Nidhi Limited Company

What is a Nidhi Limited Company?

A Nidhi Limited Company is a type of non-banking financial company (NBFC) recognized under Section 406 of the Companies Act, 2013. It primarily deals with the borrowing and lending of money among its members. Nidhi companies are created for cultivating the habit of thrift and savings amongst their members and receiving deposits from, and lending to, its members only, for their mutual benefit. These companies are regulated by the Ministry of Corporate Affairs (MCA) and operate in accordance with the Nidhi Rules, 2014.

Key Features of a Nidhi Limited Company

1. Mutual Benefit Society:   The primary objective is to cultivate savings and thrift habits among its members.


2. Member-Only Operations:   Nidhi companies can accept deposits from and lend money to only their members.


3. Regulation by MCA:   They are regulated by the Ministry of Corporate Affairs and must comply with the Nidhi Rules, 2014.


4. No External Involvement:   Nidhi companies cannot engage in external borrowing or lending.


5. Limited Activities:   They are restricted from engaging in activities like chit funds, leasing finance, insurance, or securities trading.

Benefits of a Nidhi Limited Company

1. Encourages Savings:   Promotes the habit of saving among its members.


2. Low Risk:   Low-risk due to the restriction on borrowing and lending only among members.


3. Limited Regulations:   Fewer regulatory compliances compared to other NBFCs.


4. Simple Management:   Easier management as it deals only with its members.

Eligibility Criteria for Nidhi Company Registration

1. Minimum Members:   At least 200 members within one year of commencement.


2. Share Capital:   Minimum paid-up equity share capital of INR 10 lakhs.


3. Net Owned Funds:   The net owned funds should be more than INR 10 lakhs.


4. Deposit Limit:   The ratio of net owned funds to deposits must not exceed 1:20.


5. Unencumbered Term Deposits:   At least 10% of the total deposits must be in unencumbered term deposits with a scheduled commercial bank.

Required Documents for Nidhi Company Registration

1. Identity Proof:  PAN card of all directors and shareholders.


2. Address Proof:   Aadhaar card, voter ID, passport, or driving license of all directors and shareholders.


3. Office Address Proof:
   • Rent agreement and utility bill (electricity bill, water bill, etc.) if the registered office is rented.
   • Property ownership documents and utility bill if the registered office is owned by the company.


4. Photographs:  Passport-sized photographs of all directors and shareholders.


5. Digital Signature Certificate (DSC):   DSC of the directors.


6. Memorandum of Association (MoA):  The MoA of the proposed Nidhi company.


7. Articles of Association (AoA):  The AoA of the proposed Nidhi company.

Post-Registration Compliance

1. Minimum Members:   Ensure to have at least 200 members within one year of incorporation.


2. Board Meetings:   Conduct board meetings as per the requirements of the Companies Act, 2013.


3. Annual General Meeting (AGM):   Hold AGMs and file annual returns with the RoC.


4. Maintenance of Books:   Maintain proper books of accounts and records.


5. Statutory Compliances:   Comply with all statutory and regulatory requirements under the Nidhi Rules, 2014.

Conclusion

Registering a Nidhi Limited Company is a structured process that helps in promoting savings among its members while providing financial services. It offers a secure and regulated environment for members to save and borrow money. By following the steps outlined above and ensuring all required documents are in order, you can successfully incorporate a Nidhi Limited Company and leverage its benefits.For more detailed information or assistance with the Nidhi company registration process, feel free to contact us at ATHWISE Services Private Limited. Our expert consultancy team can guide you through the registration process and help you establish your Nidhi company efficiently.

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