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NIDHI Company registration procedure in India, fee and documents required

NIDHI Company registration procedure in India, fee and documents required

Legal & Compliance

Anil Ganga

Anil Ganga

24 Jun 2021, 11:27 — 6 min read

What is a NIDHI Company?

NIDHI stands for National Initiative for Developing and Harnessing Innovations. It is a financial institution or a type of NBFC that is involved in depositing and lending money to their members. This company is registered under the Companies Act, 2013 and is managed according to the RBI’s guidelines. All the transactions are performed by the company’s members only. 

Governing Act and Rules in India

Nidhi Company registration and regulation is as per Section “406” of Companies Act 2013 and Nidhi Rules, 2014 issued by the Ministry of Corporate Affairs (MCA), India.

 

Objects of Nidhi Company

Nidhi shall have objects in its Memorandum of Association (MOA) only “cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit.”

 

Incorporation procedure

Like any other Company the process is as follows:

  1. Prepare the Objects clause of the Company
  2. Apply for name reservation by using SPICe+ facility available in MCA i.e. https://www.mca.gov.in
  3. Once the name is approved complete the incorporation formalities by filing required forms like SPICe Part-B, SPICe_MoA, SPICe_AoA, SPICe AGILE and other declarations.

Data / Documents required

  1. 4 names of the proposed Nidhi Limited Company
  2. DINs of the proposed Directors, if any available. (if not available please ignore this)
  3. PAN and Aadhaar of all Directors (self-signed)
  4. Proposed Designations of Directors (like Director/ Executive Director / Managing Director / Whole Time Director / Nominee Director etc)
  5. Email IDs and Mobile numbers of all Directors
  6. Voter ID / Passport / Driving License (any one only) of all Directors (self-signed) who don’t have DIN
  7. Latest Bank statement / Electricity Bill / Phone Bill (any one only) of all Directors (self-signed) who don’t have DIN
  8. Write business nature description in five to ten lines or more
  9. Complete address of registered office of Nidhi Limited and email ID
  10. Share capital contribution by all shareholders
  11. Rental agreement along with rent receipt of Reg. Office
  12. Latest electricity bill/Gas Bill, Water Bill (any one only) of registered office

 

Fee

The ROC / MCA fee is like any other Company.

  1. Name reservation INR 1,000/-
  2. Incorporation fee around INR 3,000/-
  3. Digital Signatures fee INR 2,000/- each proposed Director and Subscriber
  4. Professional fee by CS/CA/CMA/consultants varies from INR 15,000 to 40,000 or more based on the advisory services, work and number of subscribers etc.

Special conditions of Nidhi Company

  • “Nidhi” shall have the last words ‘Nidhi Limited’ as part of its name.
  • must have paid equity share capital of Rs 5 lakh
  • Nidhi company will be a public company
  • Minimum of 7 members (shareholders / subscribers) required
  • Minimum of 3 Directors required

 

RBI / NDFC Rules / Regulations Applicability

RBI has exempted Nidhi Companies from the core provisions or regulations applicable for NBFCs.

 

Restrictions of Nidhi Company

1.Preference shares shall not be issued by Nidhi Company.

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

  • Nidhi companies must have a minimum of 200 shareholders, and
  • must have a minimum of Rs 10 lakh of net-owned funds
  • ratio of Net Owned Funds to deposits of not more than 1:20.
  • The Company shall within 90 days from the close of first financial year after incorporation, file NDH-1 duly certified by a Practicing professional like CS, CA or CMA along with the prescribed fees.

 

3. Nidhi companies shall not:

(a)    carry on the business of:

chit fund,

hire purchase finance,

leasing finance,

insurance or

acquisition of securities issued by any body corporate;

(b)   open any current account with its members;

(c)    issue preference shares, debentures etc

(d)   issue any advertisement for soliciting deposit

(e)   pay any brokerage or incentive for mobilising deposits

(f)     others

Shares and face value

1)      shall issue fully paid-up equity shares only

2)      nominal value shall be ten rupees each

3)      shall issue minimum 10 shares to deposit holders or shares equivalent to 100/-

4)      savings account holder shall hold at least 1 equity share of 10/-

5)      recurring deposit account holder shall hold at least 1 equity share of 10/-

 

Also read: What is Legal Entity Identifier (LEI)

 

To explore business opportunities, link with me by clicking on the 'Connect' button on my eBiz Card.

 

Image source: shutterstock.com

 

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views, official policy, or position of GlobalLinker.

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