Nidhi Company Registration

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Nidhi Company Registration

What is the Nidhi Company and how does it function?

The structure of Nidhi Enterprises is that of non-banking financial companies. A Nidhi Company’s registration allows it to borrow from and lend to its members.
Nidhi Companies, which are based in India, were established to encourage members to practise thrift and save money. The funds that a Nidhi Company receives come solely from its members.The Reserve Bank of India does not require a licence to incorporate a Nidhi Company. As a result, forming the Nidhi Company is simple. Nidhi Limited should be at the end of the name because Nidhi Companies are registered as Public Companies.It’s also worth noting that Nidhi Companies are regulated by the Reserve Bank of India because their operations are similar to those of NBFCs.

What is the procedure for forming a Nidhi Company in India?

In order to form a Nidhi Company in India, it must have at least seven members, three of whom must be designated directors. The Nidhi Company, on the other hand, should have at least 200 members during the first year of operation.

A minimum paid up share of Rs. 5 lakh is required for the registration of a Nidhi Company. However, within one year of registration, the Net Owned Funds (NOF) must be increased to Rs 10 lakhs. In order to register as a Nidhi Company in India, you must first form a Limited Company under the Companies Act of 2013.

It is vital to ensure that the purpose stated in the Memorandum of Association is to promote the habit of thrift and saves among the members, receiving and lending only for the mutual benefit of the members during Nidhi Company Registration.
After forming as a Limited Company, the Nidhi Company should be able to meet the following requirements:

  1. There must be at least 200 stockholders (members)
  2. Have a net worth of ten lakh rupees or more
  3. Have encumbered deposits equal to or greater than 10% of total deposits.
  4. Maintain a net-owned-funds-to-deposit ratio of no more than 1:20.

What documents are necessary to form a Nidhi Company?

To form a Nidhi Company, you'll need the following paperwork.
Identification Number for Directors
Shareholders' PAN numbers, as well as the Directors' PAN numbers
Residential Proof of the Directors and Shareholders
Aadhar cards and other forms of identification
Registered office rent agreement or rental contract
If the office is privately owned, ownership information or the address of the registered office must be provided.
If necessary, a letter of authorization
MCA (Multiple Choice Answers)

What are the advantages of registering a Nidhi business?

  1. To begin, a Nidhi Company must be incorporated with limited capital. It should be mentioned, however, that forming a limited company is required first.
  2. The primary goal of this type of entity is to raise donations from the general population. This is another type of NBFC that performs tasks including taking deposits from members.
  3. As a result, a Nidhi Company can readily raise cash.
    The Companies are built on the mutual benefit principle and are registered under section 406 of the Companies Act 2013.
  4. The members of the entity’s shareholders are the principal beneficiaries. As a result, a Nidhi Company can readily lend money to its members.
  5. This process can be carried out by a group of people chosen by the applicant. There is no need to bring in outside management after the Nidhi Company is registered.
  6. In comparison to other types of businesses, there are less Compliances. Nidhi firms are exempted from a particular type of compliance under the RBI Act.
  7. This type of entity would be granted limited liability status under the Companies Act. This type of entity is also self-contained in terms of its members and directors.
  8. Because Nidhi Companies are comparable to NBFCs, they must adhere to the NBFC’s criteria, and they are excluded from a specific clause of the RBI Act.
  9. Nidhi Companies have fewer compliances than credit societies, which are governed by the Societies Registration Act. As a result, if a person wishes to comply with less regulations, he might choose Nidhi Company.

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