A Detailed Study of the Concept of Nidhi Company Registration

Nidhi Company Registration

It is an NBFC (non-banking finance company) established under Section 406 of the Companies Act of 2013. The primary business of such a corporation is to permit lending money amongst the organisation's core members. Members (or shareholders) are urged to save money and invest it within the organisation in this manner. These deposits are subsequently utilised by the firm to give loans or advances to its members (or shareholders), as well as to buy government-issued stocks/bonds/debentures/securities. The Ministry of Corporate Affairs regulates it, while the RBI oversees all of its financial transactions.

Benefits of a Nidhi Company Registration

Simple Financing

This type of entity is incorporated as a mutual benefit society under Section 406 of the Companies Act of 2013. As a result, the advantages are mostly for the entity's members and stockholders. Aside from that, this type of company may readily issue loans to the public.

Management is Simple to Form

An applicant who wishes to establish a Nidhi corporation may choose a group of people to conduct this operation. There is no participation of external management after this business is constituted.

Reduced Capital Needs

This entity requires only a little amount of capital to be formed. The key rationale for the Nidhi company registration is the demand for a little amount of money.

It is simple to raise funds

The major goal of this type of company is to raise donations from the general population. Aside from that, the Nidhi company is structured as an NBFC. This sort of NBFC engages in operations such as receiving public deposits. As a result, raising cash through this type of business is straightforward.

Adherence Compliance is Lower

Even if this business was formed in accordance with the Companies Act of 2013, there is still less compliance as compared to other types of organisations. Even according to the RBI Act of 1934, this corporation is free from many types of compliances.

 Less involvement of the RBI

These types of entities must adhere to the NBFC's standards. As a result, the Nidhi company registration must maintain compliance in accordance with the RBI's rules. These corporations, however, are immune from some terms of the RBI Act of 1934.

Eligibility Criteria for Nidhi Company Registration 

The eligibility criteria for a Nidhi Company Registration are discussed below:-

Number of Shareholders Required

A firm must have a certain number of shareholders. Because the Nidhi company is a public corporation, there must be a minimum of seven shareholders.

Number of Directors Required

A Nidhi company must have at least 3 directors. If these criteria are not met, the firm cannot be formed.

Capital Necessities

A minimum capital of five lakhs is needed for founding this organisation.

DIN for Executives

When directors are hired for this organisation, their DINs must be submitted. DIN is an abbreviation for Director Identification Number.

There will be no issuance of preference shares

Preference shares are a sort of share that is only given to current members. This firm was created with the primary goal of providing savings for its members. However, no preference shares may be offered to members under this arrangement.

Primary Goals

The primary goal of Nidhi company registration is to save money for current members. As a result, the basic goals of the company must be followed. Getting deposits for the firm might result in savings.

The smallest nominal value

Any equity share issued shall not be worth more than Rs. 10/-. As a consequence, the nominal worth of the equity shares granted must be less than the aforementioned amount.

Amount of Minimum Equity Shares

When equity shares are issued, the equivalent share value must equal Rs. 100. Each depositor must get one of these.

Nidhi Company Registration Process in India

Acquire DSC & DIN

The candidate must first apply for a digital signature certificate. Signatures in digital format can be submitted using the DSC. Following the acquisition of the DSC, the candidate must apply for the Director Identification Number.

Approval of a Name

One must submit to the MCA three finest names for their Nidhi Company, & one of these names will be accepted. Nidhi Company's name should be distinctive. This authorised name is only valid for 20 days.

Registration Application

Once the name has been selected, the board of directors must submit an application for a Nidhi Company registration with the Articles of Association & Memorandum of Association (MOA).

Incorporation Certificate

The competent authorities grant a certificate for the establishment of a Nidhi Company in 15-20 days. This certificate also includes the Company Identification Number.

Documents Required for a Nidhi Company Registration

For the Nidhi company registration process, the following papers are required:


  • Identification Number for Directors

  • Shareholders' and Directors' PAN numbers

  • Proof of residence for shareholders and directors

  • Members' and Directors' Digital Signature Certificate

  • Photographs

  • Aadhaar Card and other forms of identification

  • Lease Agreement or Rent Deposit for the Registered Office

  • If the Office is privately owned, ownership details or the registered office address must be given.

  • Certificate of No Objection - If Required

  • Memorandum of Association

  • Article of Association

  • Form MCA

Conclusion

In India, these entities are governed by the Ministry of Corporate Affairs, which reserves the power to provide directives regarding deposit acceptance operations. The primary goal of these companies is to instil in their members the value of saving money and being thrifty. The Nidhi Company idea is quite successful in India's southern area.
Location: India

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