About Nidhi Company registration
Nidhi Company is a type of non-banking financial company (NBFC) that is created for the sole purpose of promoting savings and investment among its members. The word “Nidhi” in Hindi means “treasure”, and hence Nidhi Companies are also known as mutual benefit societies.
Nidhi Companies are governed by the Ministry of Corporate Affairs (MCA) in India and regulated by the Reserve Bank of India (RBI). These companies are created to cultivate the habit of thrift and savings among its members and to provide them with access to credit facilities at a reasonable rate of interest.
The primary objective of a Nidhi Company is to mobilize savings from its members and lend funds to its members. Nidhi Companies accept deposits from its members and lend funds to other members who are in need of financial assistance. The interest rate charged on such loans is generally lower than what is charged by commercial banks.
Nidhi Companies are allowed to operate only within a specific district, and they cannot expand their operations beyond that district without obtaining prior approval from the RBI. Also, Nidhi Companies cannot issue any kind of debt instruments or raise funds from the public. The members of the company can only contribute to the common pool of funds and earn dividends on their investments.
It is important to note that Nidhi Companies are different from other types of NBFCs, as they are primarily formed for the benefit of their members and not for profit-making. Nidhi Companies are required to maintain a minimum net owned fund of Rs. 10 lakhs and to comply with various other regulations prescribed by the RBI.
Types of Nidhi Company
Nidhi companies are a type of non-banking financial company (NBFC) that primarily cater to the savings and credit needs of its members. There are two types of Nidhi Companies recognized under the Indian Companies Act, of 2013:
- Public Limited Nidhi Company: This type of Nidhi Company must have at least seven members and three directors, and its minimum paid-up equity share capital must be Rs. 5 lahks. Additionally, it should have a minimum of 200 shareholders, minimum net owned funds of Rs. 10 lakhs, and unencumbered deposits of at least 10% of the outstanding deposits.
- Private Limited Nidhi Company: This type of Nidhi Company must have at least two members and two directors, and its minimum paid-up equity share capital must be Rs. 5 lakhs. It should have a minimum of 200 shareholders, minimum net owned funds of Rs. 10 lakhs, and unencumbered deposits of at least 10% of the outstanding deposits. The maximum number of members in a private Nidhi company is limited to 200.
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Checklist for Nidhi Company Registration:
- Minimum 7 members: A Nidhi company should have at least 7 members or shareholders to form the company.
- Minimum paid-up capital: The minimum paid-up capital required for a Nidhi company is Rs. 5 lakhs. This means that the company should have at least Rs. 5 lakhs as initial capital investment.
- Net owned funds: The net owned funds of the Nidhi company should be at least Rs. 10 lakhs. This includes the paid-up share capital and free reserves of the company.
- Name of the company: The name of the company should include the word “Nidhi Limited” as a suffix.
- Objectives: The primary objective of a Nidhi company should be to cultivate the habit of thrift and savings among its members, and to lend and borrow funds from its members.
- Registration: The Company must be registered as a public limited company with the Ministry of Corporate Affairs (MCA) under the Companies Act, 2013.
- Board of Directors: The Company must have at least 3 directors, and at least 1/3rd of the total number of directors must be independent directors.