Nidhi Company Registration: Process, Documents, Eligibility
Company Act

All The Details for Registering A Nidhi Company

Before delving into Nidhi companies, we should understand banking and non banking financial services. NBFCs also give loans and make investments like banks do. But they are legally very different. 

The Major Differences

i. Formation: Banks are governed by the banking act. NBFCs are registered under the company act of 1956.

ii. Clearing: NBFCs are not part of the payment settlement system.

iii. Own Cheque Books: NBFCs cannot issue cheques against deposits.

iv. Demand Drafts: NBFCs cannot issue DDs.

v. Deposit Insurance: Deposits with NBFCs are not covered by the credit guarantee corporation. 

NBFC can be expanded as Non Banking Financial Company- so it is very clear that they are not banks.

Nidhi Company

An NBFC company formed under section 406 of the companies act of 2013 is called a Nidhi company. They operate on the ‘principle of mutuality.’ They facilitate lending and borrowing of money among its members. A nidhi company is also known by other name like:

i. benefit Funds.

ii. Mutual Benefit company.

iii. Permanent Fund.

iv. Mutual benefit Funds.

Activities Of A Nidhi company

It is very clear that a nidhi company exists only for the benefit of its members. The funds deposited by its members are loaned to other members and the company ensures prompt repayments.

They are observed and regulated by the MCA and function under its directions. 

Time Taken To register A Nidhi Company

Under normal circumstances, it takes about 15 days to complete the registration process.

How Much Money Is Required?

The promoters don’t need to produce more than rupees five lakhs as initial capital.

What Are The Documents Required To register A Nidhi company?

i. Address proof of all directors.

ii. Government issued ID proof of all directors.

iii. Proof of address of registered address.

iv. PAN card of all directors.

v. Clear passport size photo of all directors.

vi. Digital signatures of all directors.

All of the above documents should be submitted in a digital format.

What Are The Requirements To Apply For Registration

i. At the time of application at least three directors are needed.

ii. The company should have a minimum of seven shareholders to apply for registration.

iii. The capital required is five lakh rupees.

iv. DIN number of all directors. 

What Should Not Be Done?

i. Not allowed to issue share with a face value of less than ten rupees.

ii. The company cannot issue preference shares.

Privilege Of Members

All members who are depositors should be issued with ten shares. The face value of these ten shares will be Rs. 100 or more. 

The Registration Process

All the steps can be completed online. There is no need to visit any government office to register a nidhi company.

The below are the easy steps for getting your nidhi company registered with office of the registrar of companies of your area.

1. DSC

Apply and get the digital signature of all directors.

2. DIN

Apply for and obtain the DIN numbers for all directors.

3. Name Approval

Apply to the ministry of corporate affairs with a list of proposed names and get approval for one name.

4. Articles of Association

The by-laws of the nidhi company should be created. They are known as articles of association.

5. Memorandum Of Association

This details out the activities and area of operation.

6. Incorporation

Successful completion of the above steps shall lead to the company getting its incorporation certificate along with the unique CIN number.

7. Permanent Account Number

The company should apply for and obtain its PAN card from the IT department.

8. TAN Number

Tax deduction Account Number should be obtained.

9. Bank Account

After the nidhi company has been successfully incorporated, a bank account should be opened in the name of the company.

The following documents have to be submitted to the bank for opening the account:

i. PAN.

ii. Copy of AoA.

iii. Copy of MoA.

iv. Registration certificate.

Drafted By:
CS.A.Maniraj.,B.Com.,ACS.,CA(Fin), Independent Director 
Certified CSR Professional., Certified GST Professional.

Nidhi Company Registration: Process, Documents, Eligibility
Maniraj Anantham 1 March, 2024
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