Nidhi Company
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What is Nidhi Company ?
Nidhi Company is a kind of NBFC; Non-Banking Financing Company which is registered under Section 406 of Companies Act 2013. The foremost business of a Nidhi Company is to lend and borrow money in between its core members. The member of the shareholders of the Nidhi Company is encouraged to save money and invest them within the company. The members can use these deposits to provide loans, to buy government-issued stocks/ bonds/ debentures/ securities. They work on the concept of mutual benefits. They are not directly regulated by the RBI, but RBI has powers to issue instructions for them related to their deposit acceptance activities.
Know More About:
Section 8 Company, Private Limited Company, Company Compliances,
Eligibility for Nidhi Company Registration
Section 406 of Companies Act, 2013 prescribes that a Nidhi company
- At least 3 directors out of the members.
- Shall have at least one Indian resident as a director
- At least 7 members with no maximum limit.
- Shall have a minimum authorized equity share capital of Rs 5 lakh.
- Lending and borrowing of finance should be done among members only.
Note: –
- A director can be a member of the company or vice versa.
** Director: – Section 2 (34) of the Act prescribed that “director” means a director appointed to the Board of a company. A director is a person appointed to perform the duties and functions of director of a company under the provisions of the Companies Act, 2013
** Member: – Section 41 of the Act Defines that ” member” the subscribers of the memorandum of a company shall be deemed to have agreed to become members of the company, and on its registration, shall be entered as members in its register of members.
Key Features & Benefits of Nidhi Company
Easy Formation
The registration process requires less documentation and paperwork than an NBFC. Therefore t is easier to register and operate.
Separate Legal Existence
It has a separate legal existence than that of its shareholders and is liable to the extent of its assets.
Less Compliance
RBI regulations are limited. It follows Nidhi Rules, 2014 for its business activity.
Promote Savings
It promotes the habit of saving and thrifts among the lower and middle sections of the society. People contribute to the funds and avail credit in need at a lower Interest rate.
No outside interference
The overall operations are concerned with and to their members only. No external party can deposit money or intervene in management-related decisions.
Continuous Existence
It is continuous even death or departure of an owner or director cannot affect the existence of the company.
Process for Registering a Nidhi Company
Documents Required for Registering a Nidhi Company
- PAN and Aadhar Card of the Directors.
- Voter Identity card or Driving license of the Directors.
- Latest Bank Statement or Bank Passbook of the Directors.
- Passport Size Photograph of the Directors.
- Email I’d & Mobile Number of the Directors.
- Registered Office address Proof:
- Owned office:- Copy of electricity bill/water bill/Telephone bill or property tax receipt.
- Rented office:- Rent agreement and NOC (No objection certificate) from the owner along with electricity bill/water bill/Telephone bill or property tax receipt.