How to opt for Nidhi Company Registration in India?

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How to opt for Nidhi Company Registration in India?

A Nidhi Company is a business entity governed under India's Companies Act of 2013. The objective of a Nidhi Company is to engage its members in money-saving habits. A Nidhi Company is a kind of NBFC (Non-Banking Financial Institute). A Nidhi provides services like lending and deposits to its members exclusively. Therefore, a Nidhi Company gets its funding from its members and shareholders. In this article, we will talk about the Nidhi Company registration process.

Kickstarting a Nidhi Company in India is the same as starting a Non-Banking Financial Companies class in the country. The Reserve Bank of India governs all Nidhi Companies in the country. The Apex body regulates the registered Nidhi Company by issuing guidelines and regulations regarding its lending and depositing activities. But, a Nidhi Company can only engage with its members for its financial activities. In a Nidhi, outside members are not allowed. 

Benefits of Nidhi Company Registration

A Nidhi Company is a business entity that enjoys several perks from the Authority. We have stated the following perks that will make you think registering your Business as a Nidhi Company is a beneficial affair:

A Nidhi has ease in getting Loans

As a decent model in the eyes of the Central Government, a Nidhi Company is trusted more by commercial Banks. Therefore, once you register your Business as a Nidhi Company, it is easy to get loans and other types of funds.

A Nidhi can perpetually exist

Every Nidhi Company enjoys a perpetual existence even after one or more directors die or leave the Company or the Court of Law convicts them of a crime.

A Nidhi has a simple Incorporation Process

The Incorporation procedure of a Nidhi Company is relatively simple. The applicant can follow the standard method for Nidhi Registration in India.

 Nidhi is a Separate Identity from its Owners

After the Nidhi Company's formation, the Company becomes a separate legal identity. One can understand that Nidhi becomes an individual who can own property, invest, or do other finance-related activities like a living person.

Nidhi limits the liability of its members

A registered Nidhi enjoys limited liability, i.e., it limits the liability of its members. In the event of the Company's loss, the Debtors will not compromise the assets of the Nidhi members, nor will they use them for debt-paying or recovering from loss.

Pre-conditions for Nidhi Company Registration

General Eligibility Criteria

• The MCA demands a minimum number of three directors in a Nidhi Company.
• The MCA demands at least one Director of Nidhi must be an Indian national.
• The MCA demands a minimum of seven permitted shareholders in a Nidhi Company.
• The Nidhi Company's capital requirement is reasonably low. The MCA demands a minimum equity share capital for a Nidhi registration of five Lakh rupees.

Nidhi Incorporation Rules

• The MCA demands the to-be-incorporated Nidhi Company to be a public company.
• The MCA demands the proposed Nidhi Company to have a minimum paid-up share capital of five lakh.
• The MCA demands the to-be-incorporated Nidhi Company to issue preference shares.
• The MCA demands the to-be incorporated Nidhi Company to have an object in the Memorandum of Association for cultivating the habit of thrift and savings amongst the Nidhi members.
• The MCA demands the proposed Nidhi Company to have 'Nidhi Limited' as the last part of its registered name.

Share and Capital Allotment in a Nidhi

• The MCA directs every Nidhi to issue equity shares of the nominal value. The value must not be less than ten rupees. The Nidhi must not levy any service charge for the issue of shares.
• The MCA directs every Nidhi to allot at least ten equity shares of one hundred rupees to each of its deposit holders. In a Nidhi, both the savings and recurring deposit account holder must hold at least one equity share of rupees ten each.

Membership in a Nidhi

• The MCA directs a Nidhi not to admit a corporate body or trust as its member.
• The MCA directs a Nidhi to ensure its membership does not fall below two hundred.
• The MCA directs a Nidhi not to admit a minor as a member. But the Nidhi can accept deposits in the minor's name if its legal guardian is also a Nidhi member.

Nidhi Company’s Net-Owned Funds

The MCA directs every Nidhi to maintain Net Owned Funds of a minimum of ten lakh rupees. The fund amount excludes the proceeds of preference share capital. The fund amount can change as per the Central Government guidelines may specify from time to time.

Rate of Interest offered by the Nidhi Company

Every Nidhi Company must charge an interest rate on any loan not exceeding 7.5%, above the highest offered interest rate on deposits by it. The Nidhi must calculate the rate of interest on the reducing balance method.

Appointment of Directors in Nidhi

• The MCA directs a Nidhi to appoint a director who is also its member.
• The proposed Director must hold the Nidhi office for up to ten consecutive years as on the Board of Directors of the Nidhi Company.
• The to-be-appointed Director is eligible for re-appointment. But the eligibility becomes live after the Director’s two years of Directorship expires.
• A proposed Director must comply with the requirements of the Nidhi Act. They must not be disqualified from any such previous appointments.

Required Documentation for Nidhi Company Registration

Every Nidhi applicant must submit the following documents for the Nidhi Company Incorporation for each of its directors and shareholders:

• A Self-attested copy of the PAN card
• Four Recent Sized Photographs of the Directors

• A Self-attested copy of one of the Identification Proofs, such as:
• Driving License
• Passport
• Voter ID
• Aadhaar Card

• A Self-attested copy of one of the Residential Proofs of the directors, such as:
• Bank Pass Book
• Bank Statement
• Telephone Landline Bill
• Mobile Bill
• Electricity Bill

• Company Address Proof
• Electricity Bill
• Telephone Bill
• Mobile Bill
• Gas Bill
• Rental Agreement, if the property is rented and NOC for doing Business

Nidhi Company Registration process

Every Nidhi Company is regulated by the Nidhi Rules of the Companies Act of 2014. Therefore, the procedure for online Nidhi company registration in India is in the following points:

• Firstly, choose a unique name for your Nidhi company.
• Secondly, conduct the company name search on the selected name.
• Also, hire a Nidhi expert for Nidhi Company name suggestions.
• Afterwards, reserve the name of the Nidhi company using the MCA RUN application.
• Consequently, Register for and obtain the DSC and DIN for the directors of the Nidhi
• Furthermore, draft the MOA and AOA of the to-be-registered Nidhi
• Finally, submit the online application for Nidhi incorporation
• Lastly, the MCA will assess the submitted application and issue the Incorporation Certificate to the applicant upon successful verification.

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