Nidhi Company Registration

Nidhi Company Registration in India

A Nidhi Company is a company that primarily deals with managing deposits from and providing loans to its members, who are also shareholders. The main purpose of a Nidhi Company is to promote thrift and savings among its members while offering financial assistance through lending.

Nidhi Companies in India have specific exemptions and relaxed regulations when it comes to their annual compliance requirements and tax assessments, making them a unique financial institution designed to benefit their members mutually.

The legal framework governing Nidhi Companies in India consists of Section 406 of the Companies Act, 2013, the Companies (Nidhi Companies) Rules of 2014, and Chapter XXVI of the Companies Rules, 2014.

Benefits of Nidhi Company Registration

The following are the benefits of Nidhi Company Registration:

• Capital Requirement: As per Nidhi Rules, 2014, the minimum capital requirement for Nidhi Company Registration in India is Rs. 10 lakhs only.
• Encourages Savings: It aids in the development of the habit of saving and thrifting among its members.
• There is no outside involvement because it is not governed by any trusts or committees. It is an investing feature that the investors possess. Nidhi funds are thus governed by their members.
• Borrowings: A member can borrow money at a lower interest rate than a bank and with fewer responsibilities.
• Uninterrupted Operations: The normal operations of a Nidhi Company Registration are not interrupted even at the death, insanity, insolvency, or retirement of any member. The Nidhi Company will remain in operation irrespective of any such inevitable change in any type of membership.

Requirements for Nidhi Company Registration in India

The following are some vital requirements for Nidhi Company Registration in India:

• The Nidhi Company must have at least 200 members or shareholders before the end of the first year.
• The NOF should be greater than Rs. 10 lakhs.
• The NOF-to-deposit ratio should be more than 1:20.
• The amount of unencumbered term deposits shall not be less than 10% of the total amount of outstanding deposits.
• Nidhi can pay up to 12.5% interest on FDs and RDs and 6% on savings accounts.
• Nidhi has the ability to deposit up to 20 times the amount invested.
• Every year, it must file Annual Returns, Income Tax Returns, and Financial Statements.

Documents Required for the Registration of Nidhi Company in India

Following are some crucial documents required for Nidhi Company Registration in India:

Basic Checklist:

1. Three Directors: A Nidhi corporation must have at least three directors, at least one of whom must be an Indian Citizen and Resident.
2. Seven Promoters: At least seven Promoters are required for a Nidhi firm. It is possible that the Promoter and Director are the same individuals.
3. Unique Name: The business name must be unique. The proposed name must not be identical or similar to any existing companies or trademarks in India. The words "Nidhi Limited" must appear in the Company's name at the time of incorporation.
4. Paid-Up Capital: A minimum paid-up equity share capital of Rs. 5 lakhs is required.
5. Registered Office: The Company must have a physical location. Other Licenses should be obtained at the location.

Documents for Registered Office:

1. A copy of the most recent bank statement (within the past three months) or a copy of the most recent telephone bill, mobile bill, energy or gas bill (within the last two months) or,
2. Copies of property tax receipts,
3. Notarized rental/lease agreement,
4. Scanned copy of sale deed/property deed,
5. Property owner's no objection certificate.

Documents for Indian Directors or Promoters:

1. PAN Card of all the Shareholders and Directors of the Company.
2. A recent passport-sized photograph of the shareholder/director (in jpeg/pdf format).
3. ID proof such as Voter ID Card/Passport/Driving Licence is acceptable forms of identification.
4. Proof of Address such as Bank Statement/Recent Electricity/Telephone/Mobile Bill.

Documents for NRI Directors or Promoters:

1. ID proof: Passport/PAN Card, which must be confirmed by the Indian embassy.
2. Address Proof: If the permanent address is in India — Bank Statement/Latest Electricity/Telephone/Mobile Bill: certified by any competent CA/CS or CMA (Practising).
3. Current abroad address and if the country is a Commonwealth (CW) country / Hague Convention (HC): Notarised by a Public Notary and apostilled by the appropriate government of such country.
4. Outside of CW or HC: Notarised by a Notary (Public) of such country, with the Notary's certificate certified by a Diplomatic or Consular Officer.

Procedure for Nidhi Company Registration in India

Following is the step-by-step procedure for Nidhi Company Registration in India:

• Step 1: Apply for a Digital Signature Certificate (DSC) and Director Identification Number (DIN). Our experts will help you obtain DSC and DIN.
• Step 2: Select a suitable Company Name, and make an application for a Reservation of name.
• Step 3: Draft Memorandum of Association and Articles of Association (MOA & AOA).
• Step 4: Upload Forms and pay requisite fees and Stamp Duty to the Ministry of Corporate Affairs.
• Step 5: Scrutiny of documents by MCA.
• Step 6: Receipt of Certificate of Incorporation (COI) from MCA.

Annual Compliance of a Nidhi Company

Following are some annual compliances of a Nidhi Company in India:

1. Form NDH-1: This form contains all the information regarding members, loans, deposits, etc., for the complete Financial Year. e-Form GNL-2 is used for the submission of the documents with the Registrar.
2. Form NDH-2: This form is filled in case the Company fails to add at least 200 members within 1 year of its incorporation, or fails to maintain the NOF to deposit ratio of 1:20.
3. Form NDH-3 (Half-Yearly Return): This form is to be filed with the Registrar of Companies.
4. Form NDH-4: This form is used to file an application for a declaration as Nidhi Company & status updates.
5. Form AOC-4: For filing financial documents & other supporting documents to the RoC.
6. ITR-6: This is for filing an Income Tax Return.
7. Form MGT-7: This form is used for filing an Annual Return.

Event-Based Compliances of a Nidhi Company in India

These compliances are required to be filed only once during the incorporation process. Following is the list of event-based compliances:

1. Transfer of Shares;
2. Appointment or Resignation or Removal of Director;
3. Any change in the name of the Company;
4. Increase in the Authorised Capital of the Company;
5. Any changes in the Company's objective;
6. Change in registered office address;
7. Any other changes that are event-based;
8. Appointment of the KMP (Key Managerial Personnel).

What are the Penalties for Non-Compliance?

It is mandatory to complete all the compliances for every Nidhi Company. Non-Compliance attracts penalties for the Nidhi Companies:

1. In case the Company doesn't meet the compliance, the organisation & the concerned officers will be fined an amount up to Rs. 5000.
2. In the case of repetition of infringement, the company will be fined Rs. 500/day.