Today we at MyOnlineCA talking All about Nidhi Company. Nidhi Company comes under the group of Non-Banking Financial Company or NBFC which does not demand any Reserve Bank of India or RBI license. Nidhi Company works by way of its members. It can receive deposits and lend out loans to its members only.
Nidhi is the secure and the economical way of raising funds from the General public by registering them as members.Nidhi Companies are also known as Permanent Fund, Benefit Funds, Mutual Benefit Funds, and Mutual Benefit Company.
Basics of Nidhi Company
Before we explain the process of registration, you must understand the basic of Nidhi Company:
- Nidhi Company is also known as Mutual Benefit company. It promotes the skill of saving and effective utilization of funds within its members.
- Anybody can register a Nidhi Company In India; As there are fewer compliances and legal formality that needs to be taken care of.
- Apart from its members , A Nidhi Company cannot deal with anybody else who is not a member of the company.
- The minimum capital requirement for Nidhi Company is five Lacs with at least seven members needed to incorporate a company.
Regulatory framework on Nidhi Company
Nidhi company are Companies that are Registered under the Companies Act . Nidhi companies registered and recognized under section 406 of the Companies Act, 2013 and is regulated by Ministry of Corporate Affairs or MCA. Nidhi companies are controlled by Nidhi Rules, 2014. They are incorporated as the Public Limited company and therefore , they must abide with two set of rules, pertaining to the Public limited company as per Companies Act, 2013 and Nidhi rules, 2014. There is no need to seek RBI approval to register the company, as RBI has specifically exempted this category of NBFC in India.
Minimum Requirements for Incorporation of Nidhi Company
- Minimum 7 shareholders
- Minimum 3 Directors
- Minimum Capital of Rs. 10 Lacs
- DIN for all directors
- Minimum number of 200 Shareholders
- Net owned Fund shall not be less than Rs. 10 Lacs
- Unencumbered deposits of not less than 10% of the outstanding deposits
- Net owned funds to deposits ratio should be more than 1:20
Steps involved in Nidhi Company Registration
Step 1. Application of Digital signature & Director PIN number :
First of all, the partners have to apply for Digital signature and DPIN for Nidhi company. A digital signature is an online signature used for filing for company registration and DPIN refers to Directors PIN number and is issued by Ministry of corporate affairs. If the directors already have DSC and DPIN, then there is no need to carry out this step.
Step 2. File for Approval of name :
The Applicant have to provide 3 different names for Nidhi company to Ministry of Corporate affairs or MCA of which one will be selected as a company name. Names that you will provide should be unique and suggestive of company business that it will undertake.
Step 3. Memorandum of Association & Article Of Association submission :
When you get the approval of the name , you need to draft Memorandum of association and Articles of Associate, As Both MOA and AOA are filed with the MCA with the subscription statement And the object of the Nidhi company must always be a charitable object.
Step 4. Get incorporation certificate :
It generally takes 15- 25 days for a Nidhi company to get the incorporation certificate. Once you receive the Incorporation certification, it will serve as a proof that Nidhi Company has been created and registered and It also contains your CIN number.
Step 5. Make an Application for PAN, TAN and Bank account :
you need to apply for PAN and TAN in your company’s or business name so that you can submit the PAN alongwith the other documents with the bank to open current bank account for the Nidhi Company.
Online Filing of Nidhi Company Registration
The Nidhi Company can be Registered online by filling the Simplified Proforma for Incorporating Company Electronically or SPICe form in Form INC-32 using Digital Signature Certificate of the Director along with eMoA in Form INC-33 and eAoA in Form INC-34.
Conclusion about Nidhi Company
No External Involvement in Management, Helpful for Lower and Middle Classes, Low Rates of Interest, Secured Investments and Minimum Documentation and Formalities are few of advantages that makes Nidhi companies to be a better choice for conducting business.