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TYPES OF NIDHI COMPANY

WHAT ARE THE TYPES OF NIDHI COMPANY AND HOW TO OBTAINED IT FOR EACH?

Introduction

YOU NEED TO KNOW WHAT ARE THE TYPES OF NIDHI COMPANY AND HOW TO OBTAINED IT FOR EACH?

What are the Types of nidhi company:  Nidhi companies in India are a type of non-banking financial institution that facilitates savings and lending among its members. To obtain Nidhi company status, one must follow these steps:

  1. Incorporate a public limited company.
  2. Ensure a minimum capital requirement.
  3. Obtain necessary approvals from the Ministry of Corporate Affairs.
  4. Comply with the Companies Act and Nidhi Rules.
  5. Establish a primary objective of cultivating thrift and savings. Visitofficialwebsite

Purpose and Objectives:

The primary purposes of Nidhi Companies include:

  • Accepting deposits and providing loans to their members.
  • Creating a habit of saving and financial discipline among members.
  • Promoting financial stability within the community.
  • Fostering a culture of mutual help and support.

Types of Nidhi Companies:

There are two primary types of Nidhi Companies based on the number of members they have:

Type A: Nidhi Companies Having Less Than 200 Members:

These Nidhi companies are smaller in scale, with a membership base of fewer than 200 individuals. The process of obtaining registration for such companies is relatively straightforward.

Type B: Nidhi Companies Having 200 or More Members:

For Nidhi companies with a membership base of 200 or more individuals, the registration process is more complex. They are subject to additional regulatory requirements to ensure the protection of a larger number of depositors.

Process of Obtaining Registration:

Registration Requirements:

To register a Nidhi Company, certain key requirements must be met. These include:

  • Minimum Paid-Up Capital: A Nidhi company must have a minimum paid-up equity share capital of Rs. 5 lakhs.
  • Number of Members: For Type A Nidhi companies (less than 200 members) and Type B Nidhi companies (200 or more members), there are specific requirements.
  • Directors: The company must have a minimum of three directors.
  • Name Approval: The proposed company name must include “Nidhi Limited.”
  • Registered Office: A registered office address must be provided.
  • Statutory Declaration: Declarations from professionals confirming compliance with Nidhi Rules are required.
 

Step-by-Step Registration Process:

The process of obtaining registration for a Nidhi Company involves multiple steps, such as:

  • Name Approval: Apply for name approval with the Registrar of Companies (RoC).
  • Application for Incorporation: File an application for incorporation with the RoC.
  • Memorandum and Articles of Association: Draft the MOA and AOA and submit them to the RoC.
  • Directors and Subscribers: Obtain Director Identification Numbers (DINs) for directors and subscribers.
  • Registered Office: Provide proof of the registered office address and obtain a No-Objection Certificate (NOC) from the property owner.
  • Capital Requirement: Ensure that the company meets the minimum paid-up capital requirement.
  • Declarations and Consent Letters: Obtain various declarations and consent letters from directors and professionals.
  • NOC from Property Owner: If the registered office is not owned by the company, an NOC from the property owner is required.
  • Verification of Registered Office: File Form INC-22 to verify the registered office.
  • Declaration of Compliance: File Form INC-9 with the RoC, providing a declaration of compliance with Nidhi Rules.
  • Declaration of Disqualification: Directors must submit Form DIR-8, declaring that they are not disqualified.
  • PAN and TAN Application: Apply for a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN).
  • Appointment of Auditors: Appoint auditors for the company within 30 days of incorporation.
  • Bank Account Opening: Open a bank account for the Nidhi Company to manage financial transactions.
 

Post-Registration Compliance:

After obtaining registration, a Nidhi Company must adhere to specific operational guidelines and compliance requirements, including:

  • Membership criteria: Nidhi companies can only have members and must meet specific criteria for membership.
  • Deposit and lending limits: There are limits on the amount of deposits and loans that can be accepted and provided.
  • Reserve fund maintenance: Nidhi companies must maintain a reserve fund, and a percentage of profits must be allocated to this fund.
  • Reporting and compliance: Regular reporting and compliance with the Nidhi Rules and other relevant regulations are essential.

How many directors are required for Nidhi Company

3 directors
 
Minimum Shareholders or Members: A minimum of 7 members is required to initiate the registration process. Minimum Directors: You must have a minimum of 3 directors to form the company. Minimum Capital: A minimum capital of Rs. 5 lakhs is essential to kickstart your Nidhi Company.

What are the new Nidhi Rules 2023

The following are the rules regarding membership in Nidhi Company. A Nidhi Company shall have at least 200 members at all times. Initially, it can be incorporated with 7 members, but it shall increase the number of members to 200 within 120 days of incorporation.

What is a nidhi company’s registration and its process

Nidhi Company registration refers to the process of incorporating and establishing a Nidhi Company, a non-banking financial institution (NBFC) in India. Nidhi Companies are formed to promote the habit of thrift, savings, and financial cooperation among their members.

The process of Nidhi Company registration involves the following steps:

  1. Obtain a Digital Signature Certificate (DSC): The first step is to obtain a DSC for the proposed directors of the company. The DSC is required for the online filing of registration documents.
 

2. Apply for Director Identification Number (DIN): Each director of the Nidhi Company must apply for a DIN from the Ministry of Corporate Affairs (MCA) by submitting the required documents and forms.

 

3. Name Reservation: Once the DIN is obtained, the next step is to apply for name reservation through the RUN (Reserve Unique Name) facility on the MCA portal. The proposed name should comply with the naming guidelines and not be similar to any existing company or trademark.

 

4. Drafting of Memorandum of Association (MOA) and Articles of Association (AOA): The MOA and AOA are the constitutional documents of the Nidhi Company. These documents define the objectives, rules, and regulations, as well as the members’ and directors’ rights and responsibilities. The MOA and AOA need to be prepared per the Companies Act 2013.

 

5. Submission of Forms and Documents: Once the name is approved, the necessary forms and documents, including the MOA, AOA, and other required declarations, need to be filed with the Registrar of Companies (RoC). These documents should be submitted within 60 days from the date of name approval.

 

6. Payment of Fees: The prescribed registration fees, based on the company’s authorized share capital, should be paid to the RoC. The fee structure can be obtained from the MCA website.

 

7. Certificate of Incorporation: After verifying the submitted documents, if everything is in order, the RoC will issue a Certificate of Incorporation, officially recognizing the Nidhi Company as a registered entity.

 

8. Post-Incorporation Compliance: Once the Nidhi Company is registered, certain post-incorporation compliance requirements need to be fulfilled, such as obtaining a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN), opening a bank account, and complying with other applicable laws and regulations.

What are some important facts about Nidhi Company

The first thing you need to do is to increase the turnover of your Nidhi Company. The turnover of your Nidhi Company is a key indicator of how well your company is doing.

If your turnover is too high, it means that you are not getting enough business from your customers. If your turnover is too low, it means that you are not getting enough business from your customers.

The turnover of a Nidhi Company is usually measured in terms of the number of people that come in and leave out. When there are too many people coming in and leaving out, the turnover will be low. When there are too few people coming in and leaving out, the turnover will be high

What are the limitations of Nidhi Company

Restrictions on Nidhi Companies

Conduct the business of chit fund, leasing finance, and hire purchase. It cannot acquire securities issued by a body corporate. Issue preference shares, debentures, or any debt instrument by any name or in any form whatsoever. Open any current account with its members.

What is the minimum capital of Nidhi Company

ten lakh rupees
 
Requirements for Incorporation of Nidhi Companies

Such company shall have minimum paid up equity share capital of ten lakh rupees. Every Nidhi Company shall have not less than Two hundred Members. Every Such Company shall have Net Owned Funds of Twenty Lakh Rupees or more.

How to get profit from Nidhi Company

  1. Within a year following its initial registration.
  2. Nidhi Company should have at least 200 members within one year of its inception.
  3. Furthermore, the net held funds should be worth at least 10 lakh rupees.

Is Nidhi Company a chit fund

A Nidhi Company is an NBFC that can only lend money or accept deposits, whereas a Chit Fund is also a committee like a Nidhi Company but only accepts payments made in instalments over a set period of time by its members. This is the main distinction between the two.

WHAT ARE THE TYPES OF NIDHI COMPANY

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.
 

Functions of Nidhi company

1. The rules of funding in a Nidhi company is done through the contribution of its forming members.

2.  Later that money is used to offer loans to its own members according to their needs at very reasonable rates.

3. The funds or deposits of a Nidhi company are limited when compared with other banks because they are only able to operate their as they will be working with specific fund base in a limited area.

Some Following function are done like providing loans to its members, collects deposit from its member, loans are focused to the limits of funds raised by the member.

The purpose of Nidhi company is to give growth and support to small scale companies and tell them about habit of saving and working for the benefit of their own members by lending, receiving deposits etc.

Regulatory Framework for Nidhi Companies:

The regulatory framework for Nidhi Companies includes:

  • Nidhi Rules, 2014: These rules provide the legal framework for the incorporation and operation of Nidhi Companies. They specify the eligibility criteria, capital requirements, and operational guidelines.

  • Companies Act, 2013: The Companies Act, 2013, is the overarching legislation governing the formation and operation of companies in India. Nidhi Companies are subject to its provisions.

  • Reserve Bank of India (RBI) Regulations: While Nidhi Companies do not fall under the direct purview of the Reserve Bank of India, they are indirectly regulated by the RBI concerning matters related to the acceptance of deposits.

What is the scope for nidhi companies in Midia

In order to make regulatory regime for Nidhi Companies more effective and also to accomplish the objectives of transparency & investor friendliness in the corporate environment of the country, the Central Government has recently amended the provisions related to NIDHI under the Companies Act and the Rules

Impact

The amended provisions of the Companies Act (Section 406) and Nidhi rules (as amended w.e.f. 15.08.2019) require that the Nidhi companies have to apply to the Central government for updation of their status/ declaration as Nidhi Company in Form NDH-4.

What are NIDHI Companies?

  • Under Nidhi Rules, 2014, Nidhi is a company which has been incorporated as a Nidhi with the object of cultivating the habit of thrift and saving amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit.
  • The companies doing Nidhi business, viz. borrowing from members and lending to members only, are known under different names such as Nidhi, Permanent Fund, Benefit Funds, Mutual Benefit Funds and Mutual Benefit Company.
  • Nidhis are more popular in South India and are highly localized single office institutions. They are mutual benefit societies because their dealings are restricted only to the members; and membership is limited to individuals. The principal source of funds is the contribution from the members. The loans are given to the members at relatively reasonable rates for purposes such as house construction or repairs and are generally secured.
  • Nidhis are also included in the definition of Non- Banking Financial companies or (NBFCs) which operate mainly in the unorganized money market. However, since 1997, NBFCs have been brought increasingly under the regulatory ambit of the Indian Central Bank, RBI.
 

RBI and NIDHI

  • Since Nidhis come under one class of NBFCs, RBI is empowered to issue directions to them in matters relating to their deposit acceptance activities.
  • However, in recognition of the fact that these Nidhis deal with their shareholder-members only, RBI has exempted the notified Nidhis from the core provisions of the RBI Act and other directions applicable to NBFCs.

how auriga accounting help you to define nidhi company obtained it

Auriga Accounting, or any accounting software, can assist in managing financial data and compliance for a Nidhi Company, but it does not define or obtain the Nidhi company itself. However, I can explain how Auriga Accounting or similar accounting software can be used to help manage financial aspects related to obtaining a Nidhi Company. Here’s how it can assist:

1. Financial Data Management:

Auriga Accounting can help manage financial data related to the capital structure, initial funding, and ongoing financial transactions of the Nidhi Company. This includes tracking expenses related to the incorporation process and monitoring the company’s financial health.

2. Budgeting and Forecasting:

You can use the software to create budgets and financial forecasts, which are important for planning the capital structure and financial requirements of the Nidhi Company.

3. Tax Compliance:

Auriga Accounting can help ensure that the Nidhi Company remains compliant with tax regulations. It can generate and assist in submitting tax-related documents and reports.

4. Financial Reporting:

The software can generate financial reports, which are essential for internal management, board meetings, and for communicating financial information to stakeholders.

5. Audit Preparation:

Auriga Accounting can help prepare financial documents for audits, ensuring that the Nidhi Company’s financial records are in order and compliant with regulatory requirements.

6. Record Keeping:

Accounting software can be used for efficient record-keeping, which is essential for financial and regulatory compliance.

February 25, 2024

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