Nidhi Company Registration.

Meaning - 

Nidhi Company is a type of Non-Banking Financial Company (NBFC). It is formed to borrow and lend money to its members. It inculcates the habit of savings among its members and works on the principle of mutual benefit. These companies typically operate in the southern part of the country.
Nidhi Company isn’t required to receive the license from Reserve Bank of India (RBI), hence it is easy to form.

Basics Of Nidhi Company-

Nidhi Companies ONLY deal with its shareholder-members money, RBI has exempted Nidhi Companies from the core provisions of the RBI and other regulations applicable to an NBFC.

Number Of Member-

A minimum of seven members is required to start a Nidhi Company out of which three members must be the directors of the company.

Restrictions On Nidhi Company-

The following are some of the restrictions a Nidhi Company is subject to under Nidhi Rules, 2014.

• Carry on the business of chit fund, hire purchase finance, leasing finance, insurance or acquisition of securities issued by any body corporate;
• issue preference shares, debentures or any other debt instrument by any name or in any form whatsoever;
• Open any current account with its members;
• carry on any business other than the business of borrowing or lending in its own name: Provided that Nidhis which have adhered to all the provisions of these rules may provide locker facilities on rent to its members subject to the rental income from such facilities not exceeding twenty percent of the gross income of the Nidhi at any point of time during a financial year.
• Accept deposits from or lend to any person, other than its members;
• Take deposits from or lend money to anybody corporate;
• Enter into any partnership arrangement in its borrowing or lending activities;
• Issue or cause to be issued any advertisement in any form for soliciting deposit: Provided that private circulation of the details of fixed deposit Schemes among the members of the Nidhi carrying the words “for private circulation to members only” shall not be considered to be an advertisement for soliciting deposits.
• Pay any brokerage or incentive for mobilizing deposits from members or for the deployment of funds or for granting loans.

Nidhi Company Registration-

Documents required for registration-

• Proof of the registered place of business (Ownership documents/ rent or lease agreement)
• No Objection Certificate (signed by the owner/ landlord)
• Identity proofs
• Address proofs of the members
• Photos of the members
• PAN card copies of the members
• Digital Signature (DSC)
• Director Identification Number (DIN) of the directors
• Memorandum of Association of the company (MoA)
• Articles of Association of the company (AoA)

REGISTRATION-

To start a Nidhi Company in India, the first step is to incorporate a Limited Company, under the Companies Act, 2013. Hence, a minimum of three Directors and seven shareholders will be required to start the Limited Company incorporation process. During incorporation of the Nidhi company, care must be taken to ensure that the object of the Limited Company mentioned in the Memorandum of Association is that of cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit.

Post incorporation of the Limited Company, within a period of one year from the commencement, the Nidhi Company must meet all of the following criteria:

• Not have less than two hundred members (shareholders);
• Have Net Owned Funds (NOF) of ten lakh rupees or more;
• Have unencumbered term deposits of not less than ten percent of the outstanding deposits; and
• Have a ratio of Net Owned Funds to deposits of not more than 1:20.