YOU NEED TO KNOW CAN ON MINOR BE A MEMBER OF NIDHI COMPANY?
Member of Nidhi Company In India, a minor (someone below the age of 18) cannot be a member of a Nidhi company. Nidhi companies are regulated by the Ministry of Corporate Affairs, and the Companies Act, 2013, stipulates that only individuals above the age of 18 can become members. Minors lack the legal capacity to enter into contractual agreements, and therefore, they are ineligible to hold membership in Nidhi companies or any other corporate entities until they attain the age of majority. Visitofficialwebsite
Legal Capacity of Minors:
In India, the Indian Contract Act, 1872, governs the capacity to enter into contracts. Under this act, Section 11 clearly specifies that “every person is competent to contract who is of the age of majority according to the law to which he is subject and who is of sound mind and is not disqualified from contracting by any law to which he is subject.”
The term “age of majority” generally refers to the age at which a person is legally recognized as an adult and is allowed to enter into contracts. In India, the age of majority is typically 18 years, although it can vary in certain states. Until a person reaches the age of majority, they are considered a minor in the eyes of the law.
As minors lack the full legal capacity to contract, they are often unable to enter into binding financial transactions or agreements. However, there are some exceptions and nuances to this rule, and certain contracts with minors may be valid under specific circumstances.
Can Minors Become Members of Nidhi Companies:
The eligibility of minors to become members of Nidhi Companies is a subject of debate and may depend on the company’s specific bylaws and policies, as well as the legal framework governing Nidhi Companies.
important considerations related to minors becoming members of Nidhi Companies:
Nidhi Companies’ Bylaws:
Nidhi Companies typically have their own bylaws and rules that outline the eligibility criteria for membership. These bylaws may specify the minimum age for membership and other conditions that potential members must meet. Therefore, it is possible for a Nidhi Company to set a minimum age requirement that excludes minors from becoming members.
Legal Capacity:
As mentioned earlier, minors lack the legal capacity to enter into binding contracts. While becoming a member of a Nidhi Company may involve purchasing shares or engaging in financial transactions, this does not necessarily imply that it constitutes a contract in the traditional sense. The legal status of such membership arrangements may depend on how they are structured and the applicable legal interpretations.
Consent and Guardian’s Role:
If a minor wishes to become a member of a Nidhi Company, it is common for their legal guardian (usually a parent or legal custodian) to provide consent on their behalf. The legal guardian would also typically oversee the minor’s financial transactions within the company.
Statutory Requirements and Regulations:
Nidhi Companies are subject to regulatory oversight by the Ministry of Corporate Affairs (MCA) and must adhere to the rules and regulations set forth in the Nidhi Rules, 2014. While these rules do not explicitly address the issue of minors as members, they provide a framework for the operation and governance of Nidhi Companies. Compliance with these rules is mandatory for Nidhi Companies.
Can any person join a nidhi company
Nidhi Company is a non-banking financial business structure. Nidhi Company performs the functions of lending and borrowing money within its members where it works through its members only. Nidhi Company is also called a mutual benefit company. A person can be a part of a Nidhi company by being one of the directors or being a customer, You can use its services only if you purchase at least one share of the company.
How can I start a Nidhi company
Nidhi company registration in India is regulate by the rule & regulations specified under section 406 of companies act, 2013. The word “Nidhi” is used in reference with a treasure/a fund i.e. the company so incorporated have the primary objective of inculcating a habit of savings amongst its members.
Some of the interesting features related with NIDHI company registration are:
Borrowing & Lending: A Nidhi Company cannot lend & borrow from outside its member community.
“Nidhi ltd.”: “Nidhi limited” must be added to name of the company.
Share capital: Minimum equity share capital of INR 5 lakh is required Nidhi Company. You cannot issue preference shares once registered as Nidhi company.
No. of members: Atleast 7 members must be there to start a Nidhi company. Out of which 3 must be the full time directors of the company.
PROCEDURE OF NIDHI COMPANY REGISTRATION
- Apply for DSC/DIN
- Check proposed Nidhi company name availability with ROC/MCA
- Submit MOA/AOA Certificates
- Apply for PAN/TAN
- Opening of current account in bank
- Get your NIDHI company registration after successful verification of documents.
What is the minimum requirement to the registration of a Nidhi company
A Nidhi Company is a type of Non-Banking Financial Company (NBFC) in India that primarily deals with accepting deposits and lending money to its members. To register a Nidhi Company, you must meet the following minimum requirements:
- Incorporation: Register the company as a public limited company under the Companies Act, 2013 with the Ministry of Corporate Affairs (MCA).
- Unique name: Choose a unique name for the company that includes the word “Nidhi Limited” as part of its name.
- Minimum capital: The company must have a minimum paid-up equity share capital of INR 5 lakhs (approximately $6,700).
- Minimum members: A Nidhi Company must have at least seven members (shareholders) and three directors at the time of incorporation.
- Resident directors: All directors must be Indian residents.
- DIN (Director Identification Number): Each director must have a valid DIN.
- DSC (Digital Signature Certificate): Obtain a DSC for each director, which is required for signing electronic documents.
- MOA (Memorandum of Association) and AOA (Articles of Association): Draft the MOA, which outlines the company’s objectives, and the AOA, which contains the rules and regulations governing the company’s operations.
What is nidhi company and how it works
Nidhi Company is a non-banking financial business structure. Nidhi Company performs the functions of lending and borrowing of money within its members where it works through its members only. Nidhi Company is also called as a mutual benefit company. Nidhi Company promotes the art of saving and utilization of funds within its member community. Nidhi company does not require a license of Reserve Bank of India. Companies doing Nidhi Business are also known as Nidhi, Permanent fund, Benefit funds, Mutual Benefit Funds, and Mutual Benefit company. Nidhi Company is recognized under section 406 of the Companies Act, 2013. It is a business structure which comes under 20A of the Companies act,1956 and ruled by the Ministry of Corporative Affairs(MCA)
Nidhi Company is formed to increase the habit of savings only for mutual benefit among its member only. The main goal of funding for the Nidhi Company is the contribution from the members. Registration of Nidhi Company is very simple and less complicated. It has been more popular in southern part of India.
Basic Structure of Nidhi company
- It is a type of public limited company
- Only members are allowed to lend and borrow money.
- Legalized throughthe Ministry of Corporate affairs
- It doesn’t need any approval of RBI.But it has right to question related to deposit acceptance activities.
- To start Nidhi Company 5 lakh minimum capital is required
- Established in 2014, Governed under Nidhi rules.
- There should be at least 200 members to incorporate in Nidhi Company.
- There should be at least Rs.10/- to the members of a Nidhi company that is approved with equity share.
5 conditions to be a nidhi company.
1.Should be registered under company act 1956
2.Should be regulated by Ministry of corporate affairs.
3.process of Borrowing and lending- restricted only to members.
4. Allows Membership of a individual only.Not a firm or a group.
5. Included or considered as NBFC-Non banking financial institutions. Hence will regulated by RBI..
Only these points should keep in mind regarding NIDHI companies.
Implications and Challenges:
The eligibility of minors to become members of Nidhi Companies can have several implications and challenges:
Legal Ambiguity:
The legal status of minors as members in Nidhi Companies remains somewhat ambiguous. While some companies may permit minors to become members with proper consent and oversight, others may choose to exclude them due to the legal complexities associated with the capacity to contract.
Guardianship and Control:
Allowing minors to become members often necessitates the active involvement of their legal guardians. These guardians would oversee the minor’s participation in the Nidhi Company and ensure that financial transactions are conducted prudently and in compliance with the law.
Inheritance and Succession:
If a minor is allowed to become a member, issues related to inheritance and succession may arise. In the event of the minor’s death or when they reach the age of majority, the shares and benefits accrued in the Nidhi Company may need to be managed or transferred in accordance with the law.
Changing Legal Landscape:
The legal landscape and regulations surrounding Nidhi Companies, as well as the capacity of minors to participate in such entities, may evolve over time. It is important for Nidhi Companies to stay updated on legal developments and adapt their policies accordingly.
Conclusion to minor be a member in nidhi company
The eligibility of minors to become members of Nidhi Companies in India is a complex issue with legal, regulatory, and practical considerations. While there is no explicit prohibition on minors becoming members of Nidhi Companies, the legal capacity of minors to enter into financial transactions raises questions about the practicality and feasibility of such membership.
Nidhi Companies should carefully consider their bylaws and policies, seek legal guidance, and establish clear procedures for managing the involvement of minors as members, should they choose to allow such participation. Additionally, it is crucial for Nidhi Companies to remain compliant with the relevant regulations and stay informed about any legal developments that may impact the eligibility of minors as members.
how auriga accounting help you to define minor be a member in nidhi company
Auriga Accounting, or any similar accounting and financial consulting firm, can play a crucial role in advising and assisting Nidhi Companies in determining the eligibility of minors to become members of their company. Their expertise can help Nidhi Companies navigate the complex legal and regulatory landscape in India while making informed decisions regarding minor membership. Here’s how such a firm can help in defining the rules and policies related to minors becoming members in a Nidhi Company:
1. Legal and Regulatory Compliance:
Auriga Accounting can provide Nidhi Companies with a thorough understanding of the legal framework and regulatory requirements related to Nidhi Companies and their members. They can assist in interpreting the provisions of the Companies Act, 2013, Nidhi Rules, 2014, and any other relevant laws concerning the eligibility of minors. This is vital in ensuring that any policies and decisions related to minor membership are compliant with the law.
2. Bylaw Development:
Auriga Accounting can help Nidhi Companies draft and amend their bylaws or memorandum of association to include specific provisions related to minor membership. This may involve setting the minimum age for membership, specifying the roles and responsibilities of legal guardians, and outlining the terms and conditions for minor members.
3. Risk Assessment:
The accounting firm can assist Nidhi Companies in assessing the potential risks and implications of allowing minors as members. They can help the company understand the legal, financial, and operational risks associated with minor membership, as well as ways to mitigate these risks.
4. Consent and Documentation:
Auriga Accounting can advise on the documentation and consent processes that should be in place when a minor seeks to become a member. This may include guidance on obtaining legally valid consent from the minor’s legal guardian, as well as maintaining proper records of such consent.
5. Governance and Control:
The firm can help Nidhi Companies establish effective governance structures that ensure proper oversight of minor members and their financial transactions. This may involve defining the roles and responsibilities of legal guardians, ensuring transparency in financial operations, and setting up mechanisms for guardians to participate in decision-making processes.
6. Reporting and Compliance:
Auriga Accounting can assist in establishing reporting mechanisms to track and report on the financial activities of minor members. This ensures that the Nidhi Company remains in compliance with statutory reporting requirements.
7. Ongoing Compliance Monitoring:
As laws and regulations change over time, the accounting firm can help Nidhi Companies stay up to date with any legal developments related to minor membership. They can also assist in periodic reviews of company policies to ensure continued compliance.
8. Training and Education:
Auriga Accounting can provide training and educational resources to Nidhi Company staff and management to help them understand the nuances of managing minor members and ensuring legal compliance.
9. Legal Consultation:
The accounting firm may work in conjunction with legal experts or provide referrals to legal professionals who specialize in company law and can offer legal opinions and advice on specific issues related to minor membership.
10. Scenario Analysis:
The firm can assist Nidhi Companies in conducting scenario analyses to understand the potential outcomes and implications of allowing minors as members. This analysis can help the company make informed decisions regarding the eligibility of minors.
It’s important to note that the decision to allow minors as members in a Nidhi Company should be well-considered, taking into account the unique circumstances and objectives of the company. Consulting with experts from accounting and legal fields, such as Auriga Accounting, can help Nidhi Companies make informed and legally compliant choices regarding minor membership.
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