NIDHI COMPANY
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NIDHI COMPANY
A Nidhi Company is a distinctive form of Non-Banking Financial Company (NBFC) in India, regulated under Section 406 of the Companies Act, 2013, and the Nidhi Rules, 2014. Its primary objective is to encourage a culture of saving and financial discipline among its members. Operating exclusively for its shareholders, a Nidhi Company accepts deposits and provides loans only within its member circle. This structure offers a simple yet effective means to promote financial security and mutual benefit within a community.
Benefits
Low Capital Requirement: According to the Nidhi Rules, 2014, the minimum capital required is just ₹10 lakh, making it accessible for small-scale ventures.
Encourages Savings: Fosters a culture of saving and thriftiness among its members, promoting long-term financial security.
Member-Governed: Operates without external interference, as it is entirely managed by its members, ensuring greater control and flexibility.
Affordable Borrowing: Offers members the benefit of borrowing at lower interest rates compared to traditional banks, with fewer formalities and obligations.
Uninterrupted Operations: The company continues its operations smoothly even in the event of a member's death, insolvency, insanity, or retirement, ensuring business continuity.
Requirement for Nidhi Company Registration in India
Minimum Membership: The company must have a minimum of 200 members or shareholders by the end of its first year.
Net Owned Funds (NOF): The company's net owned funds must exceed ₹10 lakh.
NOF-to-Deposit Ratio: A ratio of more than 1:20 must be maintained between net owned funds and total deposits.
Unencumbered Deposits: At least 10% of the total outstanding deposits should be held as unencumbered term deposits.
Interest Rates: The company can offer up to 12.5% interest on fixed and recurring deposits, and 6% on savings accounts.
Deposit Limit: The company is allowed to accept deposits up to 20 times the total amount invested.
Compliance: The company must file annual returns, income tax returns, and financial statements every year.
Documents Required For Nidhi Company
Basic Checklist:
Three Directors: A minimum of three directors, with at least one being an Indian citizen and resident.
Seven Promoters: A minimum of seven promoters, who may overlap with the directors.
Unique Name: The company name must include "Nidhi Limited" and be distinct from existing companies or trademarks.
Paid-Up Capital: Minimum ₹5 lakh in equity share capital.
Registered Office: A physical office location is required, along with the necessary licenses.
Documents for Registered Office:
Recent bank statement or utility bills (dated within the last 2–3 months).
Property tax receipt copies.
Notarized rental/lease agreement.
Scanned sale/property deed.
No Objection Certificate (NOC) from the property owner.
Documents for Indian Directors/Promoters:
PAN card of shareholders and directors.
Passport-sized photograph (jpeg/pdf format).
ID proof (Voter ID/Passport/Driving License).
Address proof (Bank Statement/Utility Bill).
Note: A Digital Signature Certificate (DSC) is mandatory for incorporation.
Documents for NRI Directors/Promoters:
ID Proof: Passport/PAN card, verified by the Indian Embassy.
Address Proof (India): Bank Statement/Utility Bill, certified by CA/CS/CMA.
Abroad Address Proof:
Hague Convention (HC): Notarized and apostilled.
Outside HC/Commonwealth: Notarized and authenticated by Diplomatic/Consular Officer.
Documents for Foreign Nationals:
ID & Address Proof: Passport/PAN card.
Verification Based on Residence:
Hague Convention (HC): Notarized and apostilled.
Commonwealth (CW): Notarized by Public Notary.
Outside HC/CW: Notarized and authenticated by Diplomatic/Consular Officer.
Additional Requirement: Declaration of interest (2% or more shares) in Indian companies.
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