A Nidhi company is one which is established with the objective of increasing thrift and savings among its members. The borrowing and lending of money is limited to its members only for their mutual benefit. It is recognised under the section 406 of Companies Act 2013 and (Nidhi Companies)Rules, 2014. The main idea of Nidhi Companies is the “Principle of Mutuality” because of which they are also called Mutual Benefits Company.RBI registration is not required to Register a Nidhi Company. They are required to be registered as Public Limited Company. Thus the process to register a Nidhi Company is same as the registration of a Public Company.
Following are the minimum requirements to Register a Nidhi Company:
- A Nidhi Company shall be incorporated as a Public Limited Company. It requires:
- 7 people
- 3 directors (they can be appointed from the 7 people)
- The minimum paid up equity share capital should be Rs.5 lakh
- Nidhi Company shall not issue preferential shares
- Nidhi Company shall not pursue any other objectives.
- Each Nidhi Company is required to have “Nidhi Limited” as a part of its name.
Requirements to be fulfilled within 1 year of incorporation :
- Minimum number of members should be 200
- Minimum net owned funds Rs. 10 lakh
- Ratio of net owned funds to deposit shall be not more than 1:20
- Debt free term deposits of not less than 10% of the outstanding deposit
If the Nidhi Company fulfills the above conditions necessary for operating as a Nidhi Company, the company shall file a return of statutory compliances in Form NDH-1 duly certified by a practicing CA/CS/CWA along with the requisite fees within 90 days from the end of the first financial year after its incorporation (and where applicable, the second financial year).
In case at the end one year from incorporation, the Nidhi Company is unable to meet the above conditions, the Company may within 30 days from the end of the first financial year, apply to the Regional Director in Form NDH-2 for extension of time.
If even after the close of the second financial year the Nidhi Company is unable to meet the above conditions, then the Nidhi Company shall not accept any further deposits from the beginning of the second financial year till it complies with the provisions for operating as a Nidhi Company and will be liable for penal consequences.
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