Nidhi Company Registration

Overview

A Nidhi company is form of  Non-Banking Financial Company (NBFC) which is known under the Companies Act 2013. It mainly focuses on borrowing and lending of money within its members, which also promotes a culture of financial prudence and savings within a close-knit community. The registration of Nidhi Company requires in depth knowledge of all the legal procedures and compliance requirements.

What is a Nidhi Company?

A Nidhi Company is a Non-Banking Financial Institution and has been enshrined under the provisions of Section 406 of the Companies Act, 2013 (Chapter XXVI). All is regulated by the Ministry of Corporate Affairs and is functioning on the principle of mutuality. Compared to other NBFCs, it is relatively easy to establish Nidhi Companies as they do not need a license from the Reserve Bank of India (RBI)

Documents Required for Registering a Nidhi Company

To register a Nidhi Company, you need the following documents:

1. Passport-sized photographs of members
2. Copy of Aadhar Card or Voter ID
3. Copy of PAN Card
4. Email addresses and phone numbers of members
5. Proof of registered office address
6. Latest bank statement
7. No Objection Certificate from the property owner

Essential Licenses and Registrations for Nidhi Company

After incorporation, a Nidhi Company must obtain several registrations, including:

1. Permanent Account Number (PAN)
2. Tax Deduction and Collection Account Number (TAN)
3. Digital Signature Certificate (DSC)
4. Director Identification Number (DIN)
5. Employee Provident Fund (EPF) registration
6. Employees’ State Insurance Corporation (ESIC) registration

Registering a Nidhi Company Online through Associate Buddy

Associate Buddy simplifies the Nidhi Company registration process in three easy steps:

1. Consultation: Contact Associate Buddy for a detailed consultation.
2. Documentation: Submit all required documents through their secure platform.
3. Registration: Receive your incorporation certificate within 14-21 working days.

Compliances for Nidhi Company

Post-registration, a Nidhi Company must adhere to several compliance requirements, including:

1. Filing annual returns and financial statements with the Ministry of Corporate Affairs.
2. Maintaining statutory records and registers.
3. Conducting regular board meetings and member meetings.
4. Ensuring timely renewal of licenses and registrations.

Benefits of a Nidhi Company

1. Promotes Financial Discipline: Encourages the discipline of savings among members;

2. Restrained RBI Regulations: There is less compliance compared to other NBFCs

3. Limited liability to protect the personal assets of directors and shareholders

4. Legal Entity: Anything that is a separate legal entity (such as a company etc) can own assets and owe liabilities in its own right

5. Ease of (admin) management: Regulatory compliance and admin pain points are way less

Limitations of a Nidhi Company 

1. Strictly defined operations: Transactions are restricted to members only.
2. Prohibited Activities: Insurance, hire-purchase financing, or trust funds are prohibited.
3. Limited Funding Options: Capital cannot be raised through public channels.
   Compliancy with the Companies Act necessitates strict adherence to specific guidelines.

Detailed Guide to Nidhi Company Registration

Registration Process

1. Obtain Digital Signatures: Directors must obtain Digital Signature Certificates (DSC) for signing electronic documents.
2. Director Identification Number (DIN): Apply for a DIN if not already obtained.
3. Name Approval: File the SPICe+ form for name approval from the Ministry of Corporate Affairs (MCA).
4. Incorporation Documents: Prepare and file the necessary documents, including the Memorandum of Association (MOA) and Articles of Association (AOA).
5. Certificate of Incorporation: After verification, the MCA issues the Certificate of Incorporation.

Operational Guidelines for Nidhi Companies

1. Member Restrictions: A Nidhi Company must have a minimum of 200 members within one year of incorporation.
2. Net Owned Funds: Maintain at least ₹10 lakh as net owned funds.
3. Ratio of Net Owned Funds to Deposits: This ratio should not exceed 1:20.
4. Unencumbered Term Deposits: At least 10% of the outstanding deposits must be in unencumbered term deposits.

Financial and Regulatory Compliances

1. Annual General Meeting (AGM): Conduct AGMs as per the Companies Act.
2. Annual Returns: File annual returns with the Registrar of Companies (ROC).
3. Financial Statements: Submit audited financial statements annually.
4. Internal Audit: Conduct regular internal audits to ensure compliance with Nidhi Rules.
5. Filing of Forms: Regularly file forms like NDH-1, NDH-2, and NDH-3 with the ROC.

Advantages of Registering with Associate Buddy

1. Expert Guidance: Access to experienced professionals for legal and financial advice.
2. Seamless Process: End-to-end assistance from document collection to certificate issuance.
3. Compliance Management: Ongoing support for regulatory and financial compliance.
4. Cost-Effective Solutions: Affordable packages tailored to meet specific needs.
5. Time-Saving: Quick and efficient processing, reducing the time for registration and compliance.

In summary,

A Nidhi Company registration offers several advantages to Individuals desiring to promote financial prudence and reserve in a community. On the other hand, this comes with strict enforcement of all legal and regulatory needs. Sign up here properly using Service like Associate Buddy can also make registration process easier for you and hassle free. For more information visit Associate Buddy.