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.
