Nidhi Company Registration

Nidhi Company Registration
(Price Start at $ 192 /-)

NIDHI (National Initiative for Developing and Harnessing Innovations) Companies play a pivotal role in promoting savings and mutual support within local communities. As businesses seek to contribute to localized economic growth, registration of a Nidhi company becomes crucial for fostering financial discipline, gaining legal recognition, and building trust among members.

Nidhi Company is a type of Non-Banking Financial Company (NBFC), also known as a Mutual Benefit Finance Company. The purpose behind its formation is to borrow and lend money to its members (shareholders), thus inculcating the habits of thrift and saving in its members. These entities operate on the foundation of mutual benefit, where the community members both contribute and receive financial assistance. Unlike traditional banking institutions, they cannot accept deposits from the general public or engage in other financial activities. Since their dealings are limited to members only, they are exempted from core provisions of the RBI Act and other directions applicable to NBFCs. They are formed and governed by Section 406 of the Companies Act of 2013, the Companies (Nidhi Companies) Rules of 2014, and Chapter XXVI of the Companies Rules, 2014.

The registration of a Nidhi company is not merely a legal formality but a fundamental step to establish its legitimacy, credibility, and adherence to regulatory standards. Without registration, the company may encounter difficulties in discharging its functions effectively and may face legal challenges in conducting its financial activities. Seedling specializes in making this registration process quick and simple. Our team of experts understands the importance of Nidhi companies in local economic growth and guides companies in navigating the process. From preparing documents to working with authorities, we're your dependable partner in establishing Nidhi companies and supporting community-focused financial services.

Benefits of Nidhi company registration in India

  1. Legal Recognition:Upon registration, the company is recognized as a separate legal entity and becomes capable of acquiring assets and incurring debts in its own name.
  2. Heightened Credibility: Registration increases the company’s credibility in the eyes of its members, investors, and the society at large. It enhances trust between members and assures them that their company operates in accordance with the applicable laws.
  3. Compliance: Registered Nidhi companies need to adhere to certain rules, regulations, and government-imposed compliances. This promotes financial discipline, encourages accountability, and guarantees that the company will operate within the legal framework.
  4. Exemptions: Registered Nidhi companies can take advantage of exemptions relating to financial duties and compliance and other benefits bestowed by the regulatory bodies.
  5. Operational Legitimacy: In the absence of registration, the company may face problems in conducting its operations without any hiccups since financial bodies, stakeholders, and authorities usually require proof of registration before engaging in financial activities.
  6. Mutual Benefit Structure: The essence of a Nidhi company lies in its ability to foster mutual benefit among its members. Registration ensures that the company functions within the legal framework, safeguarding the interests of both the company and its members.
  7. Economical Registration: The cost of registration of Nidhi companies is lesser than other types of NBFCs. Saving money on registration allows directors to invest funds in business activities.

What are the Eligibility criteria for Nidhi company registration in India?

  • To establish a Nidhi Company in India, the initial step is to incorporate a Limited Company under the Companies Act of 2013. This involves having at least three Directors and seven shareholders.
  • The Limited Company’s object as specified in the Memorandum of Association must be of cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit. It must have “Nidhi Limited” in the suffix of its name and must have paid equity share capital of five lakh rupees.

    Within a year after incorporation, the Nidhi Company must meet the following conditions:

    • Have at least two hundred members (shareholders)
    • Possess Net Owned Funds (NOF) of ten lakh rupees or more
    • No preference shares shall be issued
    • Maintain unencumbered term deposits of at least ten percent of the outstanding deposits
    • Maintain at least ten percent of total deposits in a fixed deposit account of a nationalized bank
    • Maintain a Net Owned Funds to deposits ratio of not more than 1:20

    If the Nidhi Company is unable to satisfy these criteria by the end of one year from commencement, it may request an extension from the Regional Director using Form NDH-2 within thirty days from the close of the first financial year. If the criteria is not met even after the second financial year, the company cannot accept any deposits from the start of the second financial year until it complies with the provisions, facing potential penalties if non-compliant.

    What are the Documents required for Nidhi company Registration in India?

    1. Colored passport-size photographs of all members
    2. Permanent Account Number ('PAN') card copies of all members
    3. Identity proof of members in the form of Voter ID, driving license, passport, or an Aadhar card
    4. Passports of directors who are foreign nationals
    5. Address proof of members (through electricity, telephone, gas, or water bills, or a bank statement not older than two months)
    6. Address proof of the registered place of business along with contact details
    7. No objection certification from the owner of the premises
    8. Copy of property documents/stamped and notarized rent agreement
    9. Digital Signature Certificate ('DSC')
    10. Memorandum of Association of the company (MoA)
    11. Articles of Association of the company (AoA)
    12. Form INC 9 filled by all subscribers to the MoA
    13. Form DIR 2 filled by all company directors
    14. Declaration to be signed by all members

    Procedure to register a Nidhi Company in India

    1. Directors of the Nidhi Company must apply for Director Identification Number (DIN) and DSC
    2. Select three distinct company names. After name approval, fill the SPICe+ form available at the Ministry of Corporate Affairs website. Part A deals with the reservation of company names, while Part B of the form deals with the incorporation of a Nidhi company and requires the submission of the above-listed documents.
    3. If the Registrar of Companies (RoC) is satisfied with the authenticity of the details and documents submitted, he shall register the company and allot a Corporate Identification Number (CIN). The company will be issued a Certificate of Incorporation, PAN, and Tax Deduction Account Number (TAN) using which it must open a bank account.
    4. Within four months from the date of incorporation, the company must apply to the Central Government for the Nidhi Company license in Form NDH 4.

    How can Seedling help you with Nidhi Company registration in India?

    Seedling serves as your reliable partner in navigating the intricate process of Nidhi Company registration in India. Acknowledging the complexities involved, we offer comprehensive assistance throughout the entire journey. Our services include aiding in obtaining Director Identification Number (DIN) and Digital Signature Certificate (DSC), crucial components of the registration process. We guide you through meticulous document submission, ensuring accuracy and adherence to regulatory requirements. Our expertise extends to assisting in the selection of company names that not only comply with all the applicable laws but also increase the probability of quick approval. Seedling stands out as one of the best online portals for registration in India by offering transparent pricing and a hand-holding approach to make the registration journey smooth and hassle-free for our clie

    Most common question about our services

    How to select a name for your Nidhi Company?

    Make sure that the name you choose is not similar to any other previously registered company (whether it is a Private Limited, Limited Liability, or Public limited company). The name must be unique (not too generic or descriptive) and must end with “Nidhi Limited.” It should not violate the provisions of the Emblems and Names (Prevention of Improper Use) Act, 1950, or resemble any registered trademark. Try to avoid using abbreviations and adjectives to prevent rejection by the ROC.

    How much time is required to register a Nidhi company in India?

    On average, it can take 14 to 21 working days to get a Nidhi Company registered in India. This registration is subject to document approval and verification of the submitted details by the MCA.

    What are the costs associated with closing a Nidhi company in India?

    The charges for winding up a Nidhi company vary depending on factors such as the company's capital, assets, liabilities, and the governing regulations. It is advisable to seek expert advice from a legal professional or a chartered accountant in order to ascertain the exact fees and procedures involved in the closure.

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