Nidhi Company

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Overview

A Nidhi company, a special type of financial institution in India, encourages its members to save money and provides a way for them to borrow from each other. Think of it like a community savings and loan association, but it’s officially recognized under India’s company laws and overseen by the Ministry of Corporate Affairs. The main goal of a Nidhi is to promote the habit of saving among its members. These members can be individuals or groups like trusts or other companies. The Nidhi accepts deposits from its members and then lends this money back to them at reasonable interest rates. To operate as a Nidhi, a company needs to have at least 200 members and maintain a minimum of Rs. 10 lakhs in its own funds. There are also rules about how much money they need to keep in reserve and how they can invest their funds, all set by the Ministry of Corporate Affairs. Nidhi companies are particularly helpful in smaller towns and rural areas in India. They offer a convenient and trusted way for people within a community to save and borrow money.

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Minimum Requirements

New & Unique Name

In view of name guidelines under the Companies Act, 2013, you must have a new and unique name. A Nidhi company must have the word “Nidhi” in its name.

Minimum Seven Persons

Register your company with at least 7 persons to act as the initial shareholders. Minimum director required is 3 which can’t exceed 15 directors.

Registered Address

Company Premises can either be owned or rented

Capital Requirement

At the time of Incorporation minimum capital requirement for a Nidhi company in India is Rs. 5 lakhs, as per the Nidhi Rules, 2014. However, to enjoy the Ndhi Company Status, the minimum paid-up equity capital required is Rs. 10,00,000 help by at least 200 members.

Documents Required

Required in Soft Copy Only

Documents of Directors

PAN & AadharCard
Other ID Proof Driving License, Voter Id or Passport
Address Proof Bank Statement or Utility Bills - [E.g.- Electricity Bill / Water Bill / Property Tax]
Colour Photo
Email id and Mobile Number

Soft Copy Only

Business Address Proof

Address Proof (owned) Electricity Bill / Water Bill / Property Tax/Driving License]
Address Proof (Rented) NOC/ Rent Agreeement
Address Proof of Business Owned Electricity Bill / Water Bill / Property Tax/Driving License]
Address Proof of Business Rented NOC/ Rent Agreeement

Advantages

Separate Legal Entity

A Nidhi company is legally distinct from the individuals or groups who are its members. Because it’s registered as a public limited company under the Companies Act of 2013, it has its own separate identity in the eyes of the law. This means the Nidhi can have its own assets, can take legal action or be taken to court under its own name, and can independently make agreements.

Limited Liability of Members

In a Nidhi company, the financial risk for each member is limited to the value of the shares they own. This means that if the company faces any debts or losses, a member won’t be personally responsible for more than the amount they’ve invested in their shares. This protects their personal assets.

Lower Capital Requirements

Starting a Nidhi company doesn’t need a huge amount of money upfront compared to other financial businesses. The basic requirement is to have at least Rs. 10 lakhs in their own funds. What’s helpful is that the company can gradually build up this amount using the profits it makes over time.

No RBI Regulation

Nidhi companies operate without direct control from India’s central bank, the Reserve Bank of India (RBI). This lack of direct RBI oversight can make it simpler for these companies to function and grow their operations.

Flexibility in Lending

Nidhi companies often offer loans to their members with lower interest charges compared to banks or other lenders. This makes borrowing money from a Nidhi a more appealing option for its members.

Members-Focused Business

Nidhi companies operate as member-centric financial entities, prioritizing the financial well-being of their membership. This inherent focus cultivates a cohesive community united by shared economic interests and objectives.

Profit-Sharing

Nidhi companies allocate a share of their profits to their members as dividends, enabling them to directly gain from the company’s financial performance.

Encourages Savings

Nidhi companies fundamentally aim to foster a culture of savings among their members. By offering a secure and dependable avenue for depositing funds, these entities motivate their members to save for future financial needs.

Compliances

Transparency, accountability, and protecting stakeholder interests all start with timely compliance. Our team ensures your regulatory filings are handled smoothly and efficiently. These compliance obligations typically fall into four key categories. Want to stay ahead and compliant? Reach out to our expert startup consultants for tailored guidance.

One Time Compliances

Post-incorporation, companies are required to complete certain one-time formalities such as appointing the first statutory auditor, filing a declaration to commence business, and issuing share certificates to shareholders

Event Based Compliances

Change of Directors, Change of regd. Address,Allotment of shares etc

Regular Compliance

Accounting , Tax Filing , Maintenance of records and registers etc

Annual Compliance

ROC Annual filing, Audit of financial statement, ITR filing etc