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Nidhi Company

Nidhi Companies are a class of non-banking financial institutions in India that are primarily established to cultivate the habit of thrift and savings among their members. Here’s a concise outline of the process for Nidhi Company registration:

Minimum Requirements:

  • At least 7 members are required to form a Nidhi Company.
  • Net owned funds should be Rs. 10 lakhs or more.
  • Unencumbered term deposits should be at least 10% of the outstanding deposits.

Name Approval:

  • Choose a unique name for the Nidhi Company. The name should include “Nidhi Limited.”
  • Verify the name’s availability through the Ministry of Corporate Affairs (MCA) website.

Incorporation Process:

  • File the necessary incorporation forms, including the Memorandum of Association (MOA) and Articles of Association (AOA), with the Registrar of Companies (RoC).

Minimum Capital Requirements:

  • Nidhi Companies must have a minimum equity share capital of Rs. 10 lakhs.

Director and Member Requirements:

  • Each member must hold at least 10 equity shares of the company.
  • The director must be an Indian citizen and meet the criteria set by the MCA.

Infusion of Funds:

  • Within a year of incorporation, the Nidhi Company must ensure that its net owned funds are at least Rs. 20 lakhs.

Branch Requirements:

  • Nidhi Companies can open branches only after meeting certain prerequisites set by the MCA.

No External Funding:

  • Nidhi Companies cannot issue preference shares, debentures, or any other debt instruments.

Nidhi Status Approval:

  • Once the RoC reviews and approves the documents, the company obtains Nidhi status.

Compliance and Operations:

  • Nidhi Companies are required to comply with specific regulations regarding lending, interest rates, and other operational aspects.

Prudent Management:

  • Nidhi Companies should prudently manage their funds, maintain a ratio of net owned funds to deposits, and follow prudent lending practices.

Member Benefits:

  • Nidhi Companies aim to provide mutual benefits to their members through a regulated savings and lending system.