A Nidhi Company is a type of non-banking financial institution (NBFC) unique to India. It is created primarily for cultivating the habit of thrift and savings amongst its members. Nidhi companies are categorized under Section 406 of the Companies Act, 2013, and are governed by the Ministry of Corporate Affairs (MCA).
Nidhi Company
A Nidhi Company is a type of non-banking financial institution (NBFC) unique to India. It is created primarily for cultivating the habit of thrift and savings amongst its members. Nidhi companies are categorized under Section 406 of the Companies Act, 2013, and are governed by the Ministry of Corporate Affairs (MCA).
Nidhi Companies are formed to borrow and lend money to its members. It is dependent on the principle of mutual benefit and building the habit of saving among its members. These companies are more operative in the southern part of India. A Nidhi company can be started with a Minimum capital of Rs.10 lakh and requires at least seven people to start with (minimum 7 members).
- Purpose: To encourage savings and provide loans to its members.
- Members: Minimum of 7 members.
- Directors: Minimum of 3 directors needed.
- Net Owned Funds: Minimum net owned funds of ₹10 lakh.
- Deposits: Must not accept deposits from non-members.
- Business: Cannot undertake activities outside its core objective of lending and accepting deposits from members.
- Purpose: To encourage savings and provide loans to its members.
- Encourages Savings: Promotes the habit of saving among its members.
- Mutual Benefit: Operates on the principle of mutual benefit, ensuring fair treatment of all members.
- Member-Focused: Loans are provided to members at lower interest rates compared to other financial institutions.
- Simplified Management: Governed by fewer regulations compared to other NBFCs, making management simpler.
- Security: Ensures the security of funds as only members can borrow or lend.
- Encourages Savings: Promotes the habit of saving among its members.
Name Reservation: Apply for name reservation through the Ministry of Corporate Affairs (MCA) using the RUN (Reserve Unique Name) form. Ensure the proposed name includes the word "Nidhi Limited."
Digital Signature Certificate (DSC): Obtain Digital Signature Certificates for all the proposed directors of the company.
Director Identification Number (DIN): Apply for Director Identification Numbers for the proposed directors if they don't already have DINs.
Preparation of Documents:
- Draft the Memorandum of Association (MOA) and Articles of Association (AOA) of the company.
- Prepare other necessary documents such as the declaration by the first directors (DIR-2), an affidavit from the subscribers, and address proof.
Filing of Incorporation Forms:
- File the incorporation form SPICe (Simplified Proforma for Incorporating Company Electronically) along with MOA, AOA, and other required documents with the Registrar of Companies (ROC).
Payment of Fees:
- Pay the requisite registration fees and stamp duty.
Certificate of Incorporation:
- Upon approval, the ROC issues a Certificate of Incorporation, and the Nidhi Company is officially registered.
Identity Proof: PAN card and Aadhaar card of all directors and shareholders.
Address Proof:
- Voter ID, passport, or driving license of all directors and shareholders.
- Recent utility bill (electricity, water, telephone) for the registered office address.
Photographs: Passport-sized photographs of all directors and shareholders.
Ownership Proof: Ownership documents or rental agreement of the registered office.
No Objection Certificate (NOC): NOC from the owner of the registered office premises.
By partnering with SS Auditors, you can ensure a smooth and hassle-free registration process for your Nidhi company, allowing you to focus on building and expanding your business. Their professional assistance ensures compliance with all legal requirements, providing you with peace of mind and a solid foundation for your company’s growth.
The minimum capital requirement for starting a Nidhi Company is Rs. 10 lakh.
A minimum of seven members is required to start a Nidhi Company.
- Must have at least 200 members within a year of incorporation.
- Maintain Net Owned Funds of Rs. 10 lakhs or more within one year.
- Maintain a ratio of 1:20 between Net Owned Funds and deposits.
- Maintain at least 10% of deposits in unencumbered term deposits with a scheduled commercial bank.
- File annual returns and financial statements with the ROC.
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Cancellation & Refund Policy
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The explanations and information provided on this page are general and high-level guidelines on how to write your own Shipping Policy. This article should not be relied upon as legal advice or specific recommendations, as we cannot foresee the exact shipping policies you wish to establish between your business and your customers. We recommend seeking legal advice to assist you in understanding and creating your own Shipping Policy.
Shipping Policy - The Basics
A Shipping Policy is a legally binding document that establishes the legal relations between you and your customers. It provides a framework for outlining your obligations and addressing various potential issues that may arise, and what happens in each case.
A Shipping Policy is good practice and benefits both sides—you and your customers. Customers benefit from being informed about what to expect from your service, while you benefit because clear Shipping Policies can attract more customers by eliminating uncertainties about shipping timeframes or processes.