Looking to foster a spirit of savings and financial well-being within your community?
A Nidhi Company is the perfect solution! Designed to promote thrift and encourage saving habits among its members, a Nidhi Company offers a unique financial structure.
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About Nidhi Company
What is a Nidhi Company?
“Nidhi” itself signifies treasure or funds in Hindi, and a Nidhi Company reflects that very purpose. It’s a unique financial institution established to cultivate a culture of thrift and savings among its members.
It is a special type of Non-Banking Financial Company (NBFC) designed to promote financial well-being within a community. Unlike most NBFCs, Nidhi Companies focus solely on their members, fostering a spirit of mutual support and shared benefit.
Key Features of a Nidhi Company:
- Promotes Savings: Nidhi Companies encourage members to save money through deposits.
- Members-Only Focus: Borrowing and lending is restricted exclusively to members, fostering a sense of community and shared benefit.
- Simplified Regulations: Unlike most NBFCs (Non-Banking Financial Companies) in India, Nidhi Companies are exempt from many complex regulations, making them easier to manage.
- Minimum Requirements: A minimum of 7 members and 3 directors are needed to start.
- Mandatory Name Suffix: All Nidhi Companies must include “Nidhi Limited” in their name.
- Easy Formation & Low Compliance: Setting up and maintaining a Nidhi Company is a relatively simple process.
Getting Started as a Nidhi Company: Eligibility and Requirements
Building a Financially Strong Community
A Nidhi Company plays a vital role in promoting financial well-being within a community. But before you embark on this journey, there are specific requirements to meet and maintain “Nidhi” status.
Key Conditions for Nidhi Company Status:
- Member Growth: Within one year of incorporation, the company must have a minimum of 200 members.
- Strong Financial Footing: Net Owned Funds (NOF) should be at least Rs. 10 lakh. (NOF = Equity Share Capital + Free Reserves – Accumulated Losses – Intangible Assets)
- Maintaining Liquidity: Unencumbered term deposits must be at least 10% of outstanding deposits.
- Balanced Growth: The ratio of NOF to deposits should not exceed 1:20.
Meeting the Deadline:
If your Nidhi Company fulfills all the above conditions within the first year, you need to file Form NDH-1 with the prescribed fees within 90 days of your first financial year’s closing. This form requires certification from a practicing CA, CS, or CWA.
Extension Option:
In case you require more time, you can avail of an extension for another financial year by submitting Form NDH-2 to the Regional Director within 30 days of your first financial year’s end.
Consequences of Non-Compliance:
Failing to meet the requirements even after the extended period will result in:
- Restriction on Accepting Deposits: Your company cannot accept deposits until it complies with the regulations.
- Penalty Imposition: You may be subject to penalties for non-compliance.
Taking the First Step
Taxpertconsultants.com can simplify the process of incorporating your Nidhi Company and ensure you meet all the necessary requirements.
Empower your community and build a brighter financial future together. Contact us today!
Choose your package
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Basic
- 7 Digital Signature Certificates
- 4 Director Identification Numbers
- e-PAN
- 1 Name Approval Application
- e-TAN
- Copy of e-MOA & e-AOA
- 15 Email Account
- 5 e-copies of Share Certificates
- ESIC Registration through SPICe Plus
- PF Registration through SPICe Plus
- Bank Account opening (feature) through SPICe Plus
Standard
- 7 Digital Signature Certificates
- 4 Director Identification Numbers
- e-PAN
- 1 Name Approval Application
- e-TAN
- Copy of e-MOA & e-AOA
- 15 Email Account
- 5 e-copies of Share Certificates
- ESIC Registration through SPICe Plus
- PF Registration through SPICe Plus
- Bank Account opening (feature) through SPICe Plus
- 25 Copies of MOA
- 25 Copies Of AOA
- 7 Copies of Share Certificate
- Company Seal
Enhanced
- 7 Digital Signature Certificates
- 4 Director Identification Numbers
- e-PAN
- 1 Name Approval Application
- e-TAN
- Copy of e-MOA & e-AOA
- 15 Email Account
- 5 e-copies of Share Certificates
- ESIC Registration through SPICe Plus
- PF Registration through SPICe Plus
- Bank Account opening (feature) through SPICe Plus
- 25 Copies of MOA
- 25 Copies Of AOA
- 7 Copies of Share Certificate
- Company Seal
- Trademark (1 application 1 class) (start ups, proprietorship & small business)
Documents Required
Proof of the registered place of business (Ownership documents/ rent or lease agreement)
No Objection Certificate (signed by the owner/ landlord)
Identity proofs
Address proofs of the members
Photos of the members
PAN card copies of the members
Digital Signature (DSC)
Director Identification Number (DIN) of the directors
Memorandum of Association of the company (MoA)
Articles of Association of the company (AoA)
General FAQs
What is a Nidhi Company?
A Nidhi Company is a unique type of Non-Banking Financial Company (NBFC) focused on promoting financial well-being within a community. It encourages saving habits among its members and provides loans exclusively to them, fostering a spirit of mutual benefit.
What are the benefits of starting a Nidhi Company?
- Promotes Community Development: Nidhi Companies empower communities by encouraging saving and responsible borrowing.
- Simpler Regulations: Unlike most NBFCs, Nidhi Companies are exempt from many complex RBI regulations, making them easier to manage.
- Transparent Structure: Registered as public companies, they offer a clear and accountable framework.
What are the eligibility requirements for starting a Nidhi Company?
- Minimum Members: A minimum of 200 members within one year of incorporation.
- Financial Strength: Net Owned Funds (NOF) of at least Rs. 10 lakh within one year.
- Public Company Structure: Must be registered as a public limited company.
- Name Suffix: Include “Nidhi Limited” in the company name.
What documents are required for Nidhi Company registration?
- Business Address Proof: Ownership documents or lease agreement, along with a No Objection Certificate (NOC) from the owner/landlord.
- Member Identification: Identity & address proofs (e.g., Aadhaar Card) and passport-sized photographs for all members, along with their PAN card copies.
- Company Information: Digital Signature Certificate (DSC) for the company and Director Identification Number (DIN) for all directors.
- Formation Documents: Memorandum of Association (MoA) outlining the company’s objectives, and Articles of Association (AoA) detailing internal operating rules.
How to maintain Nidhi Company status?
- Maintain Minimum Deposits: Unencumbered term deposits must be at least 10% of outstanding deposits.
- Balanced Growth: Ensure the ratio of NOF to deposits doesn’t exceed 1:20.
- Timely Filings: File Form NDH-1 within 90 days of the first financial year’s end if conditions are met, or apply for an extension using Form NDH-2 within 30 days.
Where can I find more information?
- Ministry of Corporate Affairs: https://www.mca.gov.in/content/mca/global/en/home.html
- Taxpert Consultants (for tax implications and Nidhi Company registration service provider): https://taxpertconsultants.com/