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Nidhi Company Registration Complete Guide

Swarit Advisors

| Updated: Nov 28, 2018 | Category: Nidhi Company

Nidhi company registration is regulated by the Companies Act, 2013. Nidhi companies are seen in relation to the nonbanking financial companies (NBFC) and the main objective of incorporating a Nidhi company is to encourage the saving habits and save those funds for the benefits of the members. In this article, we will discuss Nidhi Company Registration Complete Guide.

Nidhi companies basically save funds to promote the thriftiness and lend money to its members for their mutual benefit. Nidhi companies are prevalent now a day, as they do not require any approval from the RBI and Nidhi Company is relatively easier because it doesn’t require you to visit any Government office.

Swarit advisors are one of the companies in India who help clients to set up their own Nidhi companies. We have a team of young, exuberant and talented team of professionals who help a number of clients on daily basis. Whenever someone thinks about starting a Nidhi company, the first name that comes to their mind is Swarit advisors.

Swarit advisors is a reputable name in the market, our team has developed trust and faith in clients by delivering the projects on time. And these are our recurring clients who believe in the services we provide.

Further, we will discuss the Nidhi company registration complete guide and all the details related to it.

In this blog, we will try to cover the areas listed below and provide a glimpse of the requirements of the Nidhi company registration. Even if somebody is not looking for the incorporation of Nidhi Company, they could get some education regarding the Nidhi companies in India.

  • Checklist for Nidhi company registration
  • Documents required for the Nidhi company registration
  • Benefits of Nidhi company registration
  • Procedure for the registration of Nidhi companies
  • Important forms to be filled for the registration of niche companies
  • Things you must know

Checklist for Nidhi company registration:

Every type of company registration come with their own characteristics, if you are someone who is looking for the incorporation of Nidhi company then there are few attributes of Nidhi companies which one should know before taking the step of incorporating the Nidhi Company. So let’s take a look at the checklist for Nidhi company registration:

  1. Nidhi company registration is governed by the Companies Act, 2013 and Nidhi rules, 2014. It is regulated by the ministry of corporate affairs.
  2. Once you have registered a Nidhi company, it is directly controlled by the RBI. RBI is authorized to pass on the directions to the Nidhi Company, but there is no need to take any approval during the registration of the Nidhi company
  3. The basic agenda of any of the Nidhi companies in India is to accept a loan from its members and then lend it to its members or shareholders only when required
  4. There have to be at least 200 members on-board in the Nidhi Company within a year of starting the company. And you require at least 3 shareholders to start the Nidhi company, that needs a net owned funds of at least 10 lakh rupees and the ratio of net owned funds to deposits cannot be more than 1:20.
  5. Like other companies in India Nidhi Company also name their companies for the recognition. However, the word “Nidhi limited” is mandatory to add at the end of the company’s name. For example, if you have a nidhi company ABC then it must be suffixed as ABC Nidhi limited.
  6. It is noted that Tamil Nadu has the maximum number of Nidhi company registration in all over India. Tamil Nadu has 80% of the Nidhi companies in India.

Documents required for the Registration of Nidhi Company Registration

  1. Identity proof- For the identity proof of directors and the shareholders one has to submit the PAN card in case of Indians, passport in case of foreign nationals
  2. Address proof- During the registration of Nidhi Company you must submit the address proof of all the directors and shareholders, that include bank statements, electricity bills not older than two months.
  3. Aadhar proof- For all the directors and shareholders, aadhar card is a must.
  4. Office proof- When you start a Nidhi company, office space is required to run the Company. So, for the address proof of the registered office in India, you need to submit the documents such as electricity bill or property tax receipt or water bill. And rental agreement or an ownership document with a no objection certificate from the landlord.
  5. Photograph– For the registration of Nidhi Company, it is required to submit the passport size photographs of all the directors.

What are the benefits of Nidhi company registration?

Every form of organization has their own advantages, if you have registered a Nidhi company then there are several benefits that you can avail. Nidhi company registration has benefits such as separate legal entity, Easy management, uninterrupted existence, going concern, credibility.

We will discuss these benefits in detail.

  • Individual legal entity- Nidhi companies are considered to be a legal entity and a juristic person. That brings a broader capacity to the Nidhi Company to own a property legally on its own name and can also sustain debts. And the members of the Nidhi Company are not liable to debts incurred by the company.
  • Swift management- There is a board of management in a Nidhi company that controls all the activities of the company. So if you want to bring a change in the board of directors then you just need to fill the few forms with the registrar of companies. By filling these simple forms you can incorporate the changes required for the better growth of the company.
  • Perpetual existence- A Nidhi company has uninterrupted existence that means it keeps on operating until it is legally dissolved. If any of the members leave the company or departs due to unfortunate death, the company keeps on existing no matter whatever the case is.
  • Reliability- As Nidhi companies are registered with the Central Government and directed by the RBI develops a trust in the eyes of the clients. They are considered to have better credibility in comparison to the mutual benefit organizations.
  • Ownership of property- Being a juristic person, Nidhi companies can own a property on its own name. And none of the members of the company can claim to the property owned by the company.

Above are all the benefits that are provided to the Nidhi companies.

Now, let’s take a look at the process of registering the Nidhi company registration.

What are the steps involved in the Nidhi company registration?

Now we will look at the steps that one needs to follow for the registration of Nidhi Company.

  • STEP1: Digital signatures

The first step is to obtain the digital signatures (DSC) for all the directors of the company. Our team at swart advisors will make the digital signatures for you, as these signatures are required to sign the soft copies of the documents during the Nidhi company registration. Members must have DPIN as well which is issued by the Ministry of Corporate Affairs (MCA).

  • STEP2: Name approval

The second step would be the approval of the name for the Nidhi Company, you look forward to starting. In this, you have to come up with a unique name that should not resemble any of the already existing names in the market. There is a Reserve Unique Name service (RUN) which one can use for the selection of a name for the Nidhi Company.

  • STEP3: Filling SPICE form

Once you are done with the approval of the name, there is a SPICE form, in which you have to file the e-Memorandum of Association (MoA) and e-Articles of Association (AoA) need to be drafted with MCA. In addition to this, you need to provide the complete details of the directors of the Company in the SPICE form with the required documents.

  • STEP4: Incorporation of Nidhi Company

It takes around a month for the Nidhi company registration process to be completed. Finally, you will receive the certificate of registration and company identity number.

List of additional forms to be filed for the Nidhi company registration

For the incorporation of any type of company or organization, one has to fill the list of forms to file the application of company registration. Similarly, there are certain forms which you must fill to get the certificate of registration of the Nidhi Company. You only have to fill two forms-

  1. INC 9
  2. DIR 2

FORM INC 9– All the subscribers in the company have to fill the form INC 9 and file it with the Memorandum of Association (MoA)

FORM DIR 2– All the subscribers must sign the declaration as per rule 5&6 of the Nidhi rules 2014 and it has to be filed by all the directors of the company.

Things you must know if you are looking for the Nidhi company Registration

We will try to discuss the points, often asked by our clients. The motive of mentioning the following points is to educate our readers so that they won’t commit the same mistakes, committed previously.

  • One of our clients called us and asked if I start a Nidhi company, will I be able to finance microfinance businesses in India?

If you start your own Nidhi Company, then you won’t be able to finance the micro businesses in India; as the name financing, it says providing the credit facility to a business. Microfinance is only possible in case of large NBFCs famous in semi-urban and rural areas, which requires the approval of RBI.

  • People always say, we know that Nidhi Company can accept and provide loans among its members but what is the amount, how much we can lend or accept?

Basically, the amount depends upon the kind of deposit Nidhi company has. There is a list of Amount deposit and loan limit.

Amount deposited Limit of loan
Less than 2 crore 2,00,000; two lakhs
Between 2 crore-20 crore 7,50,000; seven lakh fifty thousand
Between 20 crore-50 crore 12,00,000; twelve lakhs
More than 50 crore 15,00,000; fifteen lakhs

According to the above table, Nidhi Company provides the loans to its shareholders.

  • Is it possible to advertise the Nidhi company activities?

If you are thinking of promoting the activities of the Nidhi companies through advertisement then let us tell you, it is not allowed to advertise the activities of the Nidhi Company. As the Nidhi companies are made to encourage the habits of saving and promoting the thriftiness among the members.

Nidhi companies are also not allowed to offer money or gift anything for the growth in the deposits and lending.

  • People ask, I have a nidhi company and doing very well. Can I open a branch to expand it?

Yes, you can open a branch of a Nidhi company. Once the Nidhi has met the conditions of earning a profit for the three consecutive years, you will be allowed to expand the company by opening three branches in the same district, your company is operating.

For further expansion, you need to take permission from the Regional Director.

  • At last, let’s take a look at most asked question by our clients if they are operating a Nidhi company; can they provide unsecured loans?

As providing a loan to somebody is a question of involving a risk, therefore Nidhi companies are not allowed to issue the unsecured loan.  Nidhi companies can only issue secured loans to its members.

We hope that by now we are able to educate enough to get rid of most of the doubts regarding the Nidhi company registration. Swarit advisors are a well-known name in the market, clients have believed in what we do. It would have not been possible to reach the stage, where we are today.

After going through the above details, if you are thinking of starting your own Nidhi Company, then you just need to give us a call or contact swart advisors by filling our inquiry form. The moment we receive your inquiry, one of our team members will connect with you and discuss all the details regarding the kind of business you want to start.

Our team member will draft a plan according to your requirements and come with the best options available. He/she will guide you to select the best option where you can meet your company goals and flourish in future.

Your wait for a dream of having your own Nidhi Company is over; start advisors will make it all possible and make sure to fulfill all your needs regarding the company.

For more information do contact swaritadvisors.

Swarit Advisors

Swaritadvisors.com is technology motivated platform establishing the specialized legal & Financial advisory services in India. We are dedicated to helping startups and MNC in solving legal, Taxation and compliance related to starting and running their business around the world.

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