Nidhi Company

At JuroLegal, we provide complete legal and procedural support for Nidhi Company Registration in India, enabling you to establish a member-based financial institution that promotes savings and lending among its members. Registered under Section 406 of the Companies Act, 2013 and governed by the Nidhi Rules, 2014, a Nidhi Company is a type of Non-Banking Financial Company (NBFC) that operates on the principle of mutual benefit — accepting deposits and providing loans only to its members. Our experts manage the entire process, including name approval, drafting of incorporation documents (MoA & AoA), obtaining DIN & DSC, filing with the Ministry of Corporate Affairs (MCA), and ensuring full compliance with RBI and MCA regulations. With JuroLegal, you get a transparent, compliant, and hassle-free registration experience, allowing you to build a secure and credible member-based financial network.

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A Nidhi Company in India is a non-banking financial company (NBFC) that operates under the regulatory framework of the Nidhi Rules, 2014. It is governed by Section 406 of the Companies Act, 2013. Operating as a public limited company, its primary purpose is to encourage thrift and savings among its members while facilitating financial assistance through lending.

If you’re interested in registering a Nidhi Company in India and need assistance, feel free to reach out to IndiaFilings for guidance and support. We can help you navigate the registration process and ensure that your Nidhi Company complies with all the necessary regulations. Get started on your journey towards establishing a Nidhi Company today.

Form ITR-1 cannot be filed in the following cases:

  • If Income exceeds Rs. 50 lacs
  • If Agricultural income exceeds  Rs. 5,000
  • If there is any Capital Gain Income
  • If there is income from business or profession
  • If there is income from more than one house property
  • If an  individual is a Director of a company
  • If there is any Investment in unlisted equity shares in form of Equity Shares
  • If an individual owns assets or has financial interest outside India or is the signing authority of an account located outside India
  • If an  individual is a NRI or  not ordinarily resident
  • If TDS has been deducted u/s 194N
  • If Income Tax is deducted under ESOP

Registering a company as a Nidhi in India has several advantages beyond promoting savings among members. Here are some key benefits:

Easy Formation: Nidhi Companies are easy to set up with minimal requirements, making it accessible for those looking to start such entities.

Non-Compliance with RBI: Nidhi Companies are not regulated by the Reserve Bank of India (RBI), allowing them to create their own operational rules.

Lower Risk: Transactions like lending, borrowing, or depositing are conducted among members, reducing financial risks and creating a secure environment.

Economic Registration: The registration process for a Nidhi Company is cost-effective compared to other Non-Banking Financial Company (NBFC) registration procedures, making it easier to access business loans and financing.

Savings Promotion: Nidhi Companies encourage a culture of saving among Indians, contributing to financial discipline.

Net-Owned Funding System: Nidhi Companies often use a net-owned funding system, which efficiently uses their own resources and funds to promote business growth.

  • Membership Quota:By the end of the first year, your Nidhi Company must have at least 200 members or shareholders.
  • Net Owned Funds (NOF):Your company’s NOF should exceed Rs. 10 lakhs.
  • NOF to Deposit Ratio:The NOF to deposit ratio should be greater than 1:20.
  • Unencumbered Deposits:Unencumbered deposits must be over 10% of outstanding deposits.

Nidhi Company Registration Procedure

Registering a Nidhi Company in India involves several steps to ensure compliance with legal requirements. Here is a simplified procedure:

  1. Obtain Digital Signature Certificates (DSC):

   – Acquire DSCs for all proposed directors of the company. DSCs are necessary for signing electronic documents.

  1. Apply for Director Identification Numbers (DIN):

   – Obtain DIN for all the proposed directors by submitting the required forms along with the necessary documents.

  1. Name Approval:

   – Choose a unique name for the Nidhi Company and apply for name approval through the Ministry of Corporate Affairs (MCA) portal using the Reserve Unique Name (RUN) form.

  1. Prepare Documents:

   – Prepare the Memorandum of Association (MoA) and Articles of Association (AoA) detailing the company’s objectives and rules.

   – Draft other necessary documents, such as the declaration by the first directors and the affidavit from subscribers to the MoA.

  1. File Incorporation Forms:

   – Submit the incorporation form (SPICe+), along with the required documents, to the Registrar of Companies (RoC). This includes the MoA, AoA, affidavits, and declarations.

  1. Payment of Fees:

   – Pay the required registration fees and stamp duty online through the MCA portal.

  1. Verification and Approval:

   – The RoC will verify the submitted documents. If everything is in order, the RoC will issue a Certificate of Incorporation (COI), which includes the company’s Corporate Identification Number (CIN).

  1. Post-Incorporation Compliances:

   – Apply for a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) for the company.

   – Open a bank account in the name of the Nidhi Company.

   – Apply for the necessary licenses and registrations, such as GST, if applicable.

  1. Commence Business:

   – Hold the first board meeting to appoint the company’s first directors and auditors.

   – Ensure compliance with Nidhi Rules, 2014, including a minimum of 200 members within one year of incorporation and maintaining the required net owned funds.

  1. Ongoing Compliance:

    – File annual returns and financial statements with the RoC.

    – Adhere to all regulatory requirements to maintain the status of the Nidhi Company.

  • Nidhi companies must adhere to specific rules to ensure they serve their members effectively. They are not permitted to:

    – Advertise for deposits from the public.

    – Participate in chit funds.

    – Provide leasing or hire-purchase financing.

    – Conduct lotteries.

    – Offer insurance services.

    – Sell, mortgage, or use their assets as security.

    – Partner with others for lending and borrowing activities.

    – Accept deposits or lend money to non-members.

    – Issue certain types of shares or debt instruments.

    – Exceed limits on the value of shares issued.

    – Open current accounts for members (savings accounts are allowed).

    – Lend to or take deposits from corporations.

    – Pay commissions or fees for attracting deposits.

    – Engage in any business activities beyond borrowing and lending to members.

    – Get involved in hire-purchase financing.

    – Pay fees for loans to brokers.

To register a Nidhi Company in India, you need to provide the following essential documents:

  • Directors Identification Number (DIN)
  • PAN Number (Permanent Account Number)
  • Residential proof and address proof
  • Photographs of the proposed directors and members
  • Identification documents like Aadhar card
  • Proof of the registered business place, such as a rent agreement or lease
  • Ownership proof of the business place
  • NOC (No Objection Certificate) if required
  • Memorandum of Association (MOA)
  • Articles of Association (AOA)

To establish and operate as a Nidhi Company in India, certain prerequisites must be met and categorized into requirements before and after registration.

Requirements before Registration:

  • Minimum Shareholders or Members:A minimum of 7 members is required to initiate the registration process.
  • Minimum Directors:You must have a minimum of 3 directors to form the company.
  • Minimum Capital:A minimum capital of Rs. 5 lakhs is essential to kick-start your Nidhi Company.
  • Director Identification Number (DIN):Directors must obtain a Director Identification Number (DIN).
  • Number of Directors:At least three directors are necessary to establish the company.
  • No Preference Shares:Issuing preference shares is not permitted.
  • Focus on Savings:The Company’s primary objective should be to promote the habit of saving by receiving deposits from and lending to its members exclusively for their mutual benefit.

Nidhi Companies must adhere to various compliance measures for smooth operations and regulatory compliance. These include:

  • NDH-1 Form:Submitting a list of members within 90 days at the end of each financial year using this form.
  • NDH-2 Form:If your Nidhi Company has yet to reach a membership of 200 in its first financial year, you can request an extension from the Ministry of Corporate Affairs (MCA) using this form.
  • NDH-3 Form:Filing a half-yearly return apart from the NDH-1 Form.
  • Annual Returns with ROC:Filing annual returns with the MCA using Form “MGT-7.”
  • Financial Statements:Submitting the company’s financial statements and related documents annually in Form “AOC-4.”
  • Income Tax Returns:like other businesses, Nidhi Companies must file annual income tax returns by September 30th of the following fiscal year.