Nidhi Company Incorporation

Although registration procedure of a nidhi company is easy yet, support from a professional is recommended for filing difficult forms within proper deadline. It may seem difficult to understand government portals and terms therein too. Let us know the steps of Nidhi company incorporations process.

KYC of all the Directors and Shareholders

At least 3 directors and 7 members are needed. Same individuals can be both members and directors. Without DIN numbers, maximum 3 members can be directors at the time of incorporation of the company.

Digital Signature

DSC (Digital Signature) is a fundamental need for initiating the Nidhi Company Registration Process. All the forms are submitted must be self-attested.

Required details :

1. Email ID and Mobile number

2. PAN and Aadhaar

3. Passport Size Photo

Approval of Name

The suggested names of Nidhi Company must be unique and should not match the names of already registered companies. The name can be reserved with Reserve Unique Name (RUN) form..

Documentation

After digital signature and name approval, we will draft all the directors' and shareholders' declarations sheets for their acceptance, articles of association, memorandum of association and subscription sheet.

Final Incorporation (MoA and AoA)

Once approval of name procedure is completed, the application for Nidhi Company Registration should be submitted through SPICe Form. The application should accompany Memorandum of Association (MoA) and Articles of Association (AoA) of Nidhi Company. Once proper inspection of the application is completed, COI is issued.

PAN and TAN

PAN and TAN applications will be done with Nidhi Company Registration.

Requirements for minimum number of members, net owned fund etc. (As par Rule 5 of Nidhi Rules, 2014) :-

Within a period of one year from the date of incorporation, every nidhi shall ensure that it possesses :

a) Not less than 200 members

b) Net owned funds of Rs 10 lakhs or more

c) Unencumbered deposits of not less than 10% of the outstanding deposits as specified in Rule 14; and

d) The ratio of net owned fund to deposits of not more than 1:20

General restrictions or prohibitions (As par Rule 6 of Nidhi Rules, 2014) :-

Nidhi shall not :

a) Continue the business of hire purchase finance, chit fund, insurance, leasing finance or acquisition of securities allotted by any corporate entity;

b) Issue preference shares, debentures or any other debt instrument in any form or by any name;

c) Open a current account with its members;

d) Obtain another company by purchase of securities or manage the composition of the Board of Directors of any other company in any way whatsoever or enter into any preparation for the alteration of its management, unless it has approved a special resolution in its general meeting and also attained the Previous approval of the Regional Director having authority over such Nidhi;

f) Take deposits from or lend to any individual, other than its members;

g) Assurance of any of the assets lodged by its members as security;

h) Accept deposits from or lend money to anybody corporate;

(i) Enter into any partnership arrangement in its lending or borrowing tasks;

(k) Pay incentive or brokerage for mobilising deposits from members or for deployment of funds or for granting loans.

Branches (As par Rule 10 of Nidhi Rules, 2014) :-

District level operations are conducted for the first 3 years. Once the approval is obtained from Regulator Director, it is possible to make 3 branch offices in the district or outside the area.

Others :-

a) Share value shall not less than Rs.10

b) Maximum interest on loan of 20% p.a. can be charged under reducing balance method.

c) A Nidhi company can offer loan against securities. Securities include property, gold, LIC and FD.

d) Rate of Interest : Maximum 7.5% above NBFC rate for loans (reducing Balance method), Savings Bank Interest shall not exceed 2% of the Bank Rate, FD & RD Interest – As per RBI rate

e) Period of Deposits