WHAT ARE THE REQUIREMENT FOR REGISTRATION OF NIDHI COMPANY IN CHENNAI?

Introduction

YOU NEED TO KNOW REQUIREMENT FOR REGISTRATION OF NIDHI COMPANY IN CHENNAI?

introduction of nidhi company

A Nidhi Company is a type of non-banking financial company (NBFC) that is primarily formed to encourage savings and to cultivate the habit of thrift among its members. The core business of a Nidhi Company is to borrow and lend money among its members. Nidhi Companies are regulated by the Ministry of Corporate Affairs (MCA) in India.Visitofficialwebsite

Key Requirements for Registration of a Nidhi Company in Chennai:

Minimum Capital Requirement: To register a Nidhi Company, it’s mandatory to have a minimum paid-up equity share capital of Rs. 5 lakhs.
Minimum Members: A Nidhi Company must have a minimum of 200 members within one year of incorporation.
Minimum Directors: It should have at least three directors. All directors must have Director Identification Numbers (DIN).
Registered Office: You need to have a registered office in Chennai from the day of incorporation.
Applying for DSC (Digital Signature Certificate): The first step in the registration process is to apply for Digital Signature Certificates (DSC) for all the directors of the company.
Applying for DIN (Director Identification Number): After obtaining DSC, directors need to apply for DIN from the Ministry of Corporate Affairs (MCA).
Name Reservation: You need to apply for the reservation of your company’s name through Form SPICe (Simplified Proforma for Incorporating Company Electronically) with the MCA.
Memorandum of Association (MOA) and Articles of Association (AOA): Prepare MOA and AOA according to the Companies Act, 2013. These documents should be filed along with the SPICe form.
Application for Incorporation: Once the name is approved, you can submit the SPICe form along with the required documents to the Registrar of Companies (RoC) for incorporation.
Obtaining Certificate of Incorporation: After the successful scrutiny of the documents, the RoC will issue a Certificate of Incorporation.
Opening a Bank Account: Once you receive the Certificate of Incorporation, you need to open a bank account in the name of the Nidhi Company.
Maintaining Statutory Registers: A Nidhi Company is required to maintain various statutory registers and books.
Filing with ROC: File all necessary documents and returns with the Registrar of Companies regularly. This includes annual financial statements, annual returns, and other compliance requirements.
Initial Capital Infusion: The initial paid-up capital should be brought into the company’s bank account within a specified period.
Limit on Deposits and Loans: Nidhi Companies have limitations on the acceptance of deposits and lending money. Ensure compliance with these limits.
Compliance with Nidhi Rules: Comply with the Nidhi Rules, which govern the operations of Nidhi Companies in India.
Regular Audit: Appoint a statutory auditor and conduct an annual audit of the company’s financial statements.
Nidhi Company Software: Implement robust software to maintain the records, accounts, and membership details of the company.
Operational Infrastructure: Set up an efficient operational infrastructure for deposit and loan operations.
Income Tax and GST Registration: Depending on your Nidhi Company’s income, you may need to register for Income Tax and GST as applicable.

benefits of registration nidhi company

Registering a Nidhi Company in Chennai, as in any part of India, offers several benefits. Nidhi companies are unique financial entities designed to promote savings and lending activities among their members. They are governed by the Nidhi Rules, 2014, and the Companies Act, 2013. Here are some of the key benefits of registering a Nidhi Company in Chennai:

Promotion of Thrift and Savings: Nidhi Companies encourage their members to save and deposit their funds in a common pool. This promotes a culture of thrift and savings among members, particularly in smaller towns and semi-urban areas.
Access to Credit: Members can avail themselves of loans at reasonable interest rates. Nidhi Companies are primarily established to provide credit facilities to their members for various purposes, such as housing, business, and personal needs.
Mutual Benefit: The primary purpose of Nidhi Companies is to benefit their members, not to maximize profits. This makes them ideal for small investors and individuals who seek financial assistance within the community.
Ease of Formation: Registering a Nidhi Company is a relatively straightforward process compared to other types of financial institutions. It requires fewer compliances and formalities.
Limited Regulatory Compliance: While Nidhi Companies are regulated by the Ministry of Corporate Affairs (MCA), they have fewer regulatory and compliance requirements compared to traditional banks and financial institutions.

What are the privileges of a nidhi company

Here are some key advantages and disadvantages of a Nidhi company:

Advantages:

Nidhi companies have less regulatory compliance compared to other NBFCs. They do not require a license from the RBI and only need to register with the MCA as per the Nidhi Rules, 2014.
Nidhi companies aim to promote savings and thrift among middle and lower income groups by providing loans at lower interest rates.
Nidhi companies operate only for the benefit of their members. Outsiders cannot invest in or avail credit from Nidhi companies.
Nidhi companies can raise funds from their members, though the amount is limited due to their restricted membership.

Disadvantages

The funds raised by Nidhi companies are limited since they can only accept deposits from members. This restricts their ability to provide loans.
Though Nidhi companies have less compliance, they are still regulated and governed by the RBI and central government rules. They do not have complete regulatory exemption.
Nidhi companies have to comply with deposit acceptance rules of the RBI which adds some regulatory burden.
The central government issues directions and amendments to the Nidhi Rules from time to time which Nidhi companies have to follow.

In summary, while Nidhi companies have advantages like lower compliance and ability to provide loans at lower rates, their limited funds, regulatory oversight and compliance with deposit rules act as disadvantages. A balanced approach is needed to leverage the pros while minimizing the cons.

How can I start a nidhi limited company? Kindly provide me details

Nidhi Company is a type of Non-Banking Financial Company (NBFC). It is formed to borrow and lend money to its members. It inculcates the habit of saving among its members and works on the principle of mutual benefit. These companies typically operate in the southern part of the country.

Nidhi Company isn’t required to receive the license from Reserve Bank of India (RBI), hence it is easy to form.

It is registered as a public company and should have “Nidhi Limited” as the last words of its name.

Activities Prohibited in a Nidhi Company

Nidhi Company can’t deal with chit funds, hire-purchase finance, leasing finance, insurance or securities business. It is strictly prohibited from accepting deposits from or lending funds to, any other person except members.

Also, it can’t advertise itself to ask for any deposits.

Number of members

Minimum of seven members is required to start a Nidhi Company out of which three members must be the directors of the company.

Share Capital and Owners’ Funds

A minimum of 5 lakh rupees, is required as the equity share capital to start a Nidhi Company. Nidhi Company can’t issue preference shares.

Documents required for registration

Proof of the registered place of business (Ownership documents/ rent or lease agreement)

No Objection Certificate (signed by the owner/ landlord)

Identity proofs

Address proofs of the members

Photos of the members

PAN card copies of the members

Digital Signature (DSC)

Director Identification Number (DIN) of the directors

Memorandum of Association of the company (MoA)

Articles of Association of the company (AoA)

Only one object will be mentioned in MoA of the company: “cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit..”

Conditions to be fulfilled for getting ‘Nidhi’ status

Within one year of its registration

Nidhi Company should have minimum 200 members within one year from commencement
Also, the net owned funds should be 10 lakh rupees or more. Net owned funds = Equity share capital + free reserves (-) accumulated losses (-) intangible assets
Unencumbered term deposits must be 10% or higher of the outstanding deposits
The ratio of net owned funds to deposits shouldn’t be more than 1:20

If Nidhi Company satisfies all above conditions, it should file NDH-1 along with prescribed fees within 90 days from the end of the first financial year after incorporation. The form must be duly certified by practicing CA/ CS/ CWA.

Extension of another financial year can be availed upon submission of NDH-2 to the Regional Director within 30 days from the end of the first financial year.

If even after the second financial year, it doesn’t fulfill the requirements, it can’t accept deposits till it complies with the provisions, and also penalty will be imposed.

Conclusion of nidhi company

The registration of a Nidhi Company in Chennai, like anywhere in India, involves several legal and regulatory requirements. It’s a detailed process that demands careful adherence to all the rules and regulations, from obtaining name approval to fulfilling the minimum capital requirement. Consulting with a legal or financial expert is strongly recommended to ensure that your Nidhi Company registration process proceeds smoothly and successfully.

how auriga accounting help you to register nidhi company

Auriga Accounting often play a crucial role in helping businesses, including Nidhi Companies, navigate the legal and regulatory requirements for registration. Here’s how they can be of assistance:

Expertise in Legal Compliance: These firms typically have a deep understanding of the legal and regulatory framework governing Nidhi Companies, ensuring that your company complies with all the necessary rules and regulations.
Name Approval: They can assist in obtaining name approval from the Registrar of Companies (ROC) and ensure that the chosen name is compliant with the requirements.
Documentation: They help in preparing and filing the necessary documentation, including the Memorandum of Association (MOA), Articles of Association (AOA), and other required forms with the ROC.
Digital Signature Certificates (DSC) and Director Identification Numbers (DIN): Accounting firms can assist in obtaining DSCs and DINs for the directors and subscribers.
Compliance with Nidhi Rules: They ensure that your Nidhi Company adheres to the specific rules and regulations laid down in the Nidhi Rules, 2014.
Financial Management: They can help set up financial systems and software for managing the company’s transactions efficiently.
Liaison with Authorities: Accounting and consultancy firms can communicate and liaise with the relevant authorities on your behalf, streamlining the registration process.
Advisory Services: They may offer strategic advice on structuring your Nidhi Company, financial planning, and compliance, taking into account the specific needs of your business.
Annual Compliance: After registration, these firms can continue to provide support with annual compliance, including filing annual returns and financial statements with the ROC.
Audit Services: Many accounting firms also provide auditing services, ensuring that your financial records are accurate and in compliance with accounting standards.