Incorporation Procedure of Nidhi Company

Incorporation of Nidhi company is done on the basis of rules and regulation laid down by the companies act 2013 and Nidhi Company rules, 2014.These companies are formed with an object of inculcating the habit of thrift and savings among its members. Nidhi Company is referred as NBFC in RBI act 1956.

Nidhi Company is a type of company which is incorporated with the end view of inculcating the habit of saving among the members or shareholders of the company. Any Nidhi Company can only lend or take a deposit from its members only and that too for their mutual benefit. Nidhi Companies are known as mutual benefit societies because they solely take the deposit from its members only.

According to the dictionary meaning of "Nidhi", it means treasure, but in the financial sector, it is a mutual benefit society which is notified by the central government as a Nidhi Company. Nidhi companies are known by their different names such as Nidhi permanent fund, mutual benefit company and mutual benefit funds.

Regulatory Provisions

 

Nidhi Company is recognised under section 406 of companies' act 2013, and the other regulating body for any Nidhi Company registered under the Companies act 2013 is Ministry of Corporate Affairs (MCA). Reserve Bank of India has the power to issue direction regarding the depository function of Nidhi Company. This type of company is also an NBFC company if the definition of financial Institution is considered then Nidhi Company comes under the ambit of section 45-I of RBI act.

Documents Required for Incorporation of Nidhi Company

  • Identity and Address proof of directors and shareholders
     

Copy of PAN card with the directors and shareholders, who are Indian Nationals, if the shareholders or the directors are Foreign Nationals in that case, notarised Passport of the respective directors or shareholders.

  • Registered Office Proof in India


Rent agreement or sale deed copy of electricity bill, property tax receipt. No objection certificate (NOC) from the landlord for use of premises as the registered office.

  • Signed incorporation of Documents


Signed digital signature application documents and incorporation documents signed and uploaded as soft copy.

 

Minimum requirements to be followed with for the incorporation of Nidhi Company:

 

  1. Before the incorporation of the company, the company needs to have at least seven shareholders and minimum three directors. And all the directors should have Director Identification Number (DIN).
  2. The minimum capital which the companies require is 10 lakh rupees.
  3. After the incorporation of Nidhi Company, the net owned funds to deposit ratio should be more than 120.
  4. Unfettered deposits of not less than ten per cent of the outstanding deposits are essential after the incorporation of the company.
  5. The minimum number of shareholders should be 200 and no less.
  6. Net owned funds of a Nidhi company should not be less than 10%of the outstanding deposits after incorporation.

 

Procedure For Incorporation of Nidhi Company

 

Incorporation of Nidhi Company is similar to that of Public Limited Company registration. The process of registration takes up to 45 days.


The registration process of Nidhi Company involves the following steps:

 

  1. The minimum number of shareholders/members required for registration of the company is seven
  2. Three directors are an essential requirement for the incorporation of a Nidhi company, they all should have DIN number, and if not they are required to apply for the same
  3. Application for the digital signature is also necessary as it is one of the requisite for registering one's company as Nidhi Company.
  4. An application to MCA is to be filed with form no.INC-1 for reserving the name of the company and once the Name is approved by MCA;
  5. They are required to submit the memorandum of association (MOA) and Articles of Association (AOA). The objective of Nidhi Company is different from that of private limited Companies, as their primary purpose is to encourage savings amongst its members.
  6. And once all these steps have been followed with the company receives Incorporation certificate which includes CIN number which is a proof that the company has been registered.