What is Nidhi Company 

Nidhi Company full form is National Initiative for Developing and Harnessing Innovations. A Nidhi Company is a type of Non-Banking Financial Company in India, recognized under Section 406 of the Companies Act, 2013, and further governed by the Nidhi Rules, 2014. While the Ministry of Corporate Affairs regulates Nidhi Companies, the Reserve Bank of India holds the authority to issue directives concerning their deposit acceptance activities.

A Nidhi Company exclusively provides services, such as lending and accepting deposits for its members. Therefore, it can be said that a Nidhi Company in India relies solely on funding from its members and shareholders. Additionally, Nidhi Companies are restricted to dealing only with their members. This means that non-members are not permitted to participate. Nidhi companies work towards the welfare of only their own members.

Nidhi Company Registration in India

Nidhi company registration in India can be a great business move for the savvy entrepreneurs due to simple registration process, flexible operations, profitability and more. To register a Nidhi, you must follow a structured process that aligns with registration requirements set forth by the Ministry of Corporate Affairs. 

Once the Nidhi company is registered, it has to ensure compliance with Nidhi Rules, 2014, including restrictions on engaging in non-member transactions, advertising deposit schemes, and conducting financial activities beyond borrowing/lending among members.

If you want assistance in Nidhi registration in India, get in touch with Registrationwala’s Nidhi incorporation consultants. We will ensure a smooth and well-planned incorporation process, so you can get your Nidhi co. registered as quickly as possible.

Benefits of Nidhi Company Registration

Nidhi Companies are business entities that enjoy several company perks. The following are some of the popular perks that make Nidhi Company Registration quite a beneficial affair for entrepreneurs:

Easy Access to Loans

Nidhi Company is a recognized infrastructure by the Central Government. It is trusted more by the banks. Therefore, once you register a Nidhi Corporation, acquiring loans and other types of fundings is easy

Continued Existence

It enjoys a continued existence even after one of the directors is deceased.

Easy to Incorporate

The incorporation of a Nidhi is quite easy to complete. It follows the standard procedure of Company Registration in India.

Separate Legal Identity

After its formation, a Nidhi attains a distinct legal identity in India. It can be said that a Nidhi co. becomes a separate entity that shall be able to own property, invest, etc.

Limited Liability

A Nidhi enjoys limited liability for its members. This means that in the event of loss, the members of the company won't have their assets harmed.

Eligibility Criteria for Nidhi Registration in India

Among the general eligibility, some of them are followingly discussed. The minimum number of allowed directors for Nidhi Company registration is three. At least one company director should be from India. Also, the minimum number of allowed shareholders in a Nidhi is seven. Lastly, the minimum equity share capital for a Nidhi company registration is INR 10 Lakh (as per Nidhi Amendment Rules 2022). 

Now, let us get into the specifics of Nidhi eligibility. 

Rules of Incorporation

• A to-be-incorporated Nidhi must be a public company.

• A to-be-incorporated Nidhi must have a minimum paid-up equity share capital of ten lakh rupees.

• A to-be-incorporated Nidhi cannot issue preference shares.

• A to-be-incorporated Nidhi must not have any object in its Memorandum of Association other than cultivating the habit of thrift and savings amongst its members.

• A to-be-incorporated Nidhi must have 'Nidhi Limited' as the last part of its name.

Share Capital and Allotment

• Every Nidhi must issue equity shares of the nominal value of not less than ten rupees each.

• No service charge must be levied for the issue of shares.

• Every Nidhi must allot at least ten equity shares or shares equivalent to one hundred rupees to each deposit holder. A savings account holder and a recurring deposit account holder must hold at least one equity share of rupees ten.

Membership

• A Nidhi must not admit a corporate body or trust as a member.

• A Nidhi must ensure that its membership is not reduced to less than two hundred members.

• A Nidhi must not admit a minor as a member, provided that deposits can be accepted in the name of a minor if their legal guardian is also a member of Nidhi.

Net-owned Funds

Every Nidhi must maintain a minimum of Rs. 20 lakhs in Net Owned Funds, according to the Nidhi (Amendment) Rules, 2022.

Rate of interest

It must charge an interest rate on any loan that must not exceed seven and a half per cent above the highest rate of interest offered on deposits by Nidhi. The rate of interest must be calculated on the reducing balance method.

Rules relating to Directors

• The director of a Nidhi must be its member.

• The director of a Nidhi can hold office for up to ten consecutive years on the Board of Nidhi.

• The director of a Nidhi must be eligible for re-appointment only after the expiration of two years of ceasing to be a Director.

• The director of a Nidhi must comply with the requirements of the Nidhi Rules. In addition, they must not have been disqualified from any appointment.

Documents Required for Nidhi Registration

Following are the documents required for the incorporation of a Nidhi:

• Director Identification Number (DIN)

• PAN of shareholders and directors

• Residential proof of shareholders and directors

• Digital Signature Certificates (DSCs) of members and directors

• Photographs of members

• Identification documents such as Aadhaar Card

• Rent agreement or lease deed for the registered office

• If the office is owned, ownership proof or registered office address details

• No Objection Certificate (NOC) from the landlord of the business premises

• Memorandum of Association (MoA)

• Articles of Association (AoA)

• MCA registration form

Nidhi Registration Process

The Nidhi registration process involves several steps. We have explained each crucial step below in detail:

Apply for DSC and DIN.

Since a Nidhi requires directors, the first step in this company’s registration process is ensuring the directors are properly identified and authorized. For this, the directors must acquire a Digital Signature Certificate (DSC) and a Director’s Identification Number (DIN) from the Ministry of Corporate Affairs (MCA). 

The DSC is necessary for e-filing the company forms. If directors already possess DIN, they do not have to acquire it again for the specific purpose of Nidhi registration. A DIN stays valid for the directors lifetime unless it is voluntarily surrendered or cancelled by regulatory authorities.

Draft MoA and AoA 

Now, after obtaining DSC and DIN, it is necessary to draft company incorporation documents: Memorandum of Association (MoA) and Articles of Association (AoA). These documents are crucial for establishing Nidhi company’s purpose, including its scope of work, objectives, rules and internal management. After drafting MoA and AoA, you must file them with the Registrar of Companies (RoC).

Business Name Approval

Another important step in the Nidhi company's registration process is obtaining approval for its name. The Ministry of Corporate Affairs (MCA) grants this approval. The chosen name must be unique, non-offensive, and not a copy of any existing company or trademark.

The business name decided upon must align with the objectives and nature of business. A total of three business names must be proposed in front of MCA. The most appropriate name will be chosen by MCA. To send the name approval application to MCA, Part A of SPICe+ application is required.

Fill and Submit Nidhi Incorporation Application 

Once MCA grants name approval, you can initiate the process of incorporation. For this, you need to visit the official website of MCA and fill out the SPICe+ application form. This form is divided into two parts: Part A and Part B. After filling out both the parts, any director of the company shall sign it digitally using DSC. The signed application form, along with all the required documents, must be submitted online. 

Issuance of Incorporation Certificate

The Nidhi registration form is submitted to the Registrar of Companies (RoC) for examination. The RoC thoroughly reviews the form and accompanying documents to ensure compliance with all the mandatory requirements. If satisfied, the RoC issues a Certificate of Incorporation (CoI) for the Nidhi Co. Additionally, it assigns a unique Corporate Identification Number (CIN) to the company.

Nidhi License

After incorporation, a business must obtain a Nidhi license by meeting requirements related to the number of members, net assets, term deposits, and other conditions set under the Companies Act of 2013. 

The business has 120 days from the date of incorporation as a NIDHI Limited Company to submit its application to the Central Government using Form NDH-4. If needed, this deadline's extension is possible with approval from the regional director.

Post Registration Compliance for Nidhi

Every registered Nidhi must observe all the requisitory compliance as instructed by the Companies Act and Nidhi Rules of 2014. In addition to this, the Nidhi must not commit any of the following:

• Acquire another company by purchasing securities,

• Must not open any current account with its members,

• Control the composition of the Board of Directors of any other, or

• Enter into any arrangement for the change of its management

• A Nidhi must not carry on any business other than borrowing or lending in its name.

• It must not accept deposits from or lend to anyone other than its members.

• A Nidhi must not pledge any of the assets lodged by its members as security.

• It must not take deposits or lend money to anybody corporate.

• Further, it must not enter into any partnership arrangement in its borrowing or lending activities.

• A Nidhi company must not issue any advertisement for soliciting a deposit.

• It must not pay any brokerage or incentive for any of the following:

• Mobilizing deposits from members

• Deployment of funds

• Granting loans

Our Assistance in Nidhi Company Registration in India

We at Registrationwala provide end-to-end solutions for Nidhi registration with the help of our Nidhi company registration consultants. Our services include the following:

• Company name search to ensure the chosen business name is unique and not already taken.

• Obtaining DSC and DIN for the Nidhi company’s directors.

• MOA and AOA drafting according to Nidhi’s scope of work, goals, rules and internal management.

• Application filing with latest information and ensuring accuracy.

• Following up with the Ministry of Corporate Affairs.

Through Nidhi Company incorporation, you can start a non-banking financial company that enables savings and lending among its members. If it is what you want to do, connect with Registrationwala and let us handle the entire online Nidhi Company Registration process.

FAQ's

Q1. Can I register a Nidhi company as a private limited company?

A. No, you cannot register a Nidhi company as a private limited company. You need to register it as a public limited company with RoC.

Q2. Can a Nidhi deal in chit funds?

A. No, a Nidhi cannot deal in chit fund business.

Q3. Can a Nidhi conduct insurance business?

A. No, a Nidhi cannot conduct insurance business.

Q4. Which rules govern Nidhi companies in India?

A. The Companies Act, 2013, and the Nidhi Rules, 2014 govern the Nidhi companies in India.

Q5. Is it mandatory for a Nidhi entity to have “Nidhi Limited” in the company name?

A. Yes, every Nidhi co. must include “Nidhi Limited” in its name.

Q6. Can a Nidhi lend funds to a non-member?

A. No, a Nidhi can only lend funds to its members.

Q7. Which authority issues guidelines for Nidhi companies?

A. The Ministry of Corporate Affairs (MCA) regulates and issues guidelines for Nidhi companies.

Q8. What is the minimum Net Owned Funds requirement for a Nidhi company?

A. Every Nidhi must maintain a minimum of Rs. 20 lakhs in Net Owned Funds, as per the Nidhi (Amendment) Rules, 2022.