Incorporation of a Nidhi Company

What is a Nidhi Company?

Nidhi is a Hindi word meaning “treasure”, Nidhi Company is primarily registered for encouraging the practice of savings among a group of people and lending funds among them for mutual benefit. Companies having such objects are been legally recognized by the Companies Act, 2013 under section 406, and are regulated by the Ministry of Corporate Affairs.

Reasons you should incorporate a Nidhi Company

Nidhi company registration will reap you the following benefits –

1. Promotes Savings among members
2. Cost friendly to incorporate
   • Simple documentation
   • Simple registration process
   • Lesser time for getting registered
3. Lesser Compliance as they are not required to register with RBI
4. Lower risk of Non-performing assets
5. As it accepts deposits and lends loans only to its members, the risk the default in loan repayment is lesser as compared to other financing companies

Various Disadvantages which Nidhi Registration face

1. Limited fundraising as funds can be raised only through members
2. Limited loans – If funds raising is limited it will also restrict the capacity to advance loan thus it may not always be a helpful source of finance for members
3. Restrictions to carry other business other than accepting deposits and lending
4. Restriction on issue of preference shares, Debentures to any person

The procedure of Nidhi Registration

Prerequisites

1. Minimum paid-up equity share capital of Rs.5,00,000.
2. No issue of preference shares, if already issued before commencement of the act, it should be redeemed in accordance with terms of issue

Directorship

1. Minimum 3 directors are required
2. Director should be a member of the company
3. And should be appointed for a period of 10 years

Other requirements

Since Nidhi companies are public limited companies all other conditions and procedures required for starting a public limited company will apply for Nidhi Company Incorporation as well.

Step 1: Apply For Digital Signature Of Directors

Step 2: Apply for the company name

Step 3: Once the name is approved apply for Incorporation

Incorporation SPICe forms

Ministry of corporate affairs has issued a single integrated SPICe form INC-32 for PAN, TAN application, DIN application, Name reservation, Registered office address, and Incorporation of the company. e-MOA and e-AOA can be used from MCA portal for drafting MOA and AOA

Step 4: Obtain the Certificate of Incorporation on its successful approval.

Click here to for your Nidhi Registration in 30 days.