documents.

Income Tax Returns

Nidhi Company must file annual returns in the following financial year by September 30, like the rest of the companies.

Requisites after Nidhi Company Registration

To comply with the statutory requirements, A Nidhi Company needs to have 200 members by the 1st year-end.

The minimum New Owned Fund should be at least Rs 20 Lakh

The prescribed ratio of the Net Owned Fund to Deposits should not exceed more than 1:20.

A Nidhi Company is not entitled to admit a minor, trust, or a body corporate as a member.

There is a rule that unencumbered term deposits shall be more than 10% of outstanding deposits.

Factors to be Considered before selecting Nidhi Company Name

While choosing a name, you need to consider these points

Must Display Uniqueness

The name should be only one of its kinds. It must carry a distinctive identity when compared to existing companies.

Simple And Crisp

It should be easy to keep in mind for a long time, and also it should be easily understandable by one and all.

Must Meet Its Purpose

It must meet its purpose of conveying the brand objective and information about the brand to the people through its name.

The Suffix Portion Is Crucial

Mutual benefit Nidhi Limited or Nidhi Limited' should come as the suffix.

Must Follow The Laws

There are some provisions related to name in Emblems and Names (Prevention of Improper use) Act, 1950. Without violating laws, it should follow these guidelines.

Shouldn't Be Offending Anyone

It should not be offending any community of people, shouldn't be hurting the sentiments of any religion, and also shouldn't be undesirable to any culture.

FAQs on Nidhi Registration

Please reach us at info@yourlegalexpert.in if you cannot find an answer to your question.

Who has got the authority to regulate Nidhi Company?

Ministry of Corporate Affairs is the responsible authority for regulating Nidhi Company and is also accountable for Nidhi Company Registration. Provisions of Nidhi Rules, 2014, are being followed for doing all the activities.

What requirements are to be met to become a Nidhi Company member?

To become a member of Nidhi Company, an individual should meet the following requirements

The member must be over 18 years of age.
Only an individual is eligible to become a member. No trust or any corporate body can become a member.

Can Nidhi Company issue debt securities or preference shares?

No, Issuance of the following securities is not in the hand of Nidhi Company

Debentures
Preference shares
Other kinds of debt securities

Can Nidhi Company perform its operations outside the state?

No, Nidhi Company cannot perform its operations outside the boundaries of the state in which the registration has taken place.

Are Nidhi Companies authorized to advertise their activities?

No, Nidhi Companies cannot advertise their activities.

Is there any need for office space to run a Nidhi Company?

One residential address is enough for running a Nidhi Company. There is no such requirement as office space.

Can a Nidhi Company issue unsecured loans?

No, Nidhi Company cannot issue unsecured loans. However, it can issue secured loans to its members.

How long does it take to register a company?

It takes almost 30-40 days for the completion of the registration process.

How can YourLegalExpert.in help me in registering my Nidhi?

As YourLegalExpert.in is providing PAN-India services, we are ready to help you in getting your Nidhi registered wherever you want all over India. Furthermore, Nidhi Company Registration is an online process in India.

Why should I bank upon YourLegalExpert.in for Nidhi Company Registration process?

At YourLegalExpert.in, we have got professional experts like lawyers, Chartered Accountants, Company Secretaries, and other experts from different fields that are carrying their years of experience in the area of laws as well as the current industry. We give you faith that solving your queries will be the utmost priority. Besides this, we will be executing all the orders with full attention and devotion.