Nidhi Company Registration

Looking to launch your Nidhi Company? Start your business journey today with Tax2Fin’s streamlined Nidhi Company Registration process. We offer an efficient registration experience, helping you get your business operational quickly.

Nidhi Company Registration

A Nidhi Company, operating within India’s financial sector and recognized under Section 406 of the Companies Act, 2013, primarily aims to foster a habit of savings and thrift among its members by offering a secure and convenient way to save and access funds. While classified as a Non-Banking Financial Company (NBFC), Nidhi Companies are unique because they are regulated by the Ministry of Corporate Affairs (MCA) and are exempt from most core provisions enforced by the Reserve Bank of India (RBI) that apply to other NBFCs.

Nidhi Companies function on a mutual benefit principle, strictly dealing only with their registered members. Their main objective is to promote savings and provide financial assistance to these members by accepting deposits and offering loans exclusively to them. Governed by the Nidhi Rules, 2014, they operate without needing an RBI license, but must adhere to MCA’s regulations. Their activities are limited to receiving deposits from and lending to members, strictly prohibiting dealings in securities, chit funds, leasing, hire purchase, or insurance. For anyone considering starting a Nidhi Company, a thorough understanding of the registration process and adherence to regulatory compliance is essential.

These companies play a vital role in encouraging financial inclusion and savings, particularly in areas with limited traditional banking services. They combine traditional savings methods with modern financial practices, making them a key component of India’s financial strategy. However, anyone considering operating or investing in a Nidhi Company should be fully aware of its operational limitations and regulatory obligations.

Tax2Fin assures excellent satisfaction and prompt delivery of your Nidhi Company Registration Certificate, managing all government requirements through our expert team. For efficient Nidhi Company registration and complete compliance services, please reach out to us.

Process for Nidhi Company Registration

  • Obtain Digital Signature Certificates (DSCs)

    The prospective directors of the Nidhi Company must first acquire Digital Signature Certificates (DSCs). This is a mandatory initial step, as the entire Nidhi Company registration process is conducted online and requires digital authentication

  • Obtain Director Identification Number (DIN)

    Following the DSC, directors need to secure their Director Identification Number (DIN). This can be done online through the Ministry of Corporate Affairs (MCA) portal. This step is only necessary if the directors do not already possess a DIN from a previous directorship.

  • Name Approval

    The next stage involves applying for the desired company name via the RUN form on the MCA website. The chosen name must be unique, accurately reflect the company's business nature, and typically concludes with 'Nidhi Limited' to signify its specific classification.

  • Drafting Memorandum of Association (MOA) and Articles of Association (AOA)

    Crucial legal documents, the Memorandum of Association (MOA) and Articles of Association (AOA), must be meticulously drafted. These documents detail the company's objectives, internal rules, and regulations. For a Nidhi Company, the MOA specifically must state its primary objective: fostering thrift and savings among members, accepting deposits exclusively from members, and lending to them for their mutual benefit.

  • Filing of SPICe Form INC-32

    The integrated SPICe Form INC-32 needs to be filed with the Registrar of Companies (ROC). This single form serves as a comprehensive application for allotting DINs, reserving the company name, and initiating the incorporation process for a new company.

  • PAN, TAN and Bank Account

    Upon successful incorporation, the company will automatically be allotted its Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN). Following this, the company can proceed to open its bank account.

  • Apply for Nidhi Status

    After incorporation, the company must work towards fulfilling the specific requirements to be recognized as a Nidhi Company under the Nidhi Rules, 2014. These key conditions include having a minimum of 200 members, maintaining Net Owned Funds (NOF) of at least INR 10 Lakhs, and adhering to the prescribed ratios between Net Owned Funds and deposits.

  • File NDH-1 Form

    The company is required to file Form NDH-1 within 90 days from the end of its first financial year after incorporation, or within 90 days from the end of the second financial year, whichever occurs earlier. This form must be duly certified by a practicing company secretary, chartered accountant, or cost accountant.

  • File NDH-2 Form

    If a Nidhi Company is unable to meet the specified requirements (such as the minimum member count or NOF ratio) within the stipulated timeframe, it may apply for an extension to the Regional Director by filing Form NDH-2.

  • Annual Compliance

    Nidhi Companies have ongoing annual compliance obligations, including filing half-yearly returns with the Registrar of Companies (ROC) using Form NDH-3. This ensures continuous adherence to regulatory standards.

Documents Required for Nidhi Company Registration

  • Director and Shareholder PAN Cards

    For all proposed Directors, you'll need their PAN Card. For all Indian Shareholders and Directors, both their PAN and Aadhaar Cards are required.

  • Business Address Verification

    If the business property is owned, provide a copy of the Registry and the latest government electricity bill. If the property is rented, you'll need the Rent Agreement, the latest government electricity bill, and a No-Objection Certificate (NOC) from the landlord.

  • Additional Director Documents

    Each proposed Director must submit a utility bill, telephone bill, mobile bill, or bank statement that is no older than two months as proof of address. You'll also need their mail ID and mobile number, along with the Draft Articles of Association and Draft Memorandum of Association.

  • Photographs and ID

    Finally, you'll need latest passport-sized photographs of all proposed Directors, along with their Aadhaar Card or Passport for identification.

  • Mail ID and Mobile number

    Mail ID and Mobile number of proposed Director along with Draft Articles of Association and Draft Memorandum of Association.

Advantages of Nidhi Company Registration

Nidhi Company Registration

  • Promotes Savings and Financial Discipline

    Nidhi Companies are specifically designed to encourage their members to save money. They achieve this by offering various savings schemes and by fostering a consistent habit of financial discipline among their member base.

  • Easy Access to Loans

    A significant benefit for members is the straightforward access to loans. Loans are typically provided at relatively reasonable interest rates compared to the broader market, and the approval process is generally simpler and faster than what's found in traditional banks.

  • Lower Interest Rates

    For members in need of financial assistance, Nidhi Companies usually offer loans at interest rates that are more competitive and lower than those typically charged by conventional banks and other financial institutions.

  • Minimum Documentation and Formalities

    The process of obtaining a loan or accessing other financial services through a Nidhi Company involves considerably less paperwork and fewer formalities, making the experience more convenient and less burdensome for members.

  • Member-Centric Operations

    Since Nidhi Companies exclusively deal with their registered members, they develop a deep understanding of their member base. This familiarity enables them to customize their services to precisely match the unique needs and financial circumstances of their members.

  • Regulated by MCA, Not RBI

    A distinct advantage is that Nidhi Companies are regulated by the Ministry of Corporate Affairs (MCA) rather than the Reserve Bank of India (RBI), unlike most other NBFCs. This often translates to fewer stringent regulations, potentially leading to more streamlined and efficient operations.

  • Better Interest Rates on Deposits

    Nidhi Companies frequently offer more attractive interest rates on deposits compared to traditional commercial banks. This is a clear benefit for members who are looking to save their money while earning higher returns on their deposits.

  • Limited Risk Factor

    Given their restricted and localized operations, with a primary focus on a known group of members, the inherent risk associated with lending and other financial activities within a Nidhi Company is comparatively lower than that of broader financial institutions.

  • Building Local Community Networks

    Nidhi Companies often operate within specific geographical communities or regions. By doing so, they contribute significantly to the financial empowerment and overall development of that particular locality, fostering stronger local economic networks.

  • No External Involvement in Management

    These companies are managed internally by their own members. This structure ensures that the decisions made are more likely to directly align with the best interests of the members themselves, promoting transparency and trust.

How Tax2Fin helps you in the Nidhi Company Registration Process?

We are dedicated to providing comprehensive support to our clients; a personal manager will be assigned to guide you through the entire Nidhi Company Registration process.

Our team will assist you with the following key areas:

  • Company Name Search: We will help you find a suitable and available name for your company.
  • Company Name Approval: We will manage the application process for obtaining approval for your chosen company name.
  • Obtaining DIN (Up to 2 Directors): We will facilitate the acquisition of Director Identification Numbers (DINs) for up to two directors.
  • Assist in drafting of MOA & AOA: Our experts will help you draft the crucial Memorandum of Association (MOA) and Articles of Association (AOA).
  • Filing of SPICe+ Form on the MCA portal: We will handle the complete filing of the integrated SPICe+ Form on the Ministry of Corporate Affairs (MCA) portal.
  • Getting you your company’s Certificate of Incorporation, PAN & TAN: We will ensure you receive your company’s Certificate of Incorporation, along with its Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN).

Steps to be taken care of Post Incorporation of the Company

Here’s a summary of the essential compliances for a Nidhi Company, which are crucial considerations for Nidhi Company Registration:

  • DIN KYC

    This is an annual, one-time activity. All directors are required to complete their Director Identification Number (DIN) Know Your Customer (KYC) process once every financial year to ensure their details are up-to-date with the Ministry of Corporate Affairs (MCA).

  • Income Tax Return Filing

    This is also an annual, one-time compliance requirement. According to Income Tax Laws, Nidhi Companies must file their income tax return using Form ITR-6. If applicable based on turnover, a Tax Audit report, digitally signed by a Chartered Accountant, must also be submitted.

  • Auditor’s Appointment

    As per the Companies Act, within 30 days of its incorporation, the Nidhi Company is legally obligated to appoint a Chartered Accountant. This appointed CA will be responsible for conducting the Registrar of Companies (ROC) audit for the company.

  • ROC Annual Filing

    This is another annual, one-time activity. At the close of each financial year, once the income tax return has been filed and the ROC Audit report prepared, the company must upload its Annual Return. This includes Form AOC-4 (for financial statements) and Form MGT-7 (for annual return details) on the MCA portal. These forms require digital signatures from both the directors and the Chartered Accountant who performed the audit.

  • Annual Compliance (NDH-3 Filing)

    In addition to the above, Nidhi Companies are specifically required to file half-yearly returns with the Registrar of Companies (RoC) using Form NDH-3. This is a recurring compliance to report their operational status. To ensure your Nidhi Company operates smoothly and legally, a series of compliances must be met according to the Ministry of Corporate Affairs (MCA) schedule. Our team will actively help you adhere to these deadlines, as meeting all necessary requirements, especially for Nidhi Company Registration, is crucial.

FAQs

A Nidhi Company is an NBFC (Non-Banking Financial Company) in India, recognized under Section 406 of the Companies Act, 2013. Its main purpose is to foster saving habits among its members, take deposits, and provide loans exclusively to them for their mutual benefit.

Unlike other NBFCs, a Nidhi Company interacts only with its members and operates on a mutual benefit principle. It is exempt from most core provisions applicable to other NBFCs regulated by the Reserve Bank of India (RBI).

The main functions of a Nidhi Company involve accepting savings from and providing loans to its own members. These activities are conducted solely for the collective financial advantage of all members.

To join a Nidhi Company, an individual must subscribe to its shares. They also need to agree to and comply with the terms and conditions outlined in the company’s membership agreement.

Nidhi Companies are regulated by the Ministry of Corporate Affairs (MCA) and are generally considered relatively safe for small savings. However, like any investment, they carry inherent risks, so members should always perform their own due diligence.

No, Nidhi Companies are strictly permitted to accept deposits only from their officially registered members. They cannot take deposits from individuals or entities that are not members.

Nidhi Companies are governed by the Nidhi Rules, 2014, and comply with relevant provisions of the Companies Act, 2013. They are regulated by the Ministry of Corporate Affairs (MCA) and not by the Reserve Bank of India (RBI).

To establish a Nidhi Company in India, you need a minimum of seven shareholders and three directors at the time of incorporation. The company must also fulfill specific financial criteria as stipulated by the Nidhi Rules, 2014.

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