Overview of Nidhi Company Registration

Nidhi Company Registration is recognised under section 406 of the Companies Act 2013. A Nidhi Company refers to a venture in the non-banking Finance sector. The primary business function of a Nidhi company is to borrow and lend funds to the members of the company. Based on the operation of the Nidhi company, it is also known as a mutual benefit fund company, mutual benefit or benefit fund, or permanent fund company. Nidhi Company is governed in India by the MCA (Ministry of Corporate Affairs), and it has the total governing authority over any regulations related to the deposit and acceptance of the Nidhi Company. Nidhi Company is based on the objective of thrift and savings amongst its members. Concerning the popularity of Nidhi Company, Nidhi Company Registration is relatively more popular in South India than in North India. In this write-up, we will study the requirements, characteristics, Advantages, documents required, and the incorporation process of a Nidhi Company.

Requirements of Nidhi Company Registration

The governing authority sets up the requirement of a Nidhi Company Registration from the Ministry of Corporate Affairs. The requirements are stated as follows:

1. Minimum number of members - There must be at least seven members, among which three members should be the proposed directors of the company


2. Minimum number of Shareholders - The company should have not less than 200 shareholders.


3. The minimum amount of equity capital Minimum number of Shareholders - The equity share capital of a Nidhi company should be at least 10 lacs and after four months it should be 20 lacs.


4. The ratio of net owned fund to company deposit - The ratio of the net fund to the company's deposit should not exceed 1:20.


5. Name - The Nidhi company is required to have a “limited company” tagged along with its name as per the Companies Act 2013.


6. Memorandum of Association (MOA) - In the memorandum of association of the Nidhi company, the company’s objectives are to instill the habit of thrift and saving among the members of the company.

Characteristics of Nidhi Company Registration

There are several characteristics of a Nidhi company, but here we will look at the most essential elements as follows:

1. A Nidhi company is a non-banking financial company that accepts deposits and grants loans to its members.


2. A Nidhi company cannot enter finance, purchase business, or acquire corporate securities.


3. A Nidhi company can only do business with the lending and borrowing functions under its name, and it cannot engage with any corporate body for its lending and borrowing functions.


4. A Nidhi Company is prohibited from accepting any incentive for the loan or fund deployment grant


5. All the members must provide address proof, including a letter from the landlord in case it is a rented property stating that there is no objection to the property being rented.


6. The company's members should also provide identity proof, including proof of residence.


7. All the directors of the Nidhi company must have a DSC (Digital Signature Certificate) and a DIN (Director Identification Number).

Advantages of Nidhi Company Registration

There are several benefits to incorporating a Nidhi company, but here we will discuss the significant benefits of the incorporation as follows:

• Easy incorporation - The incorporation of a Nidhi company is straightforward, and one must follow the requirements stated in the earlier section and complete the documentation procedure


• Instilling a habit of thrift and saving amongst members - The concept of a Nidhi company promotes the practice of savings amongst Indian people. It is very beneficial for the economy of the country.


• Compliance factors - A Nidhi company is not required to comply with the regulations provided by the Reserve Bank of India; in other words, a Nidhi company can operate according to its own rules.


• Risk factor - As the lending and borrowing is done among the members of the Nidhi company, there is a lesser chance of the money being inappropriately handled or any other kind of financial issues.


• Economical - Incorporating a Nidhi company is not expensive and very simple compared to other non-banking financial companies.


• Net owned funds - A Nidhi company follows the system of the net on fund according to which the amount invested in the business is used for raising funds, thereby helping in the growth of the business and providing a cost-effective solution for the owners of the company.

Documents required for Nidhi Company Registration

Several documents are required for the incorporation of a Nidhi company as per the Companies Act 2013, as follows:

1. Director Identification Number (DIN).


2. Residential address of the proposed director and company member, address proof, and NOC from the landlord if it is a rented property


3. PAN of the proposed directors and all the members.


4. Photographs of all the directors and the members.


5. Identity Proof of all the members.


6. Memorandum of Association (MOA) and Article of Association (AOA).

Process of Nidhi Company Registration

Nidhi Company Registration follows a straightforward process as stated below:

• Obtaining DSC and DIN - The first step is to obtain a digital signature certificate and detected identification number from the Ministry of Corporate Affairs (MCA); for getting this, the agents approved by the MCA will ask for a standard service fee. The digital signature certificate is essential for the proposed director to authenticate all the documents electronically.


• Name application - An application has to be made to the Ministry of Corporate Affairs suggesting three name choices for the Nidhi company. The name must be distinctive and not infringe upon other companies' IP rights. Once the MCA approves the name, it will remain valid for 20 days.


• Registration application - After the name has been approved, the application for the Nidhi Company Registration must be made along with the AOA (Article of Association) and MOA (Memorandum of Association).


• Certificate of Incorporation - - Once the governing authority has verified all the documents and the AOA and MOA within 15 to 20 days, the certificate for incorporation of the Nidhi company will be issued, and it will contain the Company's Identification Number, also known as CIN.

Why Adviso?

Nidhi Company Registration involves requirements, document preparation, and pre- and post-compliance obligations. It is essential to comply with the specific terms of the Ministry of Corporate Affairs (MCA). The Nidhi Company Registration can be a tedious process without professional support. That’s where the Adviso comes in.

At Adviso, we provide expert services for online company registration on the MCA website. Our Lawyers, CA, and CS experts will be there throughout the journey to ensure your company lists smoothly and efficiently.

With Adviso's expertise and assistance, you can easily navigate the complexities of company registration, saving time and ensuring compliance with all necessary regulations.