All About on Nidhi Company
Table of Contents
All About on Nidhi Company
BRIEF INTRODUCTION
It is a company incorporated in order to cultivate a habit of saving between its members or shareholders. In the Indian financial sector, Nidhi Company is seen as a mutual benefit society and they are allowed to solely take up deposits from their members and lend money to their members only.
RBI regulates the matters of a Nidhi Company with regard to its deposit acceptance activities. Even though it is an NBFC, the same has been exempted from various core provisions of the RBI Act, 2013, since the main motive of such companies is to work for the welfare of its members. So, let’s perceive the full concept of Nidhi Company Registration Process.
If you’re looking to incorporate your own Nidhi Company, you have to contact RJA. We’ve a team of pros who are competent enough to help you with the elite services. Our team’s members not only help, but also educate and guide you in respect of every matter related to Nidhi company registration.
ESSENTIAL CHARACTERISTICS OF REGISTRATION OF NIDHI COMPANY
Whenever you founded a Nidhi company, you need to know that Nidhi company registration comes with its own features. Let’s take a glance at the subsequent features of the Nidhi company registration-
· Nidhi Company registration is provided under the Section 406 of the Companies Act, 2013 and the same is regulated by Nidhi Rules, 2014.
· Nidhi company registrations take place similar to that of public limited company.
· During the operation of the Nidhi companies, banking concern of India can give directions to those Nidhi companies. Even so, there’s no requirement of the approval from the RBI for the registration of Nidhi companies.
· The primary objective of Nidhi Company is to borrow and lend money to its shareholders and members only.
· It must be kept in mind, that if you’ve got incorporated a Nidhi company, then the corporate must have a minimum of 200 members within a year of incorporation.
· After the registration of the Nidhi Company, “Nidhi limited” should be suffixed to the corporate name
ADVANTAGES OF REGISTRATION OF NIDHI COMPANY
Whenever you’re thinking of setting up a Nidhi company, there’s a list of advantages that you simply avail the benefits of, upon looking the registration-
1. Individual Legal Identity
As per the Companies Act, 2013, Nidhi company registration offers certain benefits, and one of the main one is separate legal identity. Thus, it makes the Nidhi Company independent of its promoters and directors and hence can own property and incur debts in its own name.
2. Constant existence of the Nidhi Company
We all know that Nidhi companies have separate legal identity, and thus, their functioning is not hampered due to unannounced withdrawal or unfortunate death of its shareholders. Thus, they are going concern and can be dissolved only by the order of law.
3. Swift management
As compared to other types of business entities in India, incorporating a Nidhi company is much easier. If you would like to introduce any change inside the management of the Nidhi Company’s management you simply have to fill and submit some forms with the MCA.
4. Trustworthiness within the market
In terms of credibility within the market, Nidhi companies are considered to be most trusted one. MCA ensures and monitors the registration of the Nidhi Company.
PREREQUISITES OF NIDHI COMPANY
To set up a Nidhi company one needs to accommodates with the requirements mentioned below:
· Nidhi company is required to be incorporated as a “public company” first, and then would be required to apply for incorporating as a Nidhi Company.
· In order to run a Nidhi Company, a minimum paid-up equity share capital of INR 5 Lakhs is required.
· Minimum number of proposed members at the time of incorporation shall be 7 or more.
· Minimum number of proposed directors at the time of incorporation shall be 3 or more.
· At the time of incorporation, an organization shall not issue any preference shares. However, in case of a corporation has issued preference shares before the incorporation process. Such shares are required to be redeemed as per the terms of issue.
· Primary objective of the Nidhi company must be to foster a habit of thrift and savings among its members. Secondly, the corporate must receive and lend deposits to its members for mutual benefits.
· Each and every Nidhi company is required to have the last words as ‘Nidhi Limited [1]’, after the name of the company
· Company is required to have a minimum 7 members and 3 directors at the time of its incorporation.
DOCUMENTATION REQUIRMENTS OF NIDHI COMPANY
The Nidhi Company Registration is an online process that the applicant should have self-certified documents:
· ID proof of shareholders and directors would be required and for the same, the applicant can produce the copy of PAN card, in case of Indian Nationals or attested copy of Passport, in case of foreign nationals.
· Residential proof of shareholders and directors: duplicate copy of Aadhar card, bank statement, driving licence, electricity bill, or Passport. Amongst which, a minimum of two documents must be valid and up to date for about two months old.
· Proof of registered office: you would like to supply a copy of Rental Agreement or Sales Deed, property tax receipt, electricity bill, or a No Objection Certificate (NOC) from the owner to utilize the premises as a registered office.
· Signed Incorporation Documents: a copy of Signed Digital Signature Application documents and a soft copy of other incorporation signed documents.
· Passport Size Photographs: Also, submit 2 to three passport size photographs of directors and shareholders.
REGISTRATION PROCESS OF NIDHI COMPANY
It is essential for very company to register under the Companies Act, 2013 before establishing as a Nidhi Company in India. The applicant needs to make sure the presence of a minimum of seven members and three directors to begin with the registration process. It usually takes around 45 days in order to complete the whole process of registration. Follow these easy steps for registration:
· The first and foremost thing that an applicant must do is to use for (DIN) Director number and (DSC) Digital Signature Certificate. It takes approximately 2 days for the issuance of DSC.
· Furthermore, the directors and shareholders are required to draft the MOA and AOA of the said entity.
· Since the whole registration process of the Nidhi Company is online, you have got to submit all the documents online. Also, all the documents are required to be verified in order to check their authenticity.
· Once the DIN and DSC is obtained, the applicant is required to file an application in the Form INC-1 with the Ministry of Corporate Affairs, in order to reserve the name of proposed Nidhi Company.
· Ensure that the name of your company is exclusive and doesn’t resemble other companies. Also, it mustn’t be undesirable in consideration of the Central Government.
· It is mandatory to feature ‘Nidhi Limited ‘to the name of a Nidhi Company.
· Once you get an approval for the company’s name by MOCA, it’s time to arrange for Memorandum of Association (MOA) and Articles of Association (AOA).
· Keep in mind the target of your company while preparing MOA and AOA.
· After this, file the application for incorporation of Nidhi Company.
· After the Incorporation Certificate has issued to you; it’s suitable for you to use for the PAN and TAN of the corporate.
· Lastly, open a current bank account.
Note: A Nidhi applicant must get GST registration. All the business entities in India who exceed the brink limit of turnover or profits should oblige GST rules. If one fails to try to that for evasion, then it gets considered as a criminal offence which is subject to prosecution, jail term, and penalties.
STEP-BY-STEP PROCESS OF NIDHI COMPANY
There is a specific list of steps that one has to follow to get their Nidhi Company registered-
Step1: Obtaining Digital Signature Certificate
All the proposed directors of the corporate must have digital signatures (DSC), there are certain agencies who issues DSCs.
Step2: Reservation of Name of Nidhi Company
There is a RUN service available, which may be used for applying the name of the Nidhi Company. you may be allowed to propose two name options to the ministry of corporate affairs (MCA). The proposed names must not resemble any of the already registered names of the corporate.
Step3: Filling the Spice Form
Once you receive the approval of the name, the following step is to fill the Spice form. Under this form, the applicant would be required to filed forms like e-Memorandum of Association (MOA) and e-Articles of Association (AOA). During this step, you would be required to produce all the information regarding the shareholders of the corporate.
Step4: Incorporation of the corporate
It takes nearly a month for the entire process of Nidhi company registration after you’ll receive a certificate of registration and therefore the Company identity number. The certificate of registration serves the aim of proof of registration with the Ministry of Corporate Affairs (MCA).
If the directors of the corporate don’t have the Director identification number, they’ll get the one at this stage in addition.
RESTRICTIONS ON NIDHI COMPANIES
There are certain restrictions on Nidhi Companies under Nidhi Rules, 2014, along with the Rule ‘6’ of Nidhi Rules, 2014, a Nidhi Company shall not:
1. Carry on the business of-
• Chit Fund,
• Hire Purchase finance,
• Leasing Finance,
•Insurance Business and acquisition of other companies.
2. Issue preference shares, Debentures or the other debt instrument by any name or in any form whatsoever.
3. Open any current account with its members.
4. Acquire another company by Purchase of securities or control the composition of Board of Directors of any company in any manner whatsoever or enter into any arrangement for the change of its management unless it’s approved by a Special Resolution in its general meeting and also obtain the prior approval of Regional Director.
5. Continue any business aside from borrowing/lending in its own name.
6. Accept deposits from or lend to a person, apart from its members.
7. Pledge any of the assets that are lodged by its members as security,
8. Taking up of deposits and lend money to anybody corporate,
9. Enter into sough of Partnership Arrangement in respect of its borrowing or lending activities,
10. Issue or have issued any sought of advertisement, for soliciting their deposit,
11. Pay any sought of brokerage or incentive for mobilization of their deposits from members or granting of loans.
RESTRCITION ON MEMBERSHIP OF NIDHI COMPANY
· Nidhi company is not allowed to admit any body corporate or trust as its member.
· Every Nidhi shall ensure that their members shall not fall below 200 members at any point of time.
· Also, a minor shall not be admitted as a member of Nidhi, provided the said deposits has been accepted in the name of a minor, and the same is made by the legal heir or the guardian of the said minor.
· Ensure that a minimum of seven members be there at the time of incorporation of the Nidhi Company, and out of the said members, at least three of them must be the directors of the corporate.
POST REGISTRATION REQUIREMENTS OF NIDHI COMPANY
Here are the wants that one needs to fulfil after registration of a Nidhi Company:
· Within a year of its incorporation, a Nidhi Company shall have a minimum of 200 Members. together with that, the corporate must have the net Owned Funds of Rupees 10 Lakhs or more.
· It shall have Unencumbered Term Deposit of not exceeding to 10% of its Outstanding Deposits.
· The Net owned fund to deposits ratio should be over 2:1.
· Nidhi Company shall file Form NDH-1(Return of Statutory Compliances), certified by CA/CS/CMA within 90 days of closure of First yr.
· Where the corporate fails to meet the above requirements within one year from the date of its incorporation, the same shall apply for seeking extension from RD and the said application be made in Form NDH-2 within 30 days from the closure of the First Financial Year.
· RD is required to provide an order, within 30 days from the date of receipt of Application for the extension
· Nidhi Company shall file Form NDH-1(Return of Statutory Compliances), certified by CA/CS/CMA within 90 days of closure of First yr.
· In case of non-compliance of Point No. 1 beyond the second financial year, the said Nidhi shall not accept any deposits from the commencement of second year.
· Nidhi Company shall file Form NDH-3(Half Yearly Return), certified by CA/CS/CMA within 30 days of conclusion of every half year.
· Every Director of the Nidhi are required to the member of the said Nidhi.
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