Nidhi Company Registration Hosh February 10, 2025

Nidhi Company Registration

A Nidhi Company is a type of non-banking financial company (NBFC) that encourages its members to save money and provides loans to them at lower interest rates compared to traditional banks. The main aim of a Nidhi company is to foster the sustainability and saving habits of its members by offering a platform for mutual benefit. In a Nidhi company, only individuals can be members, which means a corporation or limited partnership cannot become a member. These companies strictly operate by receiving deposits and lending money only to their members.

The main purpose of these companies is to provide financial support to members at a lesser rate, while also ensuring that the company adheres to the rules and regulations set by the Central Government for such organizations.

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Basic Conditions for Incorporation of a Nidhi Company

Can Only Act as a Public Company:

A Nidhi company must be incorporated as a public company. It cannot be registered as a private company. This ensures that the company operates with a structure that allows for public participation in its activities, but still restricts its operations to a specific group (its members).

Cannot Issue Preference Shares:

Nidhi companies are prohibited from issuing preference shares to their members. This is a safeguard to ensure that the company remains focused on mutual benefit and fairness among its members, without giving undue advantage to certain stakeholders.

Paid-up Share Capital:

Every Nidhi company must have a minimum paid-up equity share capital of Rs. 10 Lakhs (Rs. 1,000,000). This ensures that the company has adequate financial backing to support its operations and provide loans to its members.

Inclusions in Memorandum of Association (MOA):

The MOA of a Nidhi company must clearly outline the objectives, including:

  1. Receiving deposits from members.
  2. Lending money to members.
  3. These activities must be conducted only for mutual benefit, and the company cannot extend its operations to external entities or corporate bodies.

Company Name:

The name of a Nidhi company must end with “Nidhi Ltd.” to distinguish it from other types of companies and to signify its specific nature of operations and the mutual benefit it aims to provide to its members.

Requirements for Incorporation of a Nidhi Company

1. Minimum Number of Members and Net Owned Funds

1. Number of Members:

The company must have at least 200 members within one year of commencement. The membership must consist only of individuals.

2. Net Owned Funds:

The company should have a net owned fund of at least Rs. 20 Lakhs or more. This ensures that the company has sufficient capital to support its operations.

3. Term Deposit:

The company’s unencumbered term deposit must be at least 10% of the total outstanding deposit. This deposit should be in compliance with Rule 14.

4. Ratio of Net Owned Funds to Deposits:

  • The ratio of the company’s net owned fund to deposits should not exceed 1:20. This ensures that the company does not over-leverage itself by taking in more deposits than its net capital allows.
  • Minimum Number of Members/Subscribers and Directors

2. Members/Subscribers:

A Nidhi company must have a minimum of 7 members/subscribers to be eligible for incorporation. A member is someone who holds shares in the company and becomes a part of it when their name is added to the register of members.

3. Directors:

  • A minimum of 3 directors is required to form a Nidhi company. Directors are responsible for managing the operations of the company.
  • Required Documents

ID Proof:

Self-attested ID proof of all members/subscribers and directors (e.g., valid passport, voter ID, Aadhar card, or driving license).

Address Proof:

Self-attested address proof of all members/subscribers and directors (e.g., bank statement, electricity bill, telephone bill, mobile bill, provided it is not older than 2 months).

PAN Card:

Self-attested PAN card of all members/subscribers and directors.

Passport Size Photos:

Two passport-sized colored photos of each member/subscriber and director.

Registered Office Proof:

Proof of the registered office is required:

  1. If leased: A No Objection Certificate (NOC) from the landlord, lease agreement, and utility bill (not older than 2 months) such as electricity or telephone bill.
  2. If owned: A NOC from the property owner, property papers, and utility bill (not older than 2 months).

4. Other Information Required

Authorized and Paid-up Share Capital:

Details of the authorized and paid-up share capital of the proposed company and the number of shares subscribed by each member.

Place of Birth & Duration of Stay:

Information about the place of birth and duration of stay of the members and directors at their current residential address.

Occupation:

Occupation of all members and directors.

Proposed Object/Business:

The proposed objects or business activities of the Nidhi company.

Educational Qualification:

Educational qualifications of all members and directors.

Contact Information:

Email IDs and contact numbers of all members and directors.

Process of Registration for a Nidhi Company

The Ministry of Corporate Affairs (MCA), through its notification dated 18th February 2020, implemented changes effective 23rd February 2020, amending the Companies (Incorporation) Rules, 2014. This amendment introduced the SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) web service, replacing the older INC-32 (SPICe) form and integrating multiple services for ease of incorporation.

Step 1: Application for Name Registration

Submit an application for reservation of the company name using the web service SPICe+ (Part A) available on the MCA portal (www.mca.gov.in) along with the specified fees.

Before applying for the name:

  • Ensure that the name is unique and not already registered with the MCA.
  • Verify that the name does not conflict with any trademark under the class of business you plan to register.
  • Check the availability of the name using the Trademark Registration tool.
  • The MCA also provides a facility to check name availability through its online portal.
  • SPICe+ Form Structure:
  • Part A: Used for reserving the company name.
  • Part B: Used for company incorporation and availing other integrated services.
  • Applicants can choose to complete both Part A (name reservation) and Part B (incorporation) simultaneously or separately.

Step 2: Fill Part B of SPICe+, MOA, AOA, and AGILE Form

  • Part B of SPICe+ includes sections for providing details required to register the company.
  • Fill out all the relevant information carefully, as it allows saving and modification of data before final submission.
  • Prepare and attach the following forms:
  • MOA (Memorandum of Association): Defines the company’s objectives.
  • AOA (Articles of Association): Specifies the rules and regulations of the company.
  • AGILE (Application for Goods and Services Tax Identification Number, Employees’ State Insurance Corporation Registration, and EPFO Registration): Integrates other services like GST, ESIC, and EPFO registrations.

Step 3: Convert SPICe+ Form into PDF

  • After completing Part B, the SPICe+ form is to be converted into PDF format.
  • Affix the Digital Signature Certificate (DSC) of the required personnel (subscribers, directors, etc.) to the PDF form.

Step 4: Upload the Form on the MCA Portal

  • Once the DSC is affixed, upload the SPICe+ form to the MCA portal along with the required attachments and supporting documents.
  • Follow the existing process for submission, ensuring all forms and fees are correctly filed.

Step 5: Declaration by Subscribers and Directors

  • Declarations from all subscribers and first directors are automatically generated in Form INC-9 (Declaration by Subscribers and Directors).
  • Submission of INC-9:
  • The declaration must be submitted electronically in PDF format.
  • Exceptions for manual submission:
  • If the number of subscribers or directors exceeds 20.
  • If any subscriber or director does not possess a valid Director Identification Number (DIN) or Permanent Account Number (PAN).

Changes Introduced as Per Recent Amendments for Incorporation of Nidhi Companies

The amendments made to the Companies (Incorporation) Rules, 2014, effective from 23rd February 2020, introduced several key changes to the SPICe+ process and compliance requirements for new companies, including Nidhi companies. Below is a detailed summary:

1. No Need to Mention SRN

  • There is no requirement to manually mention SRN (Service Request Number) for names reserved in Part A of SPICe+.
  • The SRN will be automatically displayed when filing Part B after completing Part A.

2. Mandatory Registrations for ESIC, EPFO, and Professional Tax

  • ESIC (Employees’ State Insurance Corporation) and EPFO (Employees’ Provident Fund Organization) registration are now mandatory for all companies incorporated from 23rd February 2020 onwards.
  • For companies incorporated in Maharashtra, Professional Tax Registration is also mandatory from the same date.

3. Mandatory Application for Bank Account

  • It is now compulsory for all newly incorporated companies to apply for the opening of a bank account.
  • This is done through the AGILE-PRO web form, which is linked to the SPICe+ form.

4. Declaration of Subscribers and First Directors

  • The declaration of all subscribers and first directors is now automatically generated in Form INC-9 in PDF format.
  • Electronic submission is mandatory, except in the following cases:
  • If the number of subscribers and/or directors exceeds 20.
  • If any subscriber and/or director does not have a DIN (Director Identification Number) and PAN (Permanent Account Number).

5. Mandatory Use of e-MOA (INC-33) and e-AOA (INC-34)

  • Use of electronic Memorandum of Association (e-MoA) and electronic Articles of Association (e-AoA) is mandatory Indian nationals.
  • Foreign nationals with a valid DIN and DSC (Digital Signature Certificate), and a valid business visa.
  • Non-individual subscribers based in India.

6. Statutory Returns for ESIC and EPFO

Newly incorporated companies that have obtained EPFO/ESIC numbers must file statutory returns only if the prescribed threshold limits are exceeded.

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