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Nidhi Company Registration
What is a Nidhi Company?
A Nidhi Company is a type of Non-Banking Financial Company (NBFC) that is governed under Section 406 of the Companies Act, 2013 and regulated by the Ministry of Corporate Affairs (MCA). It primarily operates to promote the habit of thrift and savings among its members and facilitates loans among them at lower interest rates.
Prerequisites and Eligibility Conditions
Minimum Shareholders: 7
Minimum Directors: 3
Minimum Capital Requirement: Rs. 10 lakhs
Net Owned Fund (NOF) Ratio: 1:20 (for deposits and lending activities)
Registered Office Address: Must have a valid business address.
Membership Criteria: Only members can deposit and borrow.
Annual Compliance: Filing of financial reports and compliance with MCA guidelines.
Benefits of Registering a Nidhi Company
Simple Formation Process – Easy incorporation with minimal regulatory requirements.
Limited Liability Protection – Members’ liability is limited to their contribution.
No External Interference – Nidhi Companies function exclusively among their members.
Encourages Savings – Promotes financial stability by encouraging thrift among members.
No RBI Regulations – Unlike other NBFCs, Nidhi Companies do not require RBI approval.
Lower Risk – Since the company operates within a closed group of members, the risk of bad loans is relatively low.
Easy Fund Mobilization – Members contribute to the funds, which are then used for lending purposes.
Disadvantages of a Nidhi Company
Restricted Business Model – Can only accept deposits and lend funds among members.
Limited Growth Opportunities – Cannot operate like a full-fledged financial institution.
Strict Compliance Requirements – Must adhere to periodic MCA compliance and reporting.
Limited Fund Sources – Cannot raise funds from external investors or the public.
Geographical Restrictions – Branch expansion is restricted unless conditions are met.
Procedure for Nidhi Company Registration
Step 1: Obtain Digital Signature Certificate (DSC)
Required for filing online incorporation forms.
Directors and members need to obtain DSCs.
Step 2: Apply for Director Identification Number (DIN)
Directors must apply for a unique DIN via the MCA portal.
Step 3: Name Reservation
File RUN (Reserve Unique Name) application with MCA.
The name must end with “Nidhi Limited” as per regulations.
Step 4: Drafting MOA & AOA
Memorandum of Association (MOA): Defines the objectives of the company.
Articles of Association (AOA): Contains the operational and governance framework.
Step 5: Filing of SPICe+ Form
Submit SPICe+ (Simplified Proforma for Incorporating a Company Electronically Plus) form.
Includes application for PAN, TAN, and EPFO registration.
Step 6: Certificate of Incorporation (COI)
Issued by ROC, providing a Corporate Identification Number (CIN).
Step 7: Post-Incorporation Compliances
Open a Bank Account in the company’s name.
Ensure Net Owned Funds (NOF) of at least Rs. 10 lakhs within one year.
Submit an NDH-1 return within 90 days of incorporation.
Ensure minimum 200 members within one year.
Comply with annual reporting and audits.
Documents required for Nidhi Company Registration
Step 1: Obtain Digital Signature Certificate (DSC)
Required for filing online incorporation forms.
Directors and shareholders need to obtain DSCs.
Step 2: Apply for Director Identification Number (DIN)
Directors must apply for a unique DIN via the MCA (Ministry of Corporate Affairs) portal.
Step 3: Name Reservation
File RUN (Reserve Unique Name) application with MCA.
The name must be unique and comply with Companies Act guidelines.
Step 4: Drafting MOA & AOA
Memorandum of Association (MOA): Defines the company’s objectives.
Articles of Association (AOA): Contains the rules and regulations of the company.
Step 5: File Incorporation Application
Submit the SPICe+ (Simplified Proforma for Incorporating a Company Electronically Plus) form.
Required documents include:
Director’s and shareholders’ KYC documents.
Address proof of the registered office.
MOA, AOA, and declarations from directors.
Step 6: Certificate of Incorporation (COI)
Issued by the Registrar of Companies (ROC) upon successful verification.
Company receives CIN (Corporate Identification Number).
Step 7: PAN & TAN Application
Company must obtain Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN).
Step 8: Open a Business Bank Account
A current account must be opened in the company’s name.
Step 9: Post-Incorporation Compliances
GST Registration (if applicable).
EPF, ESI, and MSME registration (if required).
Appointment of Auditor within 30 days.
Why Choose Humsabka Advisor for Nidhi Company Registration?
Expert Guidance: Comprehensive support from application to compliance.
Quick Processing: Efficient incorporation process.
Affordable Pricing: Cost-effective services tailored for startups.
Legal Compliance Support: Assistance in regulatory filings and audits.
Transparent Procedures: Real-time tracking and customer support.
Looking to register a Nidhi Company? Contact Humsabka Advisor today!
Documents & Information required for Nidhi Company
- PAN Card of Directors & Subscribers
- Aadhar Card of Directors & Subscribers
- Bank Details of Directors & Subscribers
- Address Proof (Like Rent Agreement)
- Directors Declarations
- Mobile No. of Directors & Subscribers
- Email id of Directors & Subscribers
- Photo of Directors & Subscribers
- Utility Bill (like Electricity Bill)
- Director Consents
Comparison: Sole Proprietorship vs Partnership vs LLP vs Company
Nidhi Company Registration FAQ’s
What is the primary purpose of a Nidhi Company?
A Nidhi Company is formed to encourage thrift and savings among its members and provide them with financial assistance.
Is RBI approval required for a Nidhi Company?
No, RBI approval is not required as Nidhi Companies are governed by the Ministry of Corporate Affairs (MCA).
Can a Nidhi Company provide loans to non-members?
No, a Nidhi Company can only lend money to its registered members.
What is the minimum capital requirement for a Nidhi Company?
The minimum capital required is Rs. 10 lakhs.
Can a Nidhi Company accept deposits from the public?
No, a Nidhi Company can only accept deposits from its members.
How long does it take to register a Nidhi Company?
The registration process typically takes 15-20 working days.
Can a Nidhi Company open multiple branches?
Yes, but only after it has completed three years and meets the required financial conditions.
What are the post-registration compliance requirements?
A Nidhi Company must file NDH-1, NDH-2, and NDH-3 forms annually and maintain a net owned fund (NOF) ratio of 1:20.
Can foreign nationals or NRIs invest in a Nidhi Company?
No, only Indian residents can become members of a Nidhi Company.
What happens if a Nidhi Company fails to comply with regulations?
Non-compliance may lead to penalties, cancellation of registration, or legal action by MCA.