Nidhi Company Registration
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What is Nidhi Limited Company?
A Nidhi Limited Company represents the quintessence of a non-banking financial company recognized under section 406 of The Companies Act, 2013, and regulated by the Ministry of Corporate Affairs. The Nidhi Limited Companies existed even before the enactment of The Companies Act, 2013, and were earlier discerned under section 20A of The Companies Act, 1956.
A Nidhi Limited Company or a Mutual Benefit Company works on the principle of mutuality and engages in the business of loans, savings, acquisition of shares/stocks/bonds, etc. issued by the government or other marketable securities of similar nature. Its concept was brought forth only to ramp up the habit of saving mutual benefits among its members. They are incorporated in a manner to reflect similar nature to as that of public limited companies. Hence, it formulates under the norms and guidelines of both – The Company Act, 2013, and Nidhi Company Rules, 2014. But unlike public companies, they do not deal with any purchase or sale of goods (except securities), provide any services or engage in agricultural or industrial activities.
An NLC does not need any approval from the Reserve Bank of India before its incorporation as it is not regulated by the RBI. The funds of a Nidhi Company are lent and borrowed within the organization only. That means the funds are contributed and used by the shareholders of the company only. Despite any regulations, RBI can issue directives on them in regards to the deposit acceptance activities.
At the minimum, the set up of such a company requires at least three directors and seven shareholders. Moreover, its memorandum shall propose the sole idea of the company’s foundation to promote mutual savings among a group of people. Further, as per the guidelines under the mentioned acts, the company shall have indulged a minimum of 200 members within one year of its incorporation else the body is dissolvable. The Nidhi Company Rules and The Company Act make it mandatory for such business entities to register themselves with the Registrar of Companies.
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Incorporation certificate
Benefits of Nidhi Company
No external interference
These single office foundations offer deposits to their members at charming rates with no outside inclusion and least documentation. They are not required to present any annual audits to the higher bodies.
Easy incorporation
NLCs require only a minimum of seven members for its foundation. It involves the least documentation and takes less time in registration as compared to other forms of business organizations.
Less Compliance
As the RBI does not hold any regulations on NLCs, therefore, it exempts any stringent compliance from the body and they work as per the guidelines of Nidhi Rules.
Net Owned Fund
The capital investment made by an owner in its business is referred to as the Net Owned Fund. In such business bodies, the investment raise deposits in the ratio of 1:20. That means on investment of one rupee we raise deposits of twenty rupees.
Less Risk
As the Nidhi Rules, 2014, clearly states that the lending and borrowing of deposits in an NLC will be done within the members of the body only. Therefore, there is no risk of non-repayment of loans alike other forms of companies.
More Certainty
A large number of people ranging from different age groups like the idea of savings being it in terms of bank deposits or investment in the share or stock markets. As the signature motive of Nidhi Limited Companies is to promote the idea of mutual savings and practice the same. Therefore, NLCs have higher certainty as compared to other company types.
Minimum requirements for Nidhi Company
Minimum 7 Members
One of the Member must be an Indian resident
DSC for 7 Members
Minimum 7 Directors
Minimum Authorized Share Capital 500,000/-
Directors and shareholders can be same
DIN for all Directors
Documents Required for Nidhi Company Registration
Company Name
Company Object
All Directors PAN Card
All Directors Aadhaar Card
All Directors Voter ID / Driving License
All Directors Latest Bank Statement
Latest Electricity Bill (For Address Proof)
Rent Agreement (If office is Rented)
All Directors Email ID
All Directors Mobile Number
All Directors Photo
What all you get
DIN for 7 Directors
MOA + AOA
Customized Incorporation Master File
Bank Account Opening Document Support
Digital Signature Token for 7 Promoters
Incorporation Certificate
Company PAN Card
Domain Name + Web Hosting
Company Name Approval
New Incorporation Kit
Company TAN
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