{"id":1289,"date":"2019-11-21T13:00:31","date_gmt":"2019-11-21T13:00:31","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=1289"},"modified":"2021-09-10T16:08:21","modified_gmt":"2021-09-10T10:38:21","slug":"incorporation-procedure-nidhi-company-india","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/incorporation-procedure-nidhi-company-india\/","title":{"rendered":"What is Nidhi Company? Know it\u2019s Registration Procedure"},"content":{"rendered":"\n<p class=\"has-drop-cap\">One can easily fall short of financial goals if they don\u2019t have the habit of saving money. Money is such a treasure which can easily slip off through the cracks before you realize it. And hence, it is essential to develop the habit of savings and make it your nature. Whoever wants to cultivate the habit of money saving can opt to become a member of Nidhi Company as it confines to its members and shareholders only. Nidhi Company is a mutual benefit society and is exempted from the core provisions of the RBI Act, 2013. The procedure of <a href=\"https:\/\/corpbiz.io\/nidhi-company-registration\"><strong>Nidhi Company Incorporation<\/strong><\/a> is quite lengthy and requires certain eligibility criteria. Let\u2019s have a look at the entire concept of\u00a0Nidhi Company Registration.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/incorporation-procedure-nidhi-company-india\/#What_is_Nidhi_Company\" >What is Nidhi Company?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/incorporation-procedure-nidhi-company-india\/#Why_choose_Nidhi_Company\" >Why choose Nidhi Company?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/incorporation-procedure-nidhi-company-india\/#Benefits_of_having_Nidhi_Company\" >Benefits of having Nidhi Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/incorporation-procedure-nidhi-company-india\/#Think_before_selecting_the_name_in_Nidhi_Company\" >Think before selecting the name in Nidhi Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/incorporation-procedure-nidhi-company-india\/#What_is_the_Registration_Requirements_of_a_Nidhi_Company\" >What is the Registration Requirements of a Nidhi Company?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/incorporation-procedure-nidhi-company-india\/#Documents_checklist_for_the_incorporation_of_a_Nidhi_Company\" >Documents checklist for the incorporation of a Nidhi Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/incorporation-procedure-nidhi-company-india\/#Procedure_of_Nidhi_Company_Registration\" >Procedure of Nidhi Company Registration<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/corpbiz.io\/learning\/incorporation-procedure-nidhi-company-india\/#Concerns_related_to_Nidhi_Company\" >Concerns related to Nidhi Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/corpbiz.io\/learning\/incorporation-procedure-nidhi-company-india\/#Areas_in_which_Nidhi_Companies_cannot_engage\" >Areas in which Nidhi Companies cannot engage<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/corpbiz.io\/learning\/incorporation-procedure-nidhi-company-india\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_Nidhi_Company\"><\/span>What is Nidhi Company?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Nidhi Company is the class of the NBFC Company which has been incorporated for the mutual benefits of its members. It is recognized under section 406 of the&nbsp;<strong>Companies Act, 2013<\/strong><a rel=\"noreferrer noopener\" href=\"http:\/\/www.mca.gov.in\/MinistryV2\/companiesact2013.html\" target=\"_blank\"><sup>[1]<\/sup><\/a>. No License is required from the RBI, unlike the NBFC (Non- Banking Financial Companies). Also, it does not require any background check or verification for registering a Nidhi Company. They take deposits from their members and lend it to their members only. Therefore the fund rests in the company itself and is used among the shareholders of the company. And this is why these companies cannot deal with anybody other than its members.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Why_choose_Nidhi_Company\"><\/span>Why choose Nidhi Company?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>These companies are helpful for the lower and middle classes.<\/li><li>There is no external involvement in management.<\/li><li>Minimum documents and formalities make things easy for registering a Nidhi Company.<\/li><li>The investment is secured, and there is a low rate of interest.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Benefits_of_having_Nidhi_Company\"><\/span>Benefits of having Nidhi Company<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>There is no requirement of minimum share.<\/li><li>It becomes easy for Nidhi Company to get funding from group members, and at the same time, lending is also easy.<\/li><li>There is an easy transfer of ownership.<\/li><li>Lower rate of interest and secured investment.<\/li><li>Exemptions and Privileges under Companies Act, 2013<\/li><li>No Stamp Duty and relaxation in Compliances<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Think_before_selecting_the_name_in_Nidhi_Company\"><\/span>Think before selecting the name in Nidhi Company<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>One must be careful while choosing the name of the Nidhi Company. It must be easy to attractive and relevant.<\/li><li>Short and meaningful.<\/li><li>It should not be illegal and offensive. The name of the&nbsp;<a href=\"https:\/\/corpbiz.io\/llp-registration\"><strong>limited liability partnership company<\/strong><\/a>&nbsp;(LLP) should not be against the law. It      must not contain any such words or phrases which can harm the sentiments of a particular community.<\/li><li>The company\u2019s name should not be identical to an existing LLP or company or trademark or for which a trademark has been applied for.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_Registration_Requirements_of_a_Nidhi_Company\"><\/span>What is the Registration Requirements of a Nidhi Company?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The following are the\npre and post registration requirements of a Nidhi Company:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Pre-Registrations Requirements of a Nidhi Company:<\/h3>\n\n\n\n<ul><li>The minimum number of members and directors required is 7 and 3 respectively.<\/li><li>There is no minimum capital requirement.<\/li><li>No preference shares are allowed to be issued at the time of incorporation. In case, before the incorporation procedure, the company has issued the preference share, then those shares must get redeemed as per the terms of the issue.<\/li><li>The minimum authorised share capital required for running a Nidhi Company is INR 5 Lakhs.<\/li><li>The last word of a Nidhi Company must be Nidhi Limited.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Post-Registration Requirements of a Nidhi Company:<\/h3>\n\n\n\n<ul><li>Minimum 200 members should be there in the company within 12 months of registration. It has to maintain the requirement of 200 members during the course of time. If  anytime thereafter the strength falls below 200, the company will be a default. In case if the company is unable to reach the limit of 200 members, then the company must apply for the registration within 30 days of closure of the financial year in form NDH-2 with regional directors, Ministry of corporate affairs.<\/li><li>There should be a minimum net owned fund of 10 lakh or more.<\/li><li>There should be at least 10% of the outstanding deposits.<\/li><li>The company must not make body corporate, trust, or minor as a member.<\/li><li>The ratio of Net Owned Funds to deposits should be 1:20.<\/li><\/ul>\n\n\n\n<p><strong><em>For example \u2013\nIf you have a net owned fund of 10 lakh, then your total deposit limit should\nbe two crores.<\/em><\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Documents_checklist_for_the_incorporation_of_a_Nidhi_Company\"><\/span>Documents checklist for the incorporation of a Nidhi Company<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>For the\nMembers and Shareholders<\/strong><\/p>\n\n\n\n<ul><li>PAN Card copy<\/li><li>Passport size photograph.<\/li><li>Bank statements and bills like electricity and telephone bills.<\/li><\/ul>\n\n\n\n<p><strong>Proof of\nRegistered office<\/strong><\/p>\n\n\n\n<ul><li>Copy of Rent Agreement of office premises<\/li><li>Copy of latest Electricity, water, telephone bill of registered office<\/li><li>No Objection Certificate(NOC) from the landlord.<\/li><li>Proof of Registered office<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Procedure_of_Nidhi_Company_Registration\"><\/span>Procedure of Nidhi Company Registration<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li><strong>Applying for DIN and DSC<\/strong><\/li><\/ul>\n\n\n\n<p>&nbsp;The Directors of the Nidhi Company shall apply\nfor DIN (Director\u2019s Identification Number) and for DSC (Digital Signature\nCertificate). MCA issues the DIN and the DSC is a digital signature that will\nbe used for all the e-filing processes. <\/p>\n\n\n\n<ul><li><strong>Name Approval<\/strong><\/li><\/ul>\n\n\n\n<p>For\nNidhi Company name approval the person applying shall choose and suggest 3\ndifferent names for the\ncompany to the MCA.\nOnly one will be accepted out of these 3 names by the MCA. The proposed name has to be unique and\nshould not match with the\nnames of other companies that\nare already registered\nand the approved name shall\nremain valid for 20 days only. <\/p>\n\n\n\n<p>Any company\nwhich proposes to be Nidhi Company must have last words as Nidhi Limited as\npart of its name. After this, one doesn\u2019t require the digital signature of the\napplicant for name availability.<\/p>\n\n\n\n<ul><li><strong>File Form SPICe32 (Simplified Performa for Incorporating Company Electronically)<\/strong><\/li><\/ul>\n\n\n\n<p>After the\nname approval, File form SPICe32 can help the company with a single application\nfor reservation of name. File form SPICe 32 with the following attachments for\nthe incorporation of Nidhi Company.<\/p>\n\n\n\n<ol><li>Memorandum of Association.<\/li><li>Articles of Association.<\/li><li>PAN Card of subscribers<\/li><li>Id proof of Subscribers<\/li><li>Address Proof of Directors.<\/li><li>Address proof of Registered Office(Rent Agreement)<\/li><li>Latest utility bill of Registered Office like Electricity or telephone bills)<\/li><li>NOC of the owner<\/li><li>Self Declaration from first directors and Subscribers in form INC-9<\/li><\/ol>\n\n\n\n<ul><li><strong>Approval of Incorporation Certificate<\/strong><\/li><\/ul>\n\n\n\n<p>It will take\n15-20 days to get the incorporation certificate of Nidhi Company after all the\ndocuments have been filed and registration fee and stamp duty is paid.<\/p>\n\n\n\n<ul><li><strong>GST registration<\/strong><\/li><\/ul>\n\n\n\n<p>The <a href=\"https:\/\/corpbiz.io\/gst-registration\"><strong>GST Registration<\/strong><\/a> is an obligatory process that needs to be in compliance for all the business entities in India that goes beyond the threshold limit of turnover or profits. On failure, the business entity shall be liable purpose of tax evasion which is a criminal offense and is subject to prosecution, penalties and jail term.<\/p>\n\n\n\n<ul><li><strong>Opening of a current bank account<\/strong>.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Concerns_related_to_Nidhi_Company\"><\/span>Concerns related to Nidhi Company<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>It provides services to only small and medium-income groups.<\/li><li>People are afraid to deposit funds because these companies are not licensed from the RBI.<\/li><li>One can deposit in these companies only if they have trust in them as everything is highly dependent on the honesty and loyalty of its members.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Areas_in_which_Nidhi_Companies_cannot_engage\"><\/span>Areas in which Nidhi Companies cannot engage<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>Nidhi Company cannot enter into the business of chit funds, insurance, and hire purchase.<\/li><li>Lending or accepting funds to\/from outside the companies as the funds remain inside the company.<\/li><li>These companies cannot pay any brokerage or incentives for deploying deposits from members.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Nidhi Company is basically a kind of Mutual Benefit Company as it promotes the habits of saving and utilizing the funds in the future amidst its members. As everything has it own benefits and other drawbacks, Nidhi Companies are operated by the newbies due to lack of funds and also they are not licensed by the RBI due to which people are afraid of depositing in the Nidhi Company.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/why-you-should-start-a-nidhi-company-in-india\/\">Why you should Start a Nidhi Company in India?\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>One can easily fall short of financial goals if they don\u2019t have the habit of saving money. Money is such a treasure which can easily slip off through the cracks before you realize it. And hence, it is essential to develop the habit of savings and make it your nature. Whoever wants to cultivate the [&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":1292,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[31],"tags":[32],"acf":{"service_id":"9"},"authorName":"Shalini Singh","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2019\/09\/MEE.jpeg","authorDescription":"Shalini is a B.tech graduate but her keen interest in writing impelled her to continue as a content writer. Further, She has a rich experience in Companies Act and Ammendment related topics.","postViews":8028,"readingTime":5,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/1289"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=1289"}],"version-history":[{"count":37,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/1289\/revisions"}],"predecessor-version":[{"id":35551,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/1289\/revisions\/35551"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/1292"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=1289"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=1289"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=1289"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}