An Overview of Nidhi Company Registration

A Nidhi Company is an entity established in accordance with the Companies Act of 2013 and is overseen by the Ministry of Corporate Affairs (MCA) along with the Nidhi Rules of 2014. To qualify as a Nidhi Company, it must fulfill specific criteria, including a minimum membership of 200 individuals and a net-owned fund of at least INR 20 lakhs within 120 days following its incorporation.

Benefits of a Nidhi Company

The registration of a Nidhi Company offers numerous advantages for both the management and shareholders, ensuring that customers also receive value from the organization. The benefits include the following –

1. Formation

The Nidhi Company Registration process is very easy and quick, making it feasible for those who look forward to forming such entities.

2. RBI Non-Compliance

RBI governs all banks, but its guidelines do not bind Nidhi companies in a similar sector. It requires these entities to establish their own rules and regulations and run their businesses accordingly.

3. Lesser Risk

All the operations related to borrowing, lending, or even depositing are done by the members of the entity, thereby reducing the risk of losses and ensuring the entity’s safety.

4. Promoting Savings

These Nidhi Companies ensure that the individuals involved with the entity are following the concept of saving for future use and better financial conditions.

5. Registration Procedure

The Nidhi Company Registration process is cost-effective and smooth compared to other Non-Banking Financial Company registrations. It makes it easier for these companies to access financing options and business loans.

6. Funding System

The net-owned funding system is typically adopted by the Nidhi companies, which makes it cost-effective. It positively impacts their business by using their funds and resources.

Documents Required for Nidhi Company Registration

The registration of a Nidhi Company in India necessitates the submission of specific documents. The following is a list of these required documents –

• Photographs of Promoters and all the members
• PAN card of promoters and all the members
• Identity Proof of promoters and all the members (Aadhar Card, D/L, Voter ID, Passport)
• Address Proof of promoters and all the members (through Utility bills or bank statements)
• Address proof of the business premises (through utility bills)
• NOC from the premises owner, if applicable
• Property Documents or Rent agreement, if applicable
• Form DIR – 2 with the consent of directors
• DSC & DIN of Directors
• Director specimen signatures
• Subscriber sheet duly signed
• Company Registration Questionnaire

Process for Nidhi Company Registration

A specific procedure must be adhered to for the registration of a Nidhi Company. The steps involved are outlined below –

1. Application for DSC & DIN

The first step for a Nidhi Company Registration is for the directors to acquire the Digital Signature Certificate and apply for the Director’s Identification Number issued by the Ministry of Corporate Affairs. Directors who already have the DIN can skip the process. The DSC is essential for all e-filling processes. 

2. Memorandum of Association & Articles of Association

Drafting of Memorandum of Association & Articles of Association is essential for establishing the purpose of the Nidhi Company. These are necessary things in an organization and should be filed with the registrar of the companies.

3. Name Approval

The Nidhi company seeking registration needs to obtain approval over the entity’s name through the Ministry of Corporate Affairs. The chosen name must be unique and should not be copied from the name of any other company or trademark. The objective and business nature should be reflected through the name selected for such entities. They need to propose at least three names out of which MCA chooses the appropriate one. The application for approval is sent through PART A of the SPICe+ application form.

4. Incorporation Application

After the name is approved by the MCA, the company can begin the process of incorporation. For incorporation, you must go to the MCA official website and fill out the SPICe+ application form. After filling out the application form online, divided into two parts, PART A & PART B, any one director has to sign it. The signed application form must be submitted online along with the other required documents attached to it.

5. Certificate of Incorporation

The form is sent to the registrar of companies, who is responsible for looking at the application. A thorough check is made to be sure that all the documents and the form being filled and submitted correctly and in the right manner. If everything is alright, a certificate of incorporation is issued to the applicant for Nidhi Company Registration. A unique Corporate Identification Number is provided to the Nidhi Company by the ROC.

6. Nidhi Company License

Following its incorporation, a business must apply for a NIDHI Company license by fulfilling criteria about member count, net assets, term deposits, and other conditions outlined in the Companies Act of 2013. The company has four months from the date of its incorporation as a NIDHI Limited Company to file an application to the Central Government using form NDH 4. This time frame may be extended with the regional director’s consent if necessary.

Canjain Assistance in converting a Nidhi Company Registration