Nidhi Company
Nidhi Company governed in India by Companies Act 2013, and define under section 403, and is belongs to the non banking Indian finance sector. Nidhi Companies are regulated by Ministry Of Corporate Affairs (MCA).
Nidhi Companies are incorporated with the object of developing the habit of thrift and reserve funds amongst its members and also receiving deposits and lending to its members only for their mutual benefits.
Nidhi Company must have minimum 3 directors. All the Nidhi Company shall have the last word as “Nidhi Limited” as a part of its name. Nidhi Company is easy and economic to register.
Advantages
CAPITAL REQUIREMENT
The Ministry of Corporate Affairs has done away with the minimum capital requirement of INR 5 Lakhs for Nidhi’s. It is only after Nidhi Rules, 2014, that mandated the infusion of INR 10 lakhs for such companies.
GOING CONCERN
A Nidhi company being a juristic person, can acquire, own, enjoy and alienate property in its own name. No member can make any claim upon the property of the Nidhi Company as long as it is a going concern.
CHANNELISATION OF SAVINGS
The main aim of such companies is to promote the habit of saving and thrifts among lower and middle section of the society. These small sections of the population contribute to the funds of and avail credit from Nidhi companies
OUTSIDER INTERVENTION
The Nidhi companies are formed by, managed by, and provide benefits to their members only. The outsider is not allowed to intervene in the working of the Nidhi’s, neither allowed to deposit money or avail credit from these companies.
BETTER CREDIBILITY
A Nidhi company enjoys better credibility when compared to Mutual Benefit Organizations. Nidhi companies are registered and monitored by the Central Government. Mutual Benefits Organization are on the other hand governed and monitored by State Governments.
EASY MANAGEMENT
The Board of Management of a Nidhi company can be easily changed by filing simple forms with the Registrar of Companies. The Board of Management of a Nidhi company controls the activities of the Nidhi Company.
CREDIT RATE
The loans given to the members are at a lower rate of interest than the market rate. This brings greater savings to the members.
Minimum Requirements
- Minimum paid up equity share capital of Rs.5,00,000/-
- Minimum 3 directors.
- Minimum 7 shareholders.
- The name must have Nidhi Limited.
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Company Registration
Documents Required For Registration
Identity And Address Proof
Aadhar Card, Aadhar number is now a necessity for applying for any registration in India. Also, income tax return can only be filed if the person has linked his PAN card with Aadhar number.
Address proof will be required for all directors and shareholders of the company to be incorporated. For Indian nationals, PAN is mandatory. For foreign nationals, apostilled or notarised copy of passport must be mandatorily submitted. Residence proof documents like bank statement or electricity bill should not be more than 2 months old.
All documents submitted must be valid
Registered Office Proof
- Register office of all companies must be in India .If it is a Rented Property, Rent agreement and NOC from a landlord. If it is a Self-owned Property, Electricity bill or any other address proof.
- Documents submitted must be valid and not more than 2 month old.
Process
Name Approval Application
Name Applications Under RUN Will Be Processed By Central Registration Centre (CRC). The Name Approval Is Subject To Comprehensive Check By The Central Registration (CRC) And Thereafter Approval Or Rejection Shall Be Communicated By E-Mail To The Applicant. The Name Approved Under RUN Process For New Company Registration Is Valid For A Period Of 20 Days From The Date Of Approval. In Case Of Change Of Name Of An Existing Company, The Name Shall Be Valid For 60 Days From The Date Of Approval. RUN Company Name Application Fee Is Rs.1000.00. This Fee Is Additional To The Regular Fee To Be Paid Through SPICE Application For Company Registration. RUN Company Name Application Mandatory Process. Alternatively, The Applicant Can Apply Company Name Through The Integrated SPICE Application For Company Registration. In That Case, We Can Submit ONLY ONE Name For Seeing Approval. However, There Are TWO Changes Of Re-Submissions For SPICE Application. So, Effectively The Applicant Can Submit FOUR NAMES (1-Original Submission + 1 Re-Submissions) For Approval Without Any Extra Cost.
DSC (Digital Signature)
A Digital Signature Is Electronic Signature, Which Is In The Form Of Codes. It Is Used For Signing The Electronic Forms, Filed With ROC For Incorporation Of Company. Digital Signature Cannot Be Used In Physical Documents. The Company Registration In Procedure Is Completely Online And Hence It Requires Digital Signature To Incorporate A Company. It Is Mandatory For Subscribers And Directors To Have A Valid DSC (Class II Or III). You Can Get A DSC From Us In Just One Day. If You Already Have A Digital Signature, Then You Can Use The Same But Check For Its Validity Since Agencies Issues DSC’s With Either One Or Two-Year Validity.
Apply For Din (Director Identification Number)
Director Identification Number Is A Unique Number Which Is Given To Existing Directors Of Incorporated Companies.
Rule 2(D) Of Companies (Appointment And Qualification Of Directors)Rule 2014 Defines Director Identification Number As An Identification Number Which Is Allotted By The Central Government To Any Individual, Intending To Be Appointed As Director Or To Any Existing Director Of A Company For The Purposes Of Identifying As A Director Of A Company.
The Following Points Are The Purpose Of Using DIN
- It’s A Unique Identification Number.
- The Entire Database Of The Director Can Be Found Using DIN
- The Name Of The Director, Address And PAN Number Can Be Found.
- The Past Companies In Which He Had Worked And Present Company In Which He Is Working Can Be Found.
- Once Obtained DIN Number, The Director Can Use The Same For Life Irrespective Of The Company He Works In. A Change In The Company Doesn’t Change The Director Identification Number.
Form Spice (Inc-32) Moa (Inc-33), Aoa (Inc-34), Agile
Form INC-32 Must Be Accompanied By Supporting Documents Including Details Of Directors & Subscribers, Affidavits, Declarations, Identity Proof, Address Proof, MoA And AoA Etc. Once The EForm Is Filed, Its Processed By The MCA’s Central Processing Centre.
If Found Complete Company Would Be Registered And CIN Would Be Allocated. Also DINs Gets Issued To The Proposed Directors Who Do Not Have A Valid DIN. Maximum Three Directors Are Allowed For Using This Integrated Form For Filing Application Of Allotment Of DIN While Incorporating A Company. Once All The 4 Forms Ready With The Applicant, Upload All Three Documents As Linked Form On MCA Website And Make The Payment Of The Same.
- In Respect Of Non-Individual First Subscribers Who Are Based Outside India, Pdf Attachments Of Apostilled MOA And AOA Shall Be Attached With SPICe (INC-32).
- SPICe AoA (INC-34) Has Facility For Adding, Modifying, And Deleting Articles. Thus If Additional Article Is Required, We May Add The Same
- DSC Is Mandatory For All Subscribers And Witnesses In EMoA (INC-33) And EAoA (INC-34). EMoA And EAoA Shall Be Used Only Where The Maximum Number Of Subscribers Do Not Exceed 7. In Case The Numbers Of Subscribers Are More Than 7, MoA And AoA Shall Be Attached Manually To SPICe And DSC Is Not Mandatory In Such Cases.
- Two Resubmissions Are Only Permitted In The E-Form
- SPICe EMoA And EAoA Have To Be Uploaded As ‘Linked Forms’ To SPICe (INC-32).
- The Ministry Of Corporate Affairs (MCA) Has Notified An E-Form Known As AGILE – Application For Registration Of The Goods And Services Tax Identification Number (GSTIN), Employees’ State Insurance Corporation (ESIC) Registration And Employees Provident Fund Organization (EPFO) Registration.
- GSTIN Application Via E-Form AGILE And Mandatory To File INC-35 While Submitting SPICe Form.
- It Is Mandatory To Apply For PAN And TAN For The Proposed Company Along With SPICe Form.
Certificate Of Incorporation
Incorporation Certificate Shall Be Generating With CIN, PAN & TAN. Company Has To Pay The Stamp Duty Irrespective Of The Capital Because Stamp Duty Is State Matter. Companies Act, Has Given Exemptions For The ROC Fees Not For The Stamp Duty With Authorized Capital Of Rs. 10 Lakh Or Below.
Pan & Tan Application
Once You Receive The Certificate Of Incorporation Apply For PAN And TAN As They Would Be Required For Opening A Bank Account. You Can Also Apply For The Same Along With INC-32 At The Time Of Incorporation.
Commencement Of Business (Inc-20a)
EForm INC-20A (Declaration For Commencement Of Business) Is Required To Be Filed Pursuant To Pursuant To Section 10A(1)(A) Of The Companies Act, 2013 And Rule 23A Of The Companies (Incorporation) Rules, 2014.
As Per New Section Inserted After Section 10 Of The Companies Act 2013, Section 10A Says A Company Incorporated, Having Share Capital Shall Not Commence Its Business Or Exercise Any Borrowing Powers Unless A Declaration Is Filed By The Directors Within 180 Days From Date Of Incorporation Of Company. The Registrar Of Companies That ‘Every Subscriber To The MOA Has Paid The Value Of The Shares Agreed To Be Taken By Him On The Date Of Making Of Such Declaration”
FREQUENTLY ASKED QUESTIONS
Following provisions are applicable to Nidhi Companies.
- As they are incorporated into the nature of Public Company so rules and regulations of Companies Act, 2013 are applicable.
- RBI provisions related to Interest rate payable on deposit are applicable to Nidhi Companies. But the core provisions of RBI are not applicable to Nidhi Companies as RBI has exempted the Nidhi Companies from the same.
- Nidhi Rules, 2014.
As to incorporate a Nidhi Company it is to be registered as a Public Limited Company. So, to incorporate a Nidhi Company it is necessary to fulfill following criteria:
- It should have at least 3 Directors.
- It should have at least 7 Members.
- The main objective to be written in the MOA should be to cultivate the habit of thrift and savings among its members. And it can accept deposits and lend money only to its members and shall work for the mutual benefit of its members.
Once the Nidhi Company is incorporated it must fulfill the following requirements:
- It must have at least 200 members/shareholders.
- Minimum Net Owned Fund should be Rs. 10 Lakhs.
- Unencumbered term deposit must be at least 10% of the term deposit.
- The ratio of Net Owned Fund to term deposit should not be less than 1:20.
Yes, the Deposits with such companies are safe and secure because the Ministry of Corporate Affairs and Reserve Bank of India has framed rules and regulations to ensure the safety and security of Deposits. And the Nidhi Company compulsorily abide by the rules of Central Government.
The Nidhi Company uses the funds in lending to shareholders as per Nidhi Rules. It lends such money in the form of small loan for business and finance.
Any person who is above 18 years of age as per the standard age proof can become a member of the Nidhi Companies. The person desirous of becoming a member should have valid ID Proof and Address Proof.
Nidhi can provide loans to its members only after the members have given/ provided some securities like gold, silver jewelry or any type of financial securities against the loan.
Yes, another can be a shareholder in a Nidhi company.
Yes, a salaried person can become a director in a Nidhi company. There are no legal hassles in this but one may have to go through their employment agreement if it contains any restrictions.
Once a company gets incorporated, it is active and in-existence for as long as the annual compliances are met with regularly. In a scenario where the annual compliances are not complied with, the company becomes a dormant company and then it may be struck off from the registrar after a period of time. A struck-off company can be revived for a period of up to 20 years.
No, one can open a company even at their residential address. There is no legal requirement to have a commercial place to open up a company.
No, as per the constraints mentioned in the Nidhi rules and regulations, no Nidhi company can do the business of asset.