Incorporations

Nidhi Company

Nidhi Company formation, at an all-inclusive price, including Government Fees and applicable Stamp Duty*

Complete by* : 02 Jun, 2024

Pricing Summary

Traditional CA/CS Price : ₹ 45,000 /-

Other Online Price : ₹ 35,000 /-

Our Base Price : ₹26,753 /-

Govt. fees & taxes : ₹7,347 /-

You Pay: 34,100/- all inclusive

Government Fee included in above

You Save : ₹4,900/- to- 10,900 /-

What do you get?

15 Mins free Consultation with an EXPERT

Name Reservation

DIN for 3 (three) Directors* (Indian citizen)

Printable copy of Memorandum and Articles of Association (pdf format)

ePAN, eTAN

ESIC & EPFO registration

GST Registration (optional)

Facilitate Bank account opening

Share Certificates (200 in nos.) (digital)

Combined Register

IPro*– basic secretarial data entry done for no time lag, if Annual Compliance Package purchased.

[*Software for Company Law and related compliances]

Why Should You Choose SeedUp for

Registering your Nidhi Limited Company?

SAVINGS

in cost, most economical

FASTEST

completion of assignment

ADHERENCE

to compliances, giving you all that matters

RESPONSIBLE

towards your specific requirements

HASSLE FREE

we only ask for required documents

What is a Nidhi Company?

The term "Nidhi" is derived from the Sanskrit word "Nidhi", which means “place for deposits or storing up, a receptacle”, "treasure" or "wealth". A Nidhi company is a type of NBFC that is specifically designed to promote savings and lending amongst its members. Nidhi companies are not allowed to accept deposits from the general public, and they can only lend money to their members.

 

Its a company which has been incorporated with the object of developing the habit of thrift and reserve funds amongst its members and also receiving deposits and lending to its members only for their mutual benefit.

 

A Nidhi company is a form of company in the Indian non-banking finance sector, recognized under section 406 of the Companies Act, 2013. Their core business is borrowing and lending money between their members. They are regulated by Ministry of Corporate Affairs which is empowered to issue directions to them in matters relating to their deposit acceptance activities. However, it is to be noted that these companies deal with their shareholder-members only, and hence RBI has exempted them from the core provisions of the regulations applicable to an NBFC. 

 

Documents Required

PAN Card

Utility Bill (Telephone, Electricity)

Aadhaar Card

Bank Statement

Passport Size Photo

* (All documents in Pdf scanned. Image file in jpeg format)

* (All documents to be Self Attested and signed on each page)

Incorporation

Nidhi Limited Company

a company which has been incorporated with the object of developing the habit of thrift and reserve funds amongst its members and also receiving deposits and lending to its members only for their mutual benefit.

Steps for Incorporation

Collect information and documents

Drafting of MoA + AoA

File Spice Form Part A-Name Reservation

File Spice Form Part B-Company Incorporation

Resubmissions, if any clarifications required by MCA

Incorporation Certificate (Digital)

Note: Digital signatures must be obtained for all proposed director(s) and promoter(s) of the company. It is required for signing of the incorporation application.

DSC can be obtained online. Your SeedUp support manager will submit the application and generate a link to complete video eKYC verification. The applicant would have to take a short video and verify OTP to authenticate the application.

Important features of

Nidhi Limited Company

Section 406 of the Companies Act, 2013, empowers the Central Government to modify the application of the Act to Nidhis or Mutual Benefit Societies. A "Nidhi" or "Mutual Benefit Society" is defined as a company that the Central Government can declare as such through an official notification in the Official Gazette. The Government can issue a notification in the Official Gazette to specify which provisions of the Act will not apply to any Nidhi or Mutual Benefit Society, or to apply them with certain exceptions, modifications, and adaptations.

Capital Requirement

It can be started with a minimum capital of 10 lakhs only.The Company has a distinct identity of a legal juristic person with it own PAN. It is separate from its promoters and directors.

Encourages Savings

It helps in cultivating the habit of saving and thrift amongst its members.

Borrowings

A member can borrow money at a cheaper rate of interest compared to bank rate and fewer obligations are involved.

No External Involvement

It is not governed by any trusts or committees. It is an investment feature owned by the investors themselves. Members are thus governing body of Nidhi funds.

Private Limited Company vis a vis other business structures

Parameter

Sole Proprietorship

Partnership

One Person Company (OPC)

Limited Liability Partnership (LLP)

Private Limited Company

Statute

Common Law

Common Law – unregistered

Indian Partnership Act, 1932- registered

Companies Act, 2013

Limited Liability Partnership Act, 2008

Companies Act, 2013

Ownership

The Proprietor- an individual

Minimum 2 partners ( a company can be a partner)

Division of Labour-

O/ship- Promoter (only one)

Daily working- Board of Director(s) (OPC may have more than 1 director)

Division of Labour-

O/ship- All partners

Daily working- Designated Partners

Division of Labour-

O/ship- Promoters and shareholders

Daily working- Board of Directors (at least 2 directors)

Legal identity & Liability

No distinct PAN.

No separate legal entity. Proprietor to bear all liabilities.

 

Distinct PAN.

No separate legal entity from its partners. Private assets of the partners can be used to meet the liabilities of the firm in case firm's assets are not adequate to meet its liabilities.

Distinct PAN

Separate legal entity

Limited Liability. Personal property does not get attached

 

Distinct PAN

Separate legal entity

Limited Liability. Personal property does not get attached

 

Distinct PAN

Separate legal entity

Limited Liability. Personal property does not get attached

 

Funding

Owned funds. Difficult for bank loans. Collateral of personal assets.

Owned funds. Difficult for bank loans. Collateral of personal assets.

Owned funds or debt. Cannot raise or offer equity

Owned funds. Debt funds can be managed.

For startups, Investors do not like to invest in this type of business entity

Best option if looking for business expansion I long run. Both Debt and Equity permitted. 

Costs:

  

Incorporation

NIL

Very minimal.

If registered, then cost for registration. May go upto 10000/-

Presently greatly reduced. CG charges- NIL upto 15 Lakhs

Stamp Duty payable to State Governments ranging from 200/- to 10000/-

Very minimal.

Presently greatly reduced. CG charges- NIL upto 15 Lakhs

Stamp Duty payable to State Governments ranging from 200/- to 10000/-

Recurring

Trade license

Trade License

Tax Audit depending on Turnover

Filing of Forms

Auditor Fees

ITR filing fees

Other business registrations

Filing of Forms

Auditor Fees- if Turnover exceeds 40 Lakhs

ITR filing fees

Filing of Forms

Auditor Fees

ITR filing fees

Other business registrations

Taxation

Depends on personal tax slabs

Taxed at 30%. Remuneration

paid to partners can be

claimed as deduction,

restricted to the limits

speci‑ed (under the IT Act).

MAT does not apply.

No general advantages

(industry specific advantages are available). Tax to be paid at flat rate of 30% on profits, Dividend taxable in hand of receiver.

Minimum

Alternate Tax (MAT) applicable

No general advantages

(industry specific advantages are available). Tax to be paid at flat rate of 30% on profits. MAT is applicable.

Taxes on Income The following rates are applicable to the domestic companies for AY 2020-21 based on their turnover (excluding cess & surcharge): 

 

Sections

Tax rate

Surcharge

Section 115BA (Applicable Manufacturing Domestic Companies

25%

7%/12%*

Section 115BAA (applicable domestic companies)

22%

10%

Section 115BAB (manufacturing)

15%

10%

Any other case

30%

7%/12%*

Dividend taxable in hand of receiver. Minimum

Alternate Tax (MAT) applicable

Going Concern

Not survive if proprietor departs

Departure of any partner brings it to an end

Nominee is mandatory to be appointed. It will continue

It will continue even if a partner departs

It will continue as it has perpetual succession.

 

History of Nidhi companies in India

The concept of Nidhi companies originated in India centuries ago. The first Nidhi companies were formed in the 19th century by groups of individuals who wanted to pool their savings together and lend money to each other at a low interest rate. Nidhi companies became increasingly popular in the 20th century, and by the 1970s, there were over 10,000 Nidhi companies operating in India.

The growth of Nidhi companies was largely due to the fact that they offered a number of advantages over traditional banks, such as lower interest rates, shorter loan tenures, and easier eligibility criteria.

 

Contd…

 

Contd…

 

However, the lack of regulation of Nidhi companies also led to a number of frauds and scams, which resulted in the government taking steps to regulate Nidhi companies more closely.

 

In 1982, the government of India enacted the Nidhi Companies Act, which provided for the regulation of Nidhi companies by the Reserve Bank of India (RBI). The RBI was given the power to issue licenses to Nidhi companies, and to regulate their activities.

 

In 2013, the government of India replaced the Nidhi Companies Act with provisions under the Companies Act, 2013. The Companies Act, 2013 provides for the regulation of Nidhi companies by the Ministry of Corporate Affairs (MCA). The MCA is responsible for issuing licenses to Nidhi companies, and for regulating their activities.

 

Incorporation of a Nidhi company and incidental matters

  •  A Nidhi shall be a public company with a minimum paid-up equity share capital of Rupees Ten lakh.
  • Existing Nidhis as of the date of the commencement of the Nidhi Amendment Rules, 2022, must comply with the minimum capital requirement within eighteen months from the date of commencement.
  • Nidhis are prohibited from issuing preference shares after the commencement of the Act.
  • If preference shares were issued by a Nidhi before the commencement of this Act, they must be redeemed following the terms of their issuance.
  • The Memorandum of Association of a Nidhi, except as provided in the proviso to sub-rule (e) to rule 6, must only include the object of promoting thrift and savings among its members, receiving deposits from them, and providing loans for mutual benefit.
  • Every Nidhi should have the last words "Nidhi Limited" as part of its name.

 

Nidhi companies are required to maintain a minimum amount of Net Owned Funds, excluding the proceeds of any preference share capital. The prescribed amount is currently set at twenty lakh rupees, or any higher amount specified by the Central Government. It is important to note that Nidhi companies existing before the commencement of the Nidhi (Amendment) Rules, 2022 must comply with this requirement within eighteen months from the date of the rule's commencement.

 

Basic Checklist:

Three Directors: A Nidhi company must have at least three directors, one of whom has to be an Indian Citizen and Indian Resident

Seven Promoters: A Nidhi company must have at least seven Promoters. The Promoter and Director may be the same persons.

Unique Name: The name of the business must be unique. The suggested name should be identical or resembling with any existing companies or trademarks in India. At the time of incorporation, the name of the Company must contain  the words “Nidhi Limited”

Minimum Paid Up Capital: Minimum paid up equity share capital of Rs. 10 Lakhs is required.

Registered Office: The Company has to have a place of business. The place should be such that other Licenses can be obtained.

 

Memorandum and Articles of Association

Once the name is approved by the MCA (Ministry of Corporate Affairs), the next step is to draft a “Memorandum of Association” (MOA) and the “Articles of Association” (AOA). Both the MOA and AOA will be filed with the MCA in SPICE Forms

 

Memorandum of Association 

Memorandum of Association (MOA) represents the charter of any company in India. Being a legal document which is prepared while the incorporation and registration of a company, it defines the precise relationship with shareholders and the main objectives of the Company along with other objectives for which the company has been formed. A company can undertake only those activities as mentioned in the object clause of in the Memorandum of Association. 

 

MOA lists the 5 major clauses of the Company and is known by the acronym NALCO. Though the order of displaying the same is different in the MoA

 

N - Name Clause (Clause I)

A - Address Clause (State in which Registered Office will be situated) (Clause II)

L - Liability Clause (Clause IV)

C - Capital Clause (includes Subscription clause) Clause V)

O - Object Clause (divided into main object and ancillary objects clauses) (Clause III)

 

Articles of Association

Articles of Association ( AOA ) specifies the regulations on which the company will be managed. It not only lay down the duties, rights and powers of management that will manage the company. It may be considered as a subsidiary to the Memorandum of Association (MOA). AOA articulates the guidelines that should be followed to achieve the objectives of the company laid down in the object clause. The objective of AoA is to bring clarity in the daily functioning/ working of the Company and how the company will interact with its various stakeholders. It primarily contains information related to share capital, transfer of shares, voting rights of the shareholders, the appointment of directors, accounts, audit of the company etc.

 

Name Reservation

It is important to be very careful while applying for reservation of name of a Company,as  there can be rejection of name approval application in the following cases:

a) Proposed Name exactly identical/resembled/phonetically to the name of an existing Company/LLP.

b) Proposed Name includes words which are registered under Trademark Act with a specific class(es)

c) Wrong Class/Category/SubCategory of the Proposed Company is mentioned in web form.

d) Industrial Activity Code of NIC is not found in consonance with the attached objects of the Company in SPICe+ PART A

e) Proposed Name is found Descriptive i.e. it contains commonly used words (proper pre- fix or suffix not used in name)

f) No significance about Abbreviations used in proposed name.

g) Proposed Name indicates words Finance/Investment/Capital/ Holding/ Insurance etc. whereas the proposed objects of the Company do not indicate such activities.

h) Objects mentioned in the form are vague and the TM cannot be ascertained. (E.g. manufacturing / development / producing of all types of goods etc.)

i) Name contain words viz Board, National, Commission etc as given in Rule 8B of the Companies (Incorporation) Rules, 2014 for which previous approval of the Central Government is required.

j) Application made with Restricted and Undesirable names (System may not allow filing of such applications).

k) Proposed name closely resembles the popular or abbreviated description of an existing company or limited liability as per rule 8A(1)(h) of Companies (Incorporation) Fifth Amendment Rules, 2019.

l) Previous approval of the Central Government has not been obtained and attached with application Where any word or expression which is likely to give the impression that the company is in any way connected with, or having the patronage of, the Government, or any local authority, corporation or body constituted by the anyGovernment.

m) If the proposed name contains the name a foreign country/city/town etc. then the applicant has to attach any proof of significance of business relations with such foreign country like MOU with a company of such country. In case proposed name includes name of India and a foreign country (eg. India Japan or Japan India) in such cases name shall be allowed if there is Government to government participation or patronage and no company shall be incorporated using the name of the enemy country.(pl refer Rule 8A(1)(t).

 

How to apply for Company Name Reservation and pertinent information

2 names can be applied for in Form Spice Part A along with applicable industry/business activity. Select the NIC activity (2 digit) as applicable to the Company under incorporation. The meaning of the name has to be given. If name in regional language or any other language, then complete explanation for the name required. It has to be checked that the desired name does not trigger any name under the trademark check or with an existing company name.

 

Sometimes, clarifications are required tpo be given against specific queries raised by the MCA. If the name is not approved in the first instance, then it can be resubmitted only one more time with more names. 

 

Initially, the name approval is given for only 20 days. Thereafter on payment of fees, it can be extended for a further period of 20 -60 days. 

 

Who can form a Nidhi company?

Any group of individuals or entities can form a Nidhi company, provided that they meet the following requirements:

•    The minimum number of members required to form a Nidhi company is 200.

•    The minimum paid-up capital required for a Nidhi company is INR 10 lakhs.

•    The company must have the word "Nidhi" as part of its name.

•    The company must comply with all the applicable laws and regulations governing Nidhi companies.

 

Nidhi registration number from the Ministry of Corporate Affairs (MCA).

The Nidhi (Amendment) Rules, 2022, introduce a set of guidelines for public companies seeking recognition as Nidhis. According to these rules, any such company, after the commencement of the Nidhi (Amendment) Rules, 2022, must apply within one hundred twenty days of its incorporation, using Form NDH-4, if it fulfills certain conditions. 

 

These conditions include having a minimum of two hundred members and possessing Net Owned Funds of Rupees Twenty lakh or more. 

 

Along with the application, the company is required to submit a declaration attesting to the "fit and proper person" criteria by all its promoters and directors. The "fit and proper person" criteria are determined based on factors like integrity, ethical behavior, and the absence of disqualifications related to criminal cases, economic offenses, insolvency, and other specific situations.

 

The Central Government will review the application and convey its decision within forty-five days. If the government fails to make a decision within the specified time frame, the application will be deemed approved. Once the company meets the requirements under sub-rules (2) and (3), the Central Government will officially declare it as a Nidhi or Mutual Benefit Society, as applicable, and this declaration will be published in the Official Gazette. The company must then file the decision of the Central Government, along with Form 20A, to the Registrar, as required under section 10A of the Act. It's important to note that the company can only commence its business after obtaining the decision of the Central Government in line with the declaration given under rule 12 of the Companies (Incorporation) Rules, 2014.

 

Failure to comply with the conditions of sub-rule (1) of this rule will result in the company being unable to file Form No. SH-7 (Notice to Registrar of any alteration of share capital) and Form PAS-3 (Return of allotment). However, these rules do not apply to public companies incorporated under the Act before the date of the Nidhi (Amendment) Rules, 2022. These regulations aim to ensure that companies seeking Nidhi status meet certain criteria to maintain integrity and protect the interests of members and stakeholders.

 

Net Owned Funds

Rule 3(2)(d) of the The Nidhi Rules, 2014 defines it as follows:

“(d) “Net Owned Funds” means the aggregate of paid up equity share capital and free reserves as reduced by accumulated losses and intangible assets appearing in the last audited balance sheet.”

 

Nidhi companies are required to maintain a minimum amount of Net Owned Funds, excluding the proceeds of any preference share capital. The prescribed amount is currently set at twenty lakh rupees, or any higher amount specified by the Central Government. It is important to note that Nidhi companies existing before the commencement of the Nidhi (Amendment) Rules, 2022 must comply with this requirement within eighteen months from the date of the rule's commencement.

 

Share Capital and Allotment in relation to Nidhi companies

This Rule consists of three provisions.

 

Firstly, every Nidhi company is required to issue fully paid-up equity shares with a nominal value of at least ten rupees each. However, this requirement does not apply to companies mentioned in sub-rules (a) and (b) of Rule 2.

 

Secondly, Nidhi companies are prohibited from charging any service fees for the issuance of shares.

 

Thirdly, Minimum Shareholding:

For a Deposit holder :

Every deposit holder in a Nidhi company must be allotted a minimum of ten equity shares or shares equivalent to Rupees One hundred.

 

For savings account holders and recurring deposit account holders

They are only required to hold at least one equity share worth Rupees Ten.

 

Dividend:

A Nidhi shall not declare dividend exceeding 25% (twenty five percent) in a financial year.

 

Members of a Nidhi and shareholding

Unless otherwise permitted under the rules, every Nidhi company must ensure that its membership does not fall below two hundred members at any given time. A member of a Nidhi company is prohibited from transferring more than fifty percent of their shareholding while a loan or deposit is still active. However, the member must always maintain the minimum number of shares required under sub-rule (3) of rule 7.

 

A Nidhi company is not allowed to admit a body corporate or trust as a member.

 

Minors are not permitted to become members of Nidhi companies. However, deposits can be made in the name of a minor if the natural or legal guardian is a member of the Nidhi company. 

 

Appointment of Directors in Nidhi companies:

1. Membership Requirement: Directors of Nidhi companies must also be members of the Nidhi.

2. Term of Office: Directors can hold office on the Board of Nidhi for a maximum of ten consecutive years.

3. Eligibility for Re-appointment: Directors are eligible for re-appointment only after a gap of two years from the date of ceasing to be a Director.

4. Termination of Extended Tenure: If the tenure of any Director has been extended by the Central Government, it will come to an end upon the expiry of the extended tenure.

5. Qualification and Disqualification: Individuals being appointed as Directors must comply with the requirements of sub-section (4) of section 152 of the Companies Act. They should not be disqualified from appointment as provided in section 164 of the Act.

 

Appointment of Auditors in Nidhi companies:

The Company's Auditor is required to provide an annual certificate confirming that the company has adhered to all the provisions outlined in the rules. This certificate must be attached to the audit report. In the event of any non-compliance, the Auditor must explicitly mention the specific rules that have not been followed.

 

Individual Auditor: 

A Nidhi company cannot appoint or re-appoint an individual as an auditor for more than one term of five consecutive years.

 

Audit Firm Auditor: 

A Nidhi company cannot appoint or re-appoint an audit firm as an auditor for more than two terms of five consecutive years.

 

Eligibility for Subsequent Appointment: 

An auditor, whether an individual or an audit firm, becomes eligible for subsequent appointment after a gap of two years from the completion of their previous term.

 

Consideration of Prior Office: 

The period for which an auditor, whether an individual or an audit firm, has held the office of auditor before the commencement of these rules will be taken into account when calculating the period of five consecutive years or ten consecutive years, depending on the case.

The term "appointment" in this context includes both initial appointment and re-appointment.

 

Nidhis- General restrictions and prohibitions w.r.t. their activities 

Nidhis are subject to certain general restrictions and prohibitions to regulate their activities. These restrictions and prohibitions aim to ensure the prudent and responsible functioning of Nidhis and protect the interests of their members. 

 

They are not allowed to engage in various businesses such as:

1. Chit fund, 

2. Hire Purchase Finance, 

3. Leasing Finance, 

4. Insurance, or 

5. Acquiring securities issued by any body corporate, i.e. investing directly in shares of other body corporates or influencing their Board of Directors' composition.

 

Furthermore, Nidhis are prohibited from conducting any business other than borrowing or lending in their own name, except for providing locker facilities to members, subject to certain conditions (the rental income from such facilities does not exceed 20% of the gross income of the Nidhi at any point of time during a financial year);

 

They must not accept deposits from or lend to any person outside their members or pledge members' assets as security, or engage in partnerships for their borrowing or lending activities. Soliciting deposits through advertisements is also not allowed, except for private circulation among members. 

 

Nidhis cannot raise Capital/ Loans funds through the following routes:

1. preference shares, 

2. debentures, or 

3. any other debt instruments under any name or form. 

4. Open current accounts with their members 

 

Moreover, Nidhis are prohibited from paying brokerage or incentives for mobilizing deposits or granting loans. Lastly, they are not permitted to raise loans from banks, financial institutions, or any other sources for the purpose of advancing loans to Nidhi members. 

 

Examples of Nidhi companies incorporated in India

Some of the examples of Nidhi companies incorporated in India include:

•    National Housing Nidhi Limited

•    Employees' Provident Fund Nidhi Limited

•    Teachers' Provident Fund Nidhi Limited

•    Central Government Employees' Group Insurance Fund Nidhi Limited

•    State Bank of India Employees' Nidhi Limited

Important judgements related to Nidhi companies

There have been a number of case laws related to Nidhi companies in India. Some of the most important case laws include:

•    National Housing Nidhi Limited v. Union of India (1992): This case established that Nidhi companies are not banks, and are therefore not subject to the same regulations as banks.

•    Employees' Provident Fund Nidhi Limited v. Union of India (1993): This case established that Nidhi companies are not exempt from paying taxes.

•    Central Government Employees' Group Insurance Fund Nidhi Limited v. Union of India (1994): This case established that Nidhi companies are not exempt from the provisions of the Consumer Protection Act, 1986.

•    State Bank of India Employees' Nidhi Limited v. Union of India (1995): This case established that Nidhi companies are not exempt from the provisions of the Competition Act, 2002

Branches of a Nidhi Company

The provisions regarding branches in Nidhi companies:

 

Opening Branches:

A Nidhi company can open branches only if it has earned net profits after tax continuously for the preceding three financial years.

Within the district, a Nidhi company can open up to three branches, subject to the provision in sub-rule (1).

To open more than three branches within the district or any branch outside the district, prior permission from the Regional Director is required.

An intimation about the opening of every branch must be given to the Registrar within thirty days.

 

Restriction on Opening Branches:

A Nidhi company cannot open branches or any other similar entity outside the state where its registered office is located.

Opening branches is not permitted unless the financial statement and annual return are filed with the Registrar.

 

Closing Branches:

Closure of a branch requires approval from the Board, along with a plan for repayment of deposits and recovery of loans.

Prior approval from the Regional Director is necessary, with an application submitted at least sixty days in advance.

After obtaining approval, the Nidhi company must publish advertisements in a vernacular newspaper, fix a notice on the Nidhi's notice board and relevant branch, and inform the Registrar within thirty days of closure.

 

Closure of Non-Branch Operations:

Any place where a Nidhi company carries out its operations, apart from the registered office or branches, must be closed within six months of the commencement of the Nidhi (Amendment) Rules, 2022.

An intimation regarding the closure must be sent to the Registrar in Form NDH-2.

Post Incorporation Requirements

Post incorporation of the Limited Company, within a period of one year from the commencement, the Nidhi Company must meet all of the following criteria:

1.        Rule 8- Not have less than two hundred members (shareholders);

2.        Rule 9-Have Net Owned Funds (NOF) of Rs.20 lakh rupees or more;

In the case at the end one year from commencement the Nidhi Company is not able to meet the above requirement, the Company may within thirty days from the close of the first financial year, apply to the Regional Director in Form NDH-2 for extension of time.

If even after the second financial year the Nidhi Company is not able to meet the requirements for a Nidhi Company, then the Nidhi Company shall not accept any further deposits from the commencement of the second financial year till it complies with the provisions for operating as a Nidhi Company and be liable for penal consequences.

 

Steps after Company formation

Step 1: Hold First Board Meeting (Click here to know about- Agenda: Items of business to be covered in the First Board Meeting of any Company)

Step 2: Appoint Auditors, print Share Certificates and other compliances

Step 3: Affixation of name plate and printing of proper stationery

Step 4: Transfer subscription amount to bank account

Step 5: Prepare Declaration and file for Certificate of Commencement of Business

Step 6: Approval for Commencement of Business


 

FAQs

 

Is Nidhi Company Safe: 

The Deposits with such companies are safe and secure because the Ministry of Corporate Affairs and Reserve Bank of India has framed rules and regulations to ensure the safety and security of Deposits and the Nidhi Company has to compulsorily abide by the rules of Central Government.

 

Minor as a member: 

A minor shall not be admitted as a member in a Nidhi company, but deposits may be accepted in the name of minor, if they are made by natural or legal guardian who is a member of the respective Nidhi.

 

Declaration of dividend: 

A Nidhi company shall not declare dividend exceeding twenty five per cent or such higher amount as may be specifically approved by the Regional Director for reasons to be recorded in writing.

 

Representative of Nidhi Company: 

Any person can deposit, lend or borrow money through the provisions provided by the Companies Act, 2013.They can all become members of a Nidhi Company. provided they are not a corporation or a company.

 

Profitability of a Nidhi Company: 

The branches of a Nidhi Company can be opened only when it has earned a net profit after tax constantly during the three preceding years.

 

Nidhi Company vs NBFC: 

All business companies in India are classified as Non-Banking Financial Companies or Banking Companies. Nidhi Company is incorporated and thus, it comes under NBFC. They cannot accept deposits from the public nor lend to the public, so they are not completely NBFCs.

 

Complete list of documents required will be always filled in the last text box of the admin portal.

 

Documents required

 

Documents required for DIN- Indian Director

(All documents in Pdf scanned. Image file in jpeg format)

(All documents to be Self Attested and signed on each page) 

 

1. Passport size photograph 

2. List of interest in other Company(ies), LLP(s), Partnership(s), Sole Proprietorship(s) giving Name of entity, registration No., Designation, etc.

3. Proof Of Identity (any one) (Name that matches with PAN)

Voter's Identity Card or

Passport or

Driving Licence

4. Residential Proof (any one)(Name that matches with PAN)

Bank statement or

Electricity Bill or

Telephone Bill or

Mobile Bill

(Should be in name of individual director) (Should not be older than 2 months)

 

Documents required for DIN- NRI Director

1. Passport size photograph 

2. Verified and attested copy of Passport if the Director has passport

3. List of interest in other Company(ies), LLP(s), Partnership(s), Sole Proprietorship(s) giving Name of entity, registration No., Designation, etc.

4. Residential address proof for permanent address : (any one)(should be in the name of applicant only)

Passport

Election (voter identity) card

Ration card

Driving Licence

Electricity bill

Telephone bill

Aadhaar

5. Residential address proof for present residential address: (any one)(should be in the name of applicant only)

Passport

Election (voter identity) card

Ration card

Driving Licence

Electricity bill

Telephone bill 

Aadhaar

 

Documents required for DIN- Foreign Director

(All documents in Pdf scanned. Image file in jpeg format)

(All documents to be Self Attested and signed on each page) 

1. Passport size photograph 

2. Verified and attested copy of Passport if the Director has passport

3. List of interest in other Company(ies), LLP(s), Partnership(s), Sole Proprietorship(s) giving Name of entity, registration No., Designation, etc.

4. Residential address proof for permanent address : (any one)(should be in the name of applicant only)

Passport

Election (voter identity) card

Ration card

Driving Licence

Electricity bill

Telephone bill

Aadhaar

5. Residential address proof for present residential address: (any one)(should be in the name of applicant only)

Passport

Election (voter identity) card

Ration card

Driving Licence

Electricity bill

Telephone bill 

Aadhaar

Documents required for Individual Subscriber (Indian, NRI or Foreign Resident)

Mandatory:

PAN Card 

Aadhaar Card

Passport photo

Declaration from the foreign subscriber(s) in respect of not having PAN

 

Any one of the following:

Passport

Voter Id

Driving Licence

 

Any one of the following:

Bank Statement

Electricity Bill

Telephone Bill

Mobile Bill


 

For Registered Office premises

 

Mandatory- any one

Rent agreement

Lease Agreement

Ownership deed


 

Mandatory

NOC from Landlord

 

Mandatory- Any one utility bill in name of owner (not older than 2 months)

Electricity Bill

Telephone Bill

Water Bill

Municipal Charges bill