Nidhi Company Registration: Applicability, Requirements & Procedure

What is Nidhi Company? 

​Nidhi Company is governed by Section 406 of the Companies Act, 2013 and Company Nidhi Rules, 2014 which has a sole objective of cultivating the habit of thrift and savings amongst its members. Nidhi companies are allowed to take deposit from its members and lend to its members only. Therefore, the funds contributed for a Nidhi company are only from its members (shareholders) and used only among the shareholders of the Nidhi Company.

Nidhi Company is a class of NBFCs and RBI is empowered to issue directions to them in matters relating to their deposit acceptance activities. However, in recognition of the fact that these Nidhis deal with their shareholder-members only, RBI has exempted the notified Nidhis from the core provisions of the RBI Act and other directions applicable to NBFCs. Therefore, Nidhi Company is an ideal entity to take deposit from and lend to a specific group of people.

​Benefits Of Nidhi Company Registration

These companies work toward the sole purpose of encouraging people to save and be a help to each other as a part of mutual benefit.

• Operations for a Nidhi Company is easy. Arranging funds or borrowing capital gets easier as its sole purpose is to serve other people and people who put in money also get something in return as part of lender’s interest. Ownership can also be transferred easily.
• A certain degree of relaxation in the compliances is enjoyed by the company.
• Low Rates of Interest can be enjoyed if you borrow money which makes it attractive and it is also a platform for secured investments.
• R.B.I intervenes the least in such kind of business.

​Checklist For A Nidhi Company

• A minimum of seven members is required to start a Nidhi Company out of which three members must be the directors of the company. However, it should acquire a minimum of 200 members within one year of commencement.
• A minimum of 5 lakh rupees, is required as the equity share capital to start a Nidhi Company. This entire amount has to be paid up. However, within one year of registration, the net owned funds should be 10 lakh rupees or more. This includes equity share capital and free reserves and excludes accumulated losses as well as intangible assets.
• Unencumbered term deposits must be 10% or higher of the outstanding deposits.
• The ratio of net owned funds to deposits shouldn’t be more than 1:20, where 10% of the total deposits are in a fixed deposit account of a nationalised bank.

Our Recommendation: Points to Focus on Nidhi Company Registration

Requirements for a Nidhi Company Registration

• The name must contain “Nidhi Limited”;
• Nidhi company that has to be incorporated under this Act shall be a “Public Company”;
• It must have a minimum paid up equity share capital of Rs. 5,00,000/-;
• There will be no issuances of preference shares by Nidhi Company. (If such shares had already been issued by a Nidhi Company before commencement of this Act, such preference shares are to be redeemed in accordance with the terms of issue of such shares);
• The objective of Nidhi would be to imbibe in the members a habit of thrift and saving and the services would only be restricted to its members;

​Post Incorporation Requirements for Nidhi Company

​Every Nidhi must, within a period of one year from the commencement meet all of the following criteria:

• It must have minimum 200 members,
• It must also ensure that net owned funds are Rs. 10,00,000/- or more,
• (‘Net owned funds’ mean the aggregate of paid up equity share capital and free reserved as reduced by the accumulated and intangible assets appearing in the last audited balance sheet),
• It must also ensure that the ratio of net owned funds to deposit is not more than 1:20.
• It must have unencumbered term deposits of not less than 10% of the outstanding deposits.

If the Nidhi Company satisfies above conditions, The Company shall within 90 days from the close of first financial year after incorporation, file NDH-1 duly certified by a Practicing CA/CS/CWA along with the prescribed fees.

​Required Documents for Nidhi Company Registration

• Copy of PAN of Directors and Shareholders.
• Copy of ID Proof of Directors and Shareholders. (Voter ID, AADHAR, Driving License, Passport)
• Copy of Address Proof of Directors and Shareholders (Bank Statement/ Electricity bill/ Mobile bill/ Telephone Bill)
• Passport size Photographs.
• Property Ownership Documents of Registered office premises:
• If property is owned: Electricity bill + Ownership Documents + NOC (if required)

If property is rented: Electricity bill + Rent Agreement + NOC
Apart from all these documents, Some other required documents will be prepared by your Corporate Professional i.e. CA/CS for submission to ROC.

​Process of Registration of Nidhi Company

Usually Nidhi Company Registration Process takes up to 45 days,  Registration of a Nidhi Company consists the following steps:

1. Minimum 7 Members and 3 Directors will be required to start the Incorporation of Nidhi Limited.
2. Apply for DIN and DSC.
3. After getting the DIN and DSC, file an application in INC-1 to MCA for reservation of name of Nidhi Company.
4. Once the name is approved, Prepare Memorandum of association and Articles of Association according to Nidhi objects and all other required documents carefully.
5. Apply for Incorporation.
6. Get Incorporation Certificate.
7. Apply for PAN and TAN

The Ministry of Corporate Affairs (MCA) has issued an integrated incorporation form INC-32. So now, an Company can be incorporated online by filling the Simplified Proforma for Incorporating Company Electronically (SPICe) form in Form INC-32 (using Digital Signature Certificate of the Director)along with (eMoA) in Form INC-33 and (eAoA) in Form INC-34.

​How Enterslice will help you to get Nidhi Company Registration Online

Also, Read: What are the Regulatory Requirements of Non-Banking Financial Company in India?