Nidhi Company Compliance

What Is Nidhi Company Registration?

Nidhi Company Registration refers to the process of legally establishing a Nidhi company, which is a type of non-banking financial company (NBFC) primarily focused on accepting deposits and lending money to its members. These companies operate under the guidelines set by the Ministry of Corporate Affairs (MCA) and the Reserve Bank of India (RBI), though they are exempt from certain provisions applicable to other types of NBFCs. Nidhi companies are typically formed for the mutual benefit of their members.

Features of Nidhi Company:

• Mutual Benefit Society: Nidhi companies are formed with the objective of promoting thrift and savings among their members. They allow members to deposit funds and provide loans to members at reasonable interest rates.
• Limited to Members: Only members of the Nidhi company can avail of its services, which include depositing funds and borrowing money.
• No External Borrowings: Nidhi companies can only accept deposits from their members and cannot raise money from the general public.
• Self-regulated: These companies are largely self-regulated and work on a community-based model, focusing on the welfare and financial inclusion of their members.

Benefits of Nidhi Company Registration:

• Financial Growth for Members: Helps members save and grow their funds in a secure manner, with access to loans at reasonable interest rates.
• Tax Exemption: Nidhi companies may avail of certain tax exemptions under the Income Tax Act.
• Simplicity and Low Compliance: Nidhi companies have relatively low compliance requirements compared to other types of financial institutions.
• Access to Membership Benefits: Members can enjoy benefits like low-interest loans, high savings interest, and a sense of community support.

Eligibility for Nidhi Company Registration:

• Minimum Members: The company must have at least 7 members (individuals or legal entities).
• Minimum Shareholders: A minimum of 3 directors are required for the company.
• Incorporation: The company must be registered under the Companies Act, 2013, as a Nidhi company.
• Minimum Capital: Nidhi companies must maintain a minimum paid-up capital of ₹5 lakhs.

Process of Nidhi Company Registration:

1. Name Reservation: Choose a unique name for the company that complies with the MCA naming guidelines.
2. Obtain Digital Signature Certificate (DSC): The directors must acquire DSC for signing electronic documents.
3. Obtain Director Identification Number (DIN): The proposed directors must apply for DIN.
4. Draft Memorandum and Articles of Association (MOA & AOA): Prepare the MOA and AOA outlining the company’s business objectives and operational rules.
5. File Registration Application: Submit the application for registration with the Registrar of Companies (RoC), along with the necessary documents.
6. Obtain Certificate of Incorporation: After reviewing the application, the RoC issues a Certificate of Incorporation, marking the legal establishment of the Nidhi company.

Documents Required for Nidhi Company Registration:

• Identity and Address Proof: PAN card, Aadhaar card, and passport of the directors.
• Proof of Address: Utility bills, rental agreements, or other address proofs of the company’s registered office.
• Memorandum and Articles of Association: The company’s constitution documents.
• Photographs: Passport-sized photographs of the directors.
• No Objection Certificate (NOC): If the company is to be incorporated in an existing premises, an NOC from the owner is required.