Nidhi Company is a company registered under the Companies Act, 2013, which has a sole objective of cultivating the habit of thrift and savings amongst its members. Nidhi companies are allowed to take deposit from its members and lend to its members only. Therefore, the funds contributed for a Nidhi company are only from its members (shareholders) and used only by the shareholders of the Nidhi Company.
Nidhi company is a class of NBFCs and RBI is empowered to issue directions to them in matters relating to their deposit acceptance activities. However, in recognition of the fact that these Nidhis deal with their shareholder-members only, RBI has exempted the notified Nidhis from the core provisions of the RBI Act and other directions applicable to NBFCs. Therefore, Nidhi Company is an ideal entity to take deposit from and lend to a specific group of people.
Nidhi Company Registration Process
Step 1: Nidhi Company Registration
You can register a Nidhi Company in 20 to 30 days, subject to ROC processing time.
Step 2: Obtaining DSC & DIN
Digital Signature Certificate(DSC) and Director Identification Number(DIN) is required for the proposed Directors of the Nidhi Company. DIN and DSC can be obtained for the proposed Directors within 5 to 7 days.
Step 3: Name Approval
Once DIN and DSC are available for atleast three Directors, application for reservation of name for Nidhi company can be made to MCA. Name approval can be obtained in 3 to 5 working days.
Step 4: Nidhi Company Registration
Once the name approval is obtained, registration documents can be submitted to the MCA along with an application for registration. MCA will usually approve the application for incorporation in 5 to 7 days, subject to their processing time.
Frequently Ask Questions (FAQs)
|1||How many people are required to register a nidhi company?|
|A minimum of 3 directors and 7 shareholders are required to register a Nidhi company in India.|
|2||What are the requirements to be a Director?|
|The Director needs to be over 18 years of age and must be a natural person.|
|3||Is an office required for starting a Nidhi Company?|
|An address in India where the registered office of the Company will be situated is required. The premises can be a commercial / industrial / residential where communication from the MCA will be received.|
|4||Do I have to be present in person to incorporate a Nidhi Company?|
|No, you will not have to be present at our office or appear at any office for the registration of a Nidhi Company. All the documents can be scanned and sent through email to our office. Some documents will also have to be couriered to our office.|
|5||What is a Digital Signature Certificate?|
|A Digital Signature establishes the identity of the sender or signee electronically while filing documents through the Internet. The Ministry of Corporate Affairs (MCA) mandates that the Directors sign some of the application documents using their Digital Signature. Hence, a Digital Signature is required for all Directors of a proposed Nidhi Company.|
|6||What are the documents required for registration?|
|Identity proof and address proof is mandatory for all the proposed Directors of the Nidhi Company. PAN Card is mandatory for Indian Nationals. In addition, the landlord of the registered office premises must provide a No Objection Certificate for having the registered office in his/her premises and must submit his/her identity proof and address proof.|
|7||How long will it take to incorporate a Nidhi Company?|
|You can incorporate a Nidhi Company for in 20-30 days. The time taken for registration will depend on submission of relevant documents by the client and speed of Government Approvals. To ensure speedy registration, please choose a unique name for your Company and ensure you have all the required documents prior to starting the registration process.|
|8||How long is the registration of the Company valid for?|
|Once a Nidhi Company is incorporated, it will be active and in-existence as long as the annual compliances are met with regularly. A Nidhi Company must have a minimum of 200 shareholders and comply with other criteria?s within one year of incorporation. In case, annual compliances are not complied with, the Nidhi Company will be asked to refund the deposits.|
|9||What is Director Identification Number (DIN)?|
|Director Identification Number is a unique identification number assigned to all existing and proposed Directors of a Company. It is mandatory for all present or proposed Directors to have a Director Identification Number. Director Identification Number never expires and a person can have only one Director Identification Number.|
Advantages of Nidhi Company Registration
Separate Legal Entity:
A Nidhi company is a legal entity and a juristic person established under the Act. Therefore, a Nidhi company has wide legal capacity and can own property and also incur debts. The members (Directors) of a Nidhi company have no liability to the creditors of a Nidhi company.
A Nidhi company has ‘perpetual succession’, that is continued or uninterrupted existence until it is legally dissolved. A Nidhi company, being a separate legal person, is unaffected by the death or other departure of any member but continues to be in existence irrespective of the changes in membership.
A Nidhi company enjoys better credibility when compared to Mutual Benefit Organizations. Nidhi companies are registered and monitored by the Central Government. Mutual Benefits Organization are on the other hand governed and monitored by State Governments.
The Board of Management of a Nidhi company can be easily changed by filing simple forms with the Registrar of Companies. The Board of Management of a Nidhi company controls the activities of the Nidhi company.
A Nidhi company being a juristic person, can acquire, own, enjoy and alienate, property in its own name. No member can make any claim upon the property of the Nidhi company as long as it is a going concern.
Limited Liability means the status of being legally responsible only to a limited amount for liabilities of the Nidhi company. In a Nidhi Company, the members are not held personally responsible for the liabilities of the Nidhi company.
Capacity to sue and be sued:
To sue means to institute legal proceedings against or to bring a suit in a court of law. Just as one person can bring a legal action in his/her own name against another in that person’s name, a Nidhi company being an independent legal entity can sue and also be sued in its own name.
A Nidhi company is allowed to accept deposits from its shareholders. Further, since Nidhi Companies only take deposit and lend to its shareholders, RBI does not require Nidhi Companies to have NBFC registration or comply with NBFC regulations.
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