Nidhi company registration is a financial institution or a type of non-banking financial company
(NBFC). Nidhi entity is mentioned in Section 406 of the Companies Act, 2013. It is formed to borrow
and lend money to its members and inculcates the habit of saving among its members and works on the
principle of mutual benefit.
Hence, making it simple and quick to establish the company. Nidhi entity isn’t required to receive
the license from the Reserve bank of India (RBI). It is registered as a public company and should
have ‘Nidhi Limited’ in the last words of its name.
Nidhi Company Registration Process
The following steps of the process are given for the formation of a Nidhi entity:
Step 1: Obtaining the Digital signature certificate and Director Identification Number (DIN)
The first step of the process is to apply for a digital signature certificate (DSC).
The DSC facilitates the signatures in digital format. DIN is allotted by the MCA at the time of
incorporation in Form SPICe+.
Step 2: Name Approval
The second step is to apply for name approval by submitting two names either in the
RUN (Reserve unique name) or Part-A of the SPICe+ Form on the Ministry of corporate affairs (MCA)
website. One can download the Nidhi company registration process pdf from google. The MCA will
choose one name from the suggested names by the applicant. The name must be unique and not similar
to an existing company. The name approved by the MCA is valid for 20 days.
Step 3: Drafting of MOA and AOA
After the name is approved, the directors must submit the Application for
incorporation in Form SPICe+ INC-32 with the Memorandum of association and articles of association.
The MOA must include the objects of the Nidhi entity.
Step 4: Application for Nidhi Company Incorporation
After drafting the e-MOA and e-AOA, the applicant is required to fill out the SPICe+
application on the official website of MCA. The Nidhi company registration application is divided
into two parts i.e., Part-A for the name reservation and Part-B for Nidhi entity incorporation. The
application is filled and signed by any one director of the company and submitted to the ROC with
the prescribed documents attached with the same.
Step 5: Certificate of Incorporation
The Registrar will issue the Nidhi entity Incorporation after receiving and verifying
all the details and documents furnished in it. Once the ROC is satisfied with the details submitted,
he shall register Nidhi limited and issue a Certificate of Incorporation as conclusive proof. The
ROC also allows the Company Identification Number (CIN) as a unique identity for the company.
Step 6: Obtain Nidhi Company Registration License
After the incorporation process is completed, a company must apply for obtaining the
Nidhi entity license. A set of conditions related to the number of members, net funds, term
deposits, etc. must be fulfilled as prescribed in the Companies Act, 2013. The application is to be
filled in Form NDH-4 to the Central government within four months from the date of incorporation of
the Nidhi Limited Company. After submitting all the documents, the government shall grant the Nidhi
limited company license and notify in the official gazette.
Step 7: Applying for PAN and TAN and Opening a Bank Account
The directors must apply for a Permanent account number (PAN) and a Tax deduction
account number (TAN). It is also required to open a bank account for the company.
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Nidhi Company Registration Documents
The following documents required for Nidhi company list of submissions with the SPICe+ form for the
registration of the company is:
- Declaration in the form prescribed by the members and directors
- Address Proof of registered office (Conveyance or lease deed or rent agreement with rent
receipts)
- Copy of utility bills that are not older than two months
- Certificate of incorporation
- The interest of directors in other companies
- Identity proof and residential address proof of the subscribers (Driving license or voter ID or
Passport)
- Photos of directors and subscribers
- Director Identification Number of the directors
- DSC of the directors and members
- Certified copy of the Memorandum i.e., the constitution of the company
- Certified copy of Articles from the company
- Copies of PAN cards of directors and members
- A No objection certificate (NOC) is signed by the landlord or the owner of the place where the
business is registered.
- The Nidhi registration is completely online. The registration is completed after the documents
are submitted with the payment of prescribed fees.
Nidhi Company Registration Requirements
Certain requirements are necessary to be fulfilled by a company for getting registered
as a Nidhi entity. The requirements are as follows:
- The company must be incorporated as a Public Limited Company under the Companies Act.
- The company shall have a minimum of seven members
- The company shall have a minimum of three directors
- Nidhi entity can accept deposits only from its members
- Nidhi entity is a corporate structure with the benefits of limited liability
- Nidhi entity can lend money to its members only
- It can also provide a locker facility to its members
- Nidhi company registration in Maharashtra is required to have a minimum of 200 members within
one year
- It is best suited for lending and borrowing funds among members only.
- There is a minimum paid-up capital requirement of Rs. 5 lakhs.
- The company shall have net-owned funds worth Rs. 10 lakhs or more.
- The ratio of net owned funds to deposits shall not be more than 1:20
- No issuance of Preference shares
- Main objects of the Nidhi entity are to save finance for existing members.
- The name of the company must end with ‘Nidhi limited’.
- The Director Identification Number (DIN) of all the directors has to be provided. You can also
download the Nidhi company business plan pdf from google.
Annual Compliances by Nidhi company registration
The following are mandatory annual compliance mentioned below:
-
Form NDH-1 –
The form is filled for the return of statutory compliances. A Nidhi entity
must file NDH-1 with prescribed fees in the stipulated period of 90 days from the end of the
first financial year. The form must be certified by the Company secretary or chartered
accountant in practice.
-
Form NDH-2 –
The form is concerned with the extension of time. It is submitted to the
regional director within 30 days from the end of the first financial year. The form is
filled with prescribed fees under Nidhi rules, 2014. After the submission, the regional
director will check the Nidhi company registration application and pass orders in not more
than 30 days.
-
Form NDH-3 –
The application for a half-yearly return is made in Form NDH-3. In the time
limit of 30 days from the completion of half-year with the prescribed fees with the ROC.
-
Form NDH-4 –
The government has introduced it under the Nidhi Amendment Rules, 2019. The
companies can claim the Nidhi status after filing NDH-4. The due date for filling Form NDH-4
is within the time limit of sixty days after the year-end from the incorporation date for
all the newly incorporated Nidhi entities.
Amendment to Nidhi Limited Company Rules
As per the amendment announced by the Central government to Nidhi rules, 2014 for
Nidhi company registration in India to safeguard the interest of the public. The rules provide that
public companies who desire to function as Nidhi’s must obtain a prior declaration from the Central
government before accepting deposits.
- A public company formed as a Nidhi entity with a share capital of Rs. 10 lakhs; needs to receive
a declaration as a Nidhi entity from the central government by applying in form NDH-1 with a
minimum membership of 200 Net owned funds of Rs. 20 lakhs within 20 days of its incorporation.
- The promoters and directors of the company have to meet the criteria to fit and proper person as
laid down in the rules
- If the central government doesn’t convey any decision within 45 days of the receipt of the
application filed in Form NDH-4, approval would be deemed as granted.
Prohibited Activities in Nidhi Company Registration
The Nidhi entity is subject to several restrictions on its operations that are given
below:
- Chit funds activities are not acceptable to Nidhi entities
- Hire-Purchase financing is not allowed for Nidhi entities
- The Nidhi entities cannot engage in financial leasing
- The Nidhi entities cannot engage in insurance leasing
- The Nidhi entities cannot engage in securities transactions
- The Nidhi entities are only permitted to take deposits from members
- The Nidhi entities are only permitted to lend funds to members
- The issue of preference shares, debentures, or any debt instrument by any name or in any form.
- It cannot open any current account with its members.
- It cannot make any acquisitions until the same is adopted in the general meeting by a special
resolution and is approved by the regional director.
- The Nidhi entity shall not issue any advertisement in any other form for tempting deposits.
- The Nidhi entity shall not pledge any asset lodged by the members of the Nidhi as securities
- It shall not pay any incentive or brokerage for funds deployment or for rendering loans.
Benefits of the Nidhi Company Registration
The following are various advantages of formation as given below:
1. Separate Legal Existence
Nidhi Limited has a legal entity separate from its promoters and shareholders. It can
acquire property and debts in its name.
2. Easy to Incorporate
The incorporation process is quick and easy. It is the same as the registration of a
public company with the MCA. The minimum amount of capital required as per Nidhi rules, 2014.
3. Limited Paid-Up Capital Requirements
The MCA has made it compulsory to have at least Rs. 10 lakhs to start a Nidhi entity.
4. Raising Funds is Simple
The main goal is to raise funds from the members. It is a form of NBFC. It is involved
in activities like accepting deposits from the public. The Nidhi Company Registration online is also
simple.
5. No RBI Regulations
The Nidhi Limited company is not required to get approval from the Reserve bank of
India. There is no need for a license from RBI for running a loan business in India. There are Nidhi
rules under the Companies Act, 2013.
6. Credibility in the Market
The Ministry of corporate affairs (MCA) manages Nidhi entities. Hence, they are more
reliable as compared to different institutions in the same sector controlled by state governments.
7. Option for Savings and Mutual Benefits
A Nidhi entity is mainly formed to increase the savings of the members. These are
called mutual benefit companies.
Nidhi company registration fees depend upon the state to state. Although, government
fees are the same. The professional fees depend upon the services provided to the applicant.
Frequently Asked Questions