Nidhi companies

Introduction

Nidhi companies are a type of Non-Banking Financial Company (NBFC) in India, incorporated
under Section 406 of the Companies Act, 2013. They primarily deal with borrowing and lending
money to their members, who are also shareholders. The main objective of Nidhi companies is to
promote thrift and savings among members while offering financial assistance through lending.

Here is some information about Nidhi Companies, including their features, procedures for
incorporation, and required documents:

Key features of Nidhi companies:

 Incorporation: Nidhi Companies are incorporated as public limited companies under the
Companies Act, 2013.
 Minimum Capital Requirement: The minimum paid-up equity share capital of a Nidhi
Company should be Rs. 5 lakhs.
 Net Owned Funds: The Net Owned Funds (NOF) of the company should be at least Rs.
10 lakhs
 Mutuality: Nidhi companies operate on the principle of mutuality, which means that their
members are also their shareholders. This ensures that the profits of the company are
shared among the members.
 Limited borrowing and lending: Nidhi companies can only borrow and lend money to
their members. They cannot accept deposits from or lend money to non-members.
 Minimum number of members: A Nidhi company must have a minimum of 200 members
within one year of its commencement.
 Restrictions on deposit amounts: Nidhi companies have restrictions on the amount of
deposits they can accept from their members. The maximum deposit that a member can
make in a year is Rs. 200,000.
 Limited business activities: Nidhi companies are not allowed to carry out any other
business activities other than borrowing and lending money to their members.
Procedure for registering a Nidhi company:

 Gather a minimum of 3 directors and 7 shareholders to form the company. Within a year,
the number of members must be increased to at least 200.
 Draft the Memorandum of Association (MOA) and Articles of Association (AOA) of the
company.
 File the application for incorporation with the Registrar of Companies (ROC) along with
the necessary documents and fees.
 Once the ROC is satisfied with the documents, they will issue a Certificate of
Incorporation.
 Obtain a Digital Signature Certificate (DSC) and Director Identification Number (DIN)
for all the proposed directors of the company.
 File the incorporation documents with the Ministry of Corporate Affairs (MCA) along
with the prescribed fees.
 Obtain a certificate of incorporation from the MCA.
 Apply for a Permanent Account Number (PAN) and a Tax Account Number (TAN) for
the company.
 Open a bank account in the name of the company.
 Comply with the RBI guidelines for Nidhi companies.

Requirements Following Registration

 Membership Quota: Nidhi Company must have 200 members or shareholders before the
end of the first year.
 Funds Owned Net (NOF): Organisation should have a NOF in excess of Rs. 10 lakhs.
 Ratio of NOF to Deposit: The ratio of NOF to deposit must be higher than 1:20.
 Unencumbered Deposits: The percentage of outstanding deposits that are unencumbered
must exceed 10%.

Documents Required:
  Identity Proof: PAN card, passport, or voter ID of directors and shareholders.
 Address Proof: Aadhar card, passport, or utility bills of directors and shareholders.
 Photographs: Passport-sized photographs of directors and shareholders.
 Address Proof of Registered Office: Rental agreement or sale deed, along with utility
bills.
 NO Objection Certificate (NOC): If the registered office is rented, an NOC from the
landlord.
 Declaration: Declaration by the directors and subscribers confirming compliance with
Nidhi rules.
 Directorship: Details of directorship in other companies.

Forms to be filled

INC 9– To be filed by all the subscribers to MoA

DIR 2 – To be filed by all the directors of the company, deceleration as per rule 5 & 6 of NIDHI
rules 2014 – also to be signed by all the subscribers.