An Overview- NIDHI COMPANY REGISTRATION

Nidhi Company Registration unlocks the potential of Indian Financial Services. It plays a vital role in the Indian Financial Sector, especially by offering unique financial services to individuals and small businesses.

In the dynamic landscape of the Indian financial sector, Nidhi companies have emerged as key players. Let’s look closely at the Nidhi Company Registration Process and explore the significance of these entities. And also delve into the regulatory framework governing their operations. So, at Legal Compliance India we decided to our financial professionals to help you navigate the intricacies of Nidhi company registration successfully.

Let’s understand what Nidhi Company is, well it is a Non-Banking Financial Company (NBFC) recognized under section 406 of the 2013 Companies Act. Nidhi Company Registration unlocks access to lend and borrow money from its members. 

The main objective of Nidhi companies is to cultivate the habit of savings and thrift among their members by providing them with a range of financial services. Incorporation  Nidhi Company requires a minimum of 7 members; out of these 7 members, 3 must be the company director.

Benefits of Nidhi Company:

Nidhi Companies offer several benefits to their members:

Easy Access to Financial Services: 

Basically, Nidhi Companies provide convenient access to financial services, especially for individuals who may have limited access to traditional banking institutions.

Lower Interest Rates: Not only do they offer loans to their members, equally they also provide them at lower interest rates compared to commercial banks and other financial institutions.

Flexible Loan Policies: Compared to traditional financial institutions, Nidhi Companies have more flexible loan policies.

Limited Regulatory Requirements: Unlike other types of NBFCs Nidhi Companies have certain exemptions and relaxed regulatory requirements.

Nidhi Company 6 Advantages

Nidhi Company Registration Documents - Complete Guide

Identity and Address Proof of Directors and Shareholders (PAN Card, Aadhaar Card)

Passport-size photographs of all directors and shareholders.

Proof of the registered office address, such as utility bills (electricity bill, telephone bill, etc.) or rental/lease agreement in the name of the company.

No Objection Certificate (NOC) from the property owner where the registered office of the Nidhi Company will be situated.

Director Identification Number (DIN) and Digital Signature Certificate (DSC)

Forms that need to be filled for Nidhi Company in India

NDH – 1 Return of Statutory Compliance (Within 90 days from the closure of the first financial year )

NDH – 2 Application form is filed for the Extension of time (Within 30 days from the closure of the financial year)

NDH -3 is a Half Yearly return (Within 30 days from the conclusion of each half-year)

NDH -4 Declaration

Markedly, Nidhi companies incorporated after the commencement of the Nidhi (Amendment) Rules, 2019 shall file Form NDH-4 within sixty days from the date of expiry of:

(a) an year from the date of its incorporation or

(b) the period up to which an extension of time has been granted by the Regional Director

For every company which is incorporated before the commencement of these rules, i.e. if they were incorporated after 2014 but before 2019, then the due date to file Form NDH-4 is –

 Within One year from the incorporation of the company or

Within a period of 9 months from the date of commencement of these rules, whichever is later.

AOC – 4 (Within 30 days from the date of the Company’s Annual General Meeting)

MGT -7 (Within 60 days of the Annual General Meeting)

Process for registering a Nidhi Company in India

To do a Nidhi Company Registration in India, one needs to follow these steps:

Minimum Requirements:

At least 7 shareholders (members).

Minimum 3 directors.

All shareholders/directors must be individuals and Indian residents.

Minimum capital rule Rs. 5 lakhs.

Digital Signature Certificate (DSC):

Get DSC for all the proposed directors of the company. This is necessary for the online filing of forms.

Director Identification Number (DIN):

Obtain DIN for all the proposed directors by filing Form DIR-3 with MCA.

Name Approval:

Choose a unique name for Nidhi Company and submit the desired name to the Registrar of Companies (ROC). The name should follow the naming guidelines provided by the MCA. Such an approved name remains valid for 20 days only.

Incorporation:

After name approval, one needs to file the incorporation documents including the Memorandum of Association (MOA) and Articles of Association (AOA) with the ROC.

PAN and TAN:

After the incorporation, one will receive the Certificate of Incorporation (COI) from ROC. Apply for a Permanent Account Number (PAN) and a Tax Deduction and Collection Account Number (TAN) from the relevant authorities.

Bank Account Opening:

Open a bank account in the name of Nidhi Company and deposit the minimum capital requirement.

Nidhi Company Compliance:

After registration ensure compliance with the regulatory requirements of a Nidhi Company such as conducting regular board meetings, maintaining statutory registers, filing annual financial statements, etc.

Nidhi Company Registration Fees

Nidhi company registration fees encompass government fees, professional fees, and miscellaneous expenses. These fees are crucial aspects of establishing a Nidhi company and should be carefully considered when budgeting for the registration process. By understanding the various components of the registration fees and consulting with experts in the field, you can gain clarity on the financial requirements and make informed decisions while setting up and operating a Nidhi company.

Restrictions on Nidhi Company as an NBFC

Altogether, Nidhi Companies can’t deal with chit funds.

Evidently, they cannot provide hire-purchase financing.

Nidhi Companies will not have the option to deal with leasing finance.

Consequently, insurance and securities businesses are not allowed by Nidhi Companies.

Except for members, they cannot accept deposits from anyone other.

In the case of Nidhi Company, they cannot lend money to anyone other than their members.

What Are the Latest Nidhi Company Rules?

Below are the notable changes relating to the registration of Nidhi Company made pursuant to the Nidhi Company (Amendment) Regulations, 2022.

The company have to file the declaration in form NDH-4 within 120 days of incorporation fulfilling the following conditions:

Minimum 200 members.

Net Owned Funds of Rs.20 lakhs

Nidhi companies are required to have a minimum paid-up capital of Rs. 10 lacs.

Every Nidhi shall maintain Net Owned Funds of not less than Rs. 20 lakhs.

The Provision of acceptance/rejection of form NDH-4 is now specified for 45 days.

Nidhi (Amendment) Rules, 2023:

MCA notified Nidhi (Amendment) Rules, 2023 on 20 January 2023, to change some forms relevant to Nidhi firms as specified by the Nidhi Rules 2014. Form NDH-1, Form NDH-2, Form NDH-3, and Form NDH-4 all are modified. The Nidhi (Amendment) Regulations, 2023 Annexure contains a modified version of these forms..