YOU NEED TO KNOW WHO IS ELIGIBLE TO BECAME A MEMBER OF NIDHI COMPANY?
Nidhi Companies In India, eligibility criteria for became a member of a Nidhi Company are outlined in the Companies (Nidhi Companies) Rules, 2014. Individuals who subscribe to the Memorandum of Association and intend to actively participate in the activities of the Nidhi Company are eligible for membership. Additionally, they must comply with the prescribed requirements, such as being at least 18 years old, possessing a valid PAN card, and having a residential address in India. Specific eligibility details may vary, and individuals should refer to the relevant regulations for accurate information. Visitofficialwebsite
Key characteristics of Nidhi Companies include:
- Membership: Nidhi Companies primarily serve their members and have a closed membership structure.
- Non-Banking: They are categorized as Non-Banking Financial Companies (NBFCs) but are exempt from many of the regulations applicable to traditional NBFCs.
- Core Objective: The primary objective of a Nidhi Company is to cultivate the habit of thrift and savings among its members.
- Lending and Borrowing: They facilitate lending and borrowing activities among members, primarily in the form of unsecured loans.
- Mutual Benefit: The profits earned by Nidhi Companies are distributed among their members, promoting mutual benefit.
Formation and Registration of Nidhi Companies:
The formation and registration of Nidhi Companies are governed by the Companies Act, 2013, and the rules framed under this act. The steps involved in setting up a Nidhi Company include:
- Incorporation: A Nidhi Company must be incorporated as a public limited company.
- Minimum Capital: It should have a minimum paid-up equity share capital of Rs. 5 lakhs.
- Name: The name of the company should include the term “Nidhi Limited” as its last words.
- Board of Directors: A minimum of three directors is required for the company, and they should be individuals.
- Membership: To become a member, one must fulfill certain eligibility criteria as specified by the company.
- Registration: The Nidhi Company must be registered with the Ministry of Corporate Affairs (MCA) and obtain a certificate of incorporation.
Once registered, the company can commence its operations and provide financial services to its members.
Objectives and Activities of Nidhi Companies:
The main objectives of Nidhi Companies are as follows:
- Encourage Saving: To inculcate the habit of saving among its members.
- Mutual Benefit: To provide a platform for members to lend and borrow funds from each other for their mutual benefit.
- Long-term Financial Assistance: To offer long-term financial assistance, particularly for housing and small businesses.
- Borrowing and Lending: To engage in borrowing and lending money among its members, primarily in the form of unsecured loans.
- Prudent Lending: To ensure that lending is done prudently, and the financial resources of the company are used for the benefit of the members.
Nidhi Companies are not allowed to carry out certain financial activities, such as:
- Accepting deposits or loans from individuals who are not members.
- Extending loans for speculative purposes.
- Engaging in any chit fund-related activities.
- Undertaking insurance or hire-purchase financing.
Eligibility Criteria for Nidhi Company Membership:
To become a member of a Nidhi Company, an individual must meet specific eligibility criteria. These criteria are typically set by the Nidhi Company itself and can vary from one company to another. However, there are some common requirements that are usually applicable to most Nidhi Companies. The key eligibility criteria for Nidhi Company membership include:
- Age: Members must be of a certain age to be eligible for membership. This age requirement is often specified in the company’s bylaws.
- Indian Citizenship: Typically, Nidhi Companies only allow Indian citizens to become members.
- Residence: Some Nidhi Companies may require members to be residents of a particular state or region.
- Minimum Investment: Members may be required to invest a certain amount of money in the company to become eligible.
- Number of Shares: Members are usually required to purchase a minimum number of shares in the Nidhi Company.
- Document Verification: Members are required to provide documents such as identity proof, address proof, and photographs for verification.
- Application Fee: Some companies may charge an application fee for membership.
It’s important to note that these eligibility criteria can vary, and individuals interested in becoming members should refer to the specific rules and regulations of the Nidhi Company they wish to join.
How many members can a Nidhi Company have
Rule 5 of Nidhi Rules, 2014 is not applicable to companies incorporated after the commencement of Nidhi (Amendment) Rules, 2022. Such companies are not required to comply with the requirements of Rule 5 regarding Minimum Number of Members, Net Owned Funds, etc. within one year of incorporation.
What is the rule 5 of Nidhi Company
Rule 5 of Nidhi Rules, 2014 is not applicable to companies incorporated after the commencement of Nidhi (Amendment) Rules, 2022. Such companies are not required to comply with the requirements of Rule 5 regarding Minimum Number of Members, Net Owned Funds, etc. within one year of incorporation.
Is Nidhi Company under RBI
The Nidhi Companies are regulated by the Reserve Bank of India and are required to comply with the guidelines issued by the RBI. The RBI has prescribed the eligibility criteria, capital requirement, net-owned fund, prudential norms, audit requirements, reserve fund and disclosure requirements for Nidhi Companies.
How can I close my Nidhi Company
Need 75% Consent
This is a very new requirement which is to be complied for Nidhi Limited Company closure. To wind up the company, you need at least 75% consent of the shareholders/members of the company Further, one director is also needs to be notified to take care of all the responsibility for company closure.
Membership Application Process:
The process of becoming a member of a Nidhi Company typically involves the following steps:
Obtain Information: Interested individuals should first obtain information about the Nidhi Company they wish to join. This includes details about the company’s objectives, membership requirements, and application process.
Eligibility Check: Ensure that you meet the eligibility criteria set by the Nidhi Company. This may involve checking your age, citizenship, residence, and financial requirements.
Application Form: Obtain an application form from the Nidhi Company. This form will require you to provide personal details, investment information, and other necessary information.
Attach Documents: Attach the required documents, which may include identity proof, address proof, photographs, and any other documents specified by the company.
Submit Application: Submit the completed application form along with the necessary documents to the Nidhi Company’s office.
Who Cannot be a member of Nidhi Company
Minor, Body Corporate and a Trust cannot be admitted as members of Nidhi. The minimum paid-up share capital must be Rs. 5 lakh. Nidhi Company cannot open branches if it has not earned any profit after tax for consecutive three financial years.
What is the minimum member of Nidhi Company
Can a society become member of Nidhi Company
Who are members of Nidhi Company
As per the provisions of the law, a minimum of seven members are required for the incorporation of a Nidhi Company. It is to be noted that out of those seven members, three of them are supposed to be company directors. Moreover, the company is supposed to have a minimum paid-up equity share of 5 lakhs.
How can I add members in Nidhi Company
- Choose and divide shares:
- Attach the share certificate with FORM SH – 4:
- Attach along with Membership Form:
- Hand over the share certificate to him:
- Pass board resolution for each entry:
- Enter details in Share Transfer Register:
Benefits of Nidhi Company Membership:
Membership in a Nidhi Company offers several benefits to individuals, including:
Thrift and Savings: Nidhi Companies encourage members to develop a habit of thrift and savings, which can lead to financial stability and security.
Easy Access to Credit: Members have access to financial assistance in the form of unsecured loans for various purposes, including education, housing, and business.
Mutual Benefit: Profits earned by the Nidhi Company are distributed among members, ensuring that the financial gains are mutual and not concentrated in the hands of a few.
Community-Based Financial Support: Nidhi Companies foster a sense of community and mutual support among members, as they work together for their financial well-being.
Simple Documentation: The documentation and application process for Nidhi Company membership is usually less complex compared to traditional financial institutions.
Local Focus: Nidhi Companies often serve specific regions or communities, making them more attuned to the financial needs of their members.
Long-Term Assistance: Members can access long-term financial assistance for significant life events and investments.
Participation in Decision-Making: Members typically have the opportunity to participate in the decision-making process of the Nidhi Company through general meetings and voting rights.
Conclusion to became a member of nidhi company
Becoming a member of a Nidhi Company in India involves meeting specific eligibility criteria as set by the company itself. These eligibility criteria may include age, Indian citizenship, residence, minimum investment, and document verification. The application process typically involves submitting an application form, attaching required documents, and purchasing a minimum number of shares in the company.
Membership in a Nidhi Company offers several advantages, such as promoting savings, providing easy access to credit, and fostering a sense of community-based financial support. As a member, individuals can benefit from the mutual financial gains that Nidhi Companies aim to achieve.
how auriga accounting help you to became a member of nidhi company
Understanding Nidhi Company Regulations: Auriga Accounting or a similar firm can help you understand the legal and regulatory framework governing Nidhi Companies in India. This includes the Companies Act, 2013, and the rules set forth by the Ministry of Corporate Affairs.
Incorporation and Registration: Auriga Accounting assist you in setting up your own Nidhi Company by providing guidance on the incorporation process. They can help you with the paperwork and filing necessary for registering your Nidhi Company with the relevant authorities.
Drafting Bylaws and Policies: Auriga Accounting need to have their own set of bylaws and policies. Auriga Accounting can help in drafting these documents in compliance with legal requirements and best practices.
Compliance and Reporting: Nidhi Companies are required to comply with various reporting and regulatory obligations. An accounting and financial consulting firm can assist in maintaining financial records and preparing reports for submission to the authorities.
Membership Application Process: While Auriga Accounting might not directly assist with your membership application, they can guide you on the necessary documentation and financial requirements for becoming a member of a Nidhi Company.
Financial Planning and Management: These firms can provide financial planning and management services to Nidhi Companies to ensure that they operate efficiently and in compliance with relevant financial regulations.
Taxation and Audit: Accounting firms can help Nidhi Companies with their tax planning, filing, and audit requirements, ensuring that all financial activities are carried out in a legally compliant manner.
Legal Compliance: Auriga Accounting can help Nidhi Companies stay up-to-date with changes in financial regulations and ensure that their operations are always in compliance with the law.
Risk Management: These firms can provide guidance on managing financial risks and ensuring the safety of members’ deposits and investments.
Member Benefits and Distributions: Accounting firms can assist in calculating and distributing profits or benefits to members in accordance with the Nidhi Company’s bylaws.
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