{"id":12760,"date":"2023-04-03T12:49:37","date_gmt":"2023-04-03T12:49:37","guid":{"rendered":"https:\/\/swaritadvisors.com\/blog\/?p=12760"},"modified":"2023-04-03T12:49:38","modified_gmt":"2023-04-03T12:49:38","slug":"registration-of-nidhi-company-in-india","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/blog\/registration-of-nidhi-company-in-india\/","title":{"rendered":"Registration of Nidhi Company in India"},"content":{"rendered":"\n<p>A <a class=\"text-primary\" href=\"https:\/\/swaritadvisors.com\/nidhi-company-registration\">Nidhi Company<\/a> is a kind of non-banking financial business (NBFC) in India that focuses mostly on lending and borrowing among its members. The Nidhi Regulations, 2014, govern Nidhi Corporations and are administered by the Ministry of Corporate Affairs (MCA). This blog post will cover how to form a Nidhi company in India.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a34aaeb8e8a5\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a34aaeb8e8a5\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/blog\/registration-of-nidhi-company-in-india\/#Eligibility_Criteria_for_Nidhi_Company_Registration\" title=\"Eligibility Criteria for Nidhi Company Registration\">Eligibility Criteria for Nidhi Company Registration<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/blog\/registration-of-nidhi-company-in-india\/#Steps_for_Registering_a_Nidhi_Company\" title=\"Steps for Registering a Nidhi Company\">Steps for Registering a Nidhi Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/blog\/registration-of-nidhi-company-in-india\/#Post-Registration_Compliances\" title=\"Post-Registration Compliances\">Post-Registration Compliances<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/blog\/registration-of-nidhi-company-in-india\/#Advantages_of_Nidhi_Company\" title=\"Advantages of Nidhi Company\">Advantages of Nidhi Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/blog\/registration-of-nidhi-company-in-india\/#Disadvantages_of_Nidhi_Company\" title=\"Disadvantages\nof Nidhi Company\">Disadvantages\nof Nidhi Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/blog\/registration-of-nidhi-company-in-india\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Eligibility_Criteria_for_Nidhi_Company_Registration\"><\/span>Eligibility Criteria for Nidhi Company Registration<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Before\nregistering a Nidhi Company, certain eligibility criteria need to be fulfilled.\nThey are:<\/p>\n\n\n\n<ol><li>The company should be registered as a Public Limited Company under the <strong>Companies Act, 2013<\/strong><sup><a class=\"text-primary\" href=\"https:\/\/www.mca.gov.in\/content\/mca\/global\/en\/acts-rules\/companies-act\/companies-act-2013.html\"><strong>[1]<\/strong><\/a><\/sup>.<\/li><li>The company should have a minimum paid-up share capital of Rs. 5 lakhs.<\/li><li>The company should have at least 200 members within one year of incorporation.<\/li><li>The company should not have any object other than borrowing and lending activities.<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Steps_for_Registering_a_Nidhi_Company\"><\/span>Steps for Registering a Nidhi Company<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The\nprocess of registering a Nidhi Company in India involves the following steps:<\/p>\n\n\n\n<p><strong>Step\n1:<\/strong>&nbsp;Obtain Digital Signature Certificate\n(DSC) and Director Identification Number (DIN)<\/p>\n\n\n\n<p>Obtaining\na Director Identification Number (DIN) and Digital Signature Certificate (DSC)\nfor the proposed directors of the firm is the first step in forming a Nidhi\nCorporation. The DIN is needed to identify the company&#8217;s directors, whereas the\nDSC must sign documents electronically sent to the Registrar of Companies\n(ROC).<\/p>\n\n\n\n<p><strong>Step\n2:<\/strong>&nbsp;Name Approval<\/p>\n\n\n\n<p>The\nnext step is to apply for approval of the proposed name of the Nidhi Company.\nThe name should be unique and should not be similar to the name of any existing\ncompany or trademark. The proposed name can be checked for availability on the\nMCA website.<\/p>\n\n\n\n<p><strong>Step\n3:<\/strong>&nbsp;Articles of Association and\nMemorandum of Association drafting<\/p>\n\n\n\n<p>The\ncompany&#8217;s Memorandum and Articles of Association (MOA and AOA) should be\ndrafted after the name has been approved. The company&#8217;s primary goals are\noutlined in the MOA, while the internal management policies are outlined in the\nAOA.<\/p>\n\n\n\n<p><strong>Step\n4:<\/strong>&nbsp;Filing of Incorporation Documents<\/p>\n\n\n\n<p>Once\nthe MOA and AOA are drafted, the next step is to file the incorporation\ndocuments with the ROC. The following documents should be filed:<\/p>\n\n\n\n<ol><li>Form INC-32 (SPICe) &#8211; Application for the registration of a company.<\/li><li>Form INC-33 &#8211; eMOA (Electronic Memorandum of Association).<\/li><li>Form INC-34 &#8211; eAOA (Electronic Articles of Association).<\/li><li>Form DIR-12 &#8211; Declaration of the directors of the company.<\/li><li>Form URC-1 &#8211; Application for the conversion of a Public Company into a Nidhi Company.<\/li><\/ol>\n\n\n\n<p><strong>Step\n5:<\/strong>&nbsp;Payment of Fees<\/p>\n\n\n\n<p>The\nnext step is to pay the required fees for registering the Nidhi Company. The\nfees can be paid online through the MCA portal.<\/p>\n\n\n\n<p><strong>Step\n6:<\/strong>&nbsp;Certificate of Incorporation<\/p>\n\n\n\n<p>After\nthe payment of fees, the ROC will verify the documents, and if everything is\nfound to be in order, a Certificate of Incorporation will be issued. This\ncertificate marks the completion of the Nidhi Company registration process.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Post-Registration_Compliances\"><\/span>Post-Registration Compliances<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>After\nthe registration of the Nidhi Company, certain compliances need to be followed.\nThey are:<\/p>\n\n\n\n<ol><li><strong>Filing of Annual Returns:<\/strong>\u00a0The Nidhi Company should file its annual returns with the ROC within 60 days of the closure of the financial year.<\/li><li><strong>Maintenance of Statutory Registers:<\/strong>\u00a0The NidhCompany should maintain various statutory registers such as the register of members, register of loans and investments, register of deposits, register of directors, etc. These registers should be kept at the registered office of the company.<\/li><li><strong>Minimum Number of  Members:<\/strong>\u00a0The Nidhi Company should maintain a minimum of 200 members at all times.<\/li><li><strong>Loan and Deposit Limits:<\/strong>\u00a0The Nidhi Company should comply with the loan and deposit limits prescribed by the Nidhi Rules, 2014. The company should only accept deposits at most 20 times its net owned funds and lend at most 25% of its net owned funds to a single borrower.<\/li><li><strong>Nidhi Status:<\/strong>\u00a0The Nidhi Company should maintain its status by complying with the Nidhi Rules, 2014. The company should not engage in any other business except borrowing and lending activities among its members.<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Advantages_of_Nidhi_Company\"><\/span>Advantages of Nidhi Company<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>There\nare several advantages of registering a Nidhi Company, which are:<\/p>\n\n\n\n<ol><li><strong>Easy to Register:<\/strong>\u00a0The registration process for a Nidhi Company is straightforward.<\/li><li><strong>Limited Liability:<\/strong>\u00a0The liability of the members of a Nidhi Company is limited to the extent of their shareholding.<\/li><li><strong>No External Shareholding:<\/strong>\u00a0A Nidhi Company cannot issue equity shares to the public, ensuring that the ownership remains with the members.<\/li><li><strong>Lower Compliance:<\/strong>\u00a0A Nidhi Company&#8217;s compliance requirements are lower than other types of companies.<\/li><li><strong>Cost-Effective:<\/strong>\u00a0Setting up and maintaining a Nidhi Company is relatively low.<\/li><li><strong>Access to Funds:<\/strong>\u00a0A Nidhi Company can raise funds easily from its members, which makes it a good option for small and medium-sized businesses.<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Disadvantages_of_Nidhi_Company\"><\/span><strong>Disadvantages\nof Nidhi Company<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>While\nthere are several advantages of registering a Nidhi Company, there are also\nsome disadvantages that need to be considered, which are:<\/p>\n\n\n\n<ol><li><strong>Limited Business Activities:<\/strong>\u00a0A Nidhi Company is restricted from engaging in business activities other than borrowing and lending among its members. This limits the potential growth of the company.<\/li><li><strong>Limited Borrowing Capacity:<\/strong>\u00a0The borrowing capacity of a Nidhi Company is limited to 20 times its net owned funds, which may need to be increased for larger projects or expansion plans.<\/li><li><strong>Limited Investor Interest:<\/strong>\u00a0A Nidhi Company cannot issue equity shares to the public, and it may not be easy to attract outside investors.<\/li><li><strong>Limited Access to Capital Markets: A<\/strong>\u00a0Nidhi Company cannot raise capital through public offerings or debentures, which may restrict its access to capital markets.<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>An\nexample of a non-banking financial organisation is a Nidhi company, which\noffers a special platform for its members to lend and borrow money from one\nanother. A Nidhi Corporation can be registered in India easily, simply, and\nwith fewer compliance requirements than other kinds of businesses. However, a\nNidhi Corporation is subject to some restrictions, including maintaining a\nminimum number of members and restricting economic activity.<\/p>\n\n\n\n<p>Despite\nits limitations, registering a Nidhi Company has several advantages, such as\nlimited liability, easy access to funds, and cost-effectiveness, making it a\npopular option for small and medium-sized businesses. Moreover, the company&#8217;s\nownership remains with its members, ensuring external shareholders do not\ninfluence it. To ensure that a Nidhi Company operates smoothly, it is crucial\nto comply with the post-registration compliances, such as filing annual\nreturns, maintaining statutory registers, and complying with the loan and\ndeposit limits prescribed by the Nidhi Rules, 2014.<\/p>\n\n\n\n<p>Overall, a Nidhi Company is a great option for individuals looking to start a business with a low investment. Its unique structure and advantages provide an excellent opportunity for its members to meet their financial needs while maintaining control over the company&#8217;s ownership.<\/p>\n\n\n\n<p><strong>Also Read<\/strong>: <br><a class=\"text-primary\" href=\"https:\/\/swaritadvisors.com\/blog\/assessment-of-new-nidhi-company-rules\/\">Detailed Assessment of New Nidhi Company Rules<\/a><br><a class=\"text-primary\" href=\"https:\/\/swaritadvisors.com\/blog\/purpose-and-applicability-of-new-nidhi-company-forms\/\">Purpose and Applicability of New Nidhi Company Forms<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A Nidhi Company is a kind of non-banking financial business (NBFC) in India that focuses mostly on lending and borrowing among its members. The Nidhi Regulations, 2014, govern Nidhi Corporations and are administered by the Ministry of Corporate Affairs (MCA). This blog post will cover how to form a Nidhi company in India. Eligibility Criteria [&hellip;]<\/p>\n","protected":false},"author":17,"featured_media":12765,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[8],"tags":[1107],"acf":[],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/12760"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/users\/17"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/comments?post=12760"}],"version-history":[{"count":3,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/12760\/revisions"}],"predecessor-version":[{"id":12766,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/12760\/revisions\/12766"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media\/12765"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media?parent=12760"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/categories?post=12760"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/tags?post=12760"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}