Nidhi Company Registration

Nidhi Companies, often referred to as Nidhi Mutual Benefit Companies, are a unique category of non-banking financial institutions in India. 

These companies are formed with the primary objective of cultivating the habit of thrift and savings among their members and promoting the spirit of mutual assistance.

Nidhi Companies operate on the principle of mutual benefit, where the members contribute to a common pool of funds and receive financial assistance in times of need

Conditions for Incorporating Nidhi Companies in India

Minimum number of members: 7 (3 members should be the designated directors)

Minimum equity share capital: Rs. 10 lakhs and After 4 months 20 lakhs.

Mandatory inclusion of the Company's object in MOA reflects its intention to foster the habit of thrift and savings among the members.

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Overview of Nidhi Company Registration

A Nidhi company refers to a type of entity in the non-banking finance sector, recognized under Section 406 of the Companies Act, 2013. Their primary business is borrowing as well as lending funds between their members. They are also regarded as Benefit funds, permanent funds, Mutual benefits and Mutual Benefit Funds companies. 

The Ministry of Corporate Affairs governs these entities in India and reserves the right to issue directions related to deposit acceptance activities. The core object of these entities is to foster the habit of thrift and reserve funds amongst its serving members. The concept of Nidhi Company is quite popular in the southern region of India.

Benefits of Nidhi Company Registration

Nidhi Companies encourage members to save and invest within the group, fostering a culture of financial discipline. Members can access loans at reasonable rates, addressing their financial needs. Nidhi Companies offer a secure platform for members to invest their funds and earn competitive returns. Members’ liability is limited to the amount of shares they hold, providing financial security. Nidhi Companies promote mutual cooperation and support among members.

Collective Savings

Financial Assistance

Safe Investments

Limited Liability

The first step in Nidhi Company Registration is to incorporate the company as a Public Limited Company under the Companies Act, 2013. The minimum requirement is that a Nidhi Company must have at least three directors and seven shareholders to begin the registration process.

Nidhi Companies are required to have a minimum equity share capital of Rs. 5 lakh (subject to change as per prevailing regulations). This capital is essential to start the operations and comply with the Nidhi Company rules.

The name of the company must include the term “Nidhi Limited.” This signifies the core objective of the company, which is to promote thrift and savings among its members.

The main objectives of a Nidhi Company include encouraging savings, granting loans to members, and accepting deposits from its members for the mutual benefit of all.

Once the necessary documents are prepared, including the Memorandum and Articles of Association, they must be submitted to the Registrar of Companies (ROC) for approval.

A Nidhi Company should have a minimum of 200 members within one year of incorporation. Failure to meet this requirement may result in the company losing its Nidhi status.

Nidhi Companies are subject to strict financial ratios, including the Net Owned Funds (NOF) to Deposit ratio and the Net Owned Funds to Loan ratio. Compliance with these ratios is crucial to maintaining the Nidhi status.

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