Nidhi Company Registration

A Nidhi Company in India is a non-banking financial company (NBFC) that operates under the regulatory framework of the Nidhi Rules, 2014. It is governed by Section 406 of the Companies Act, 2013. Operating as a public limited company, its primary purpose is to encourage thrift and savings among its members while facilitating financial assistance through lending.

If you're interested in registering a Nidhi Company in India and need assistance, feel free to reach out to IndiaFilings for guidance and support. We can help you navigate the Nidhi registration process and ensure that your Nidhi Company complies with all the necessary regulations. Get started on your journey towards establishing a Nidhi Company today!

What is Nidhi Company?

A Nidhi Company is a company that primarily deals with managing deposits from and providing loans to its members, who are also shareholders. The main purpose of a Nidhi Company is to promote thrift and savings among its members while offering financial assistance through lending.

Nidhi Companies in India have specific exemptions and relaxed regulations when it comes to their annual compliance requirements and tax assessments, making them a unique financial institution designed to benefit their members mutually.

The legal framework governing Nidhi Companies in India consists of Section 406 of the Companies Act, 2013, the Companies (Nidhi Companies) Rules of 2014, and Chapter XXVI of the Companies Rules, 2014.

The Purpose and Nature of Nidhi Companies

Nidhi Companies serve a distinct purpose in the Indian financial landscape, primarily focused on promoting savings among their members. These companies are unique in that they can accept deposits from and offer loans exclusively to their members. The term "Nidhi" in Nidhi Company, derived from Hindi, signifies "treasure."

Nidhi Companies fall within the category of Non-Banking Financial Companies (NBFCs). While they do not fall under direct regulation by the Reserve Bank of India (RBI), the RBI holds the authority to issue directives regarding their deposit acceptance activities. 

What sets Nidhi Companies apart is their exclusive engagement with their members, who are also shareholders. This exclusive relationship grants them exemptions from certain core provisions of the RBI Act and other regulatory guidelines that apply to traditional NBFCs. As a result, a Nidhi Company is a legally sound entity for accepting deposits and providing loans exclusively to a specific group of members, making it a unique financial institution in India. Understanding what is Nidhi company comes down to these key characteristics and purpose distinguishing it from other forms of companies.

Benefits of Nidhi Company

Registering a company as a Nidhi in India offers a range of advantages that extend beyond the primary objective of fostering savings among members. Here are key points emphasizing what is Nidhi company benefits:

  • Easy Formation: Nidhi Companies boast a straightforward and hassle-free formation process with minimal requirements, making it accessible for those looking to establish such entities.
  • Non-Compliance with RBI: Nidhi Companies are not bound by the Reserve Bank of India (RBI) guidelines, allowing them to set their own operational rules and regulations.
  • Lower Risk: Transactions involving lending, borrowing, or depositing are carried out by members of the Nidhi Company, reducing financial risks and ensuring a sense of security within the community.
  • Economic Registration: The registration process for a Nidhi Company is cost-effective when compared to other Non-Banking Financial Company (NBFC) registration procedures, which facilitates easier access to business loans and financing options.
  • Savings Promotion: Nidhi Companies play a pivotal role in promoting a culture of saving among the Indian population, thereby contributing to financial prudence.
  • Net-Owned Funding System: Nidhi Companies typically adopt a cost-effective net-owned funding system, which can enhance their business growth prospects by efficiently utilizing their own resources and funds.

Restrictions on Nidhi Companies

Nidhi companies have certain rules they must follow to keep their focus on serving their members. They are not allowed to:

  • Advertise for deposits from the public.
  • Get involved in chit funds.
  • Provide leasing or hire-purchase financing.
  • Run lotteries.
  • Offer insurance services.
  • Sell, mortgage, or use assets as security.
  • Partner with others for lending and borrowing.
  • Take deposits or lend money to people who aren't their members.
  • Issue certain types of shares or debt instruments.
  • Exceed a limit on the value of shares.
  • Open current accounts for members (though savings accounts are fine).
  • Lend to or take deposits from corporations.
  • Pay commissions or fees for attracting deposits.
  • Do any business beyond borrowing and lending to members.
  • Get involved in hire-purchase financing.
  • Pay fees for loans to brokers.

Documents Required for Nidhi Company Registration in India

To register a Nidhi Company in India, you need to provide the following essential documents:

  • Directors Identification Number (DIN)
  • PAN Number (Permanent Account Number)
  • Residential proof and address proof
  • Photographs of the proposed directors and members
  • Identification documents like Aadhar card
  • Proof of the registered business place, such as a rent agreement or lease
  • Ownership proof of the business place
  • NOC (No Objection Certificate) if required
  • Memorandum of Association (MOA)
  • Articles of Association (AOA)

Nidhi Company Incorporation Requirements

To establish and operate as a Nidhi Company in India, certain prerequisites must be met and categorized into requirements before and after Nidhi registration process.

Requirements before Registration:

  • Minimum Shareholders or Members: A minimum of 7 members is required to initiate the registration process.
  • Minimum Directors: You must have a minimum of 3 directors to form the company.
  • Minimum Capital: A minimum capital of Rs. 5 lakhs is essential to kickstart your Nidhi Company.
  • Director Identification Number (DIN): Directors must obtain a Director Identification Number (DIN).
  • Number of Directors: At least three directors are necessary to establish the company.
  • No Preference Shares: Issuing preference shares is not permitted.
  • Focus on Savings: The Company's primary objective should be to promote the habit of saving by receiving deposits from and lending to its members exclusively for their mutual benefit.

Requirements After Registration:

  • Membership Quota: By the end of the first year, your Nidhi Company must have at least 200 members or shareholders.
  • Net Owned Funds (NOF): Your company's NOF should exceed Rs. 10 lakhs.
  • NOF to Deposit Ratio: The NOF to deposit ratio should be greater than 1:20.
  • Unencumbered Deposits: Unencumbered deposits must be over 10% of outstanding deposits.

Nidhi Company Registration Procedure

Incorporating a Nidhi Company in India involves several key steps, including legal measures in case of member defaults. Here's a step-by-step guide to the Nidhi registration process:

Step 1: Applying for DIN and DSC

Directors of the Nidhi Company must apply for Directorâ??s Identification Number (DIN) and acquire a Digital Signature Certificate (DSC). DIN is issued by the Ministry of Corporate Affairs (MCA), while DSC is essential for all e-filing processes. Directors with pre-existing DIN and DSC can bypass this step.

Step 2: MoA & AoA

Draft the Memorandum of Association (MoA) and Articles of Association (AoA), specifying the primary purpose of establishing the Nidhi company. These documents, along with a subscription statement, need to be filed with the Registrar of Companies (ROC).

Step 3: Name Approval Process

Propose three preferred names for the Nidhi Company to the MCA. The MCA will choose one name for approval. The selected name must be unique and not currently in use. Once approved, it remains valid for 20 days.

Step 4: Application for Registration

After securing name approval, directors must submit an application for registration. This application includes the submission of the Articles of Association (AOA) and Memorandum of Association (MOA).

Step 5: Certificate of Incorporation (CIN)

Typically, it takes 15-20 days for the relevant authority to issue the Certificate of Incorporation for the Nidhi Company. This certificate also provides the unique Company Identification Number (CIN) for the company.

Step 6: PAN, TAN, and Nidhi Bank Account

Apply for the Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN). Subsequently, open Nidhi bank account by submitting the Certificate of Incorporation, MoA, AoA, and PAN

Compliance for Nidhi Company

Nidhi Companies must adhere to various compliance measures for smooth operations and regulatory compliance. These include:

  • NDH-1 Form: Submitting a list of members within 90 days at the end of each financial year using this form.
  • NDH-2 Form: If your Nidhi Company has yet to reach a membership of 200 in its first financial year, you can request an extension from the Ministry of Corporate Affairs (MCA) using this form.
  • NDH-3 Form: Filing a half-yearly return apart from the NDH-1 Form.
  • Annual Returns with ROC: Filing annual returns with the MCA using Form "MGT-7."
  • Financial Statements: Submitting the company's financial statements and related documents annually in Form "AOC-4."
  • Income Tax Returns: like other businesses, Nidhi Companies must file annual income tax returns by September 30th of the following fiscal year.

Seamless Nidhi Company Registration with IndiaFilings

IndiaFilings is your trusted partner in simplifying the Nidhi Company registration process. With our expert team, we provide end-to-end assistance in obtaining your Nidhi Company registration efficiently and in compliance with all legal requirements. From applying for DIN and DSC to handling the documentation, name approval process, opening a Nidhi Bank account and even the post-registration formalities, our comprehensive services ensure a hassle-free Nidhi company registration experience. Let IndiaFilings guide you through the intricacies of Nidhi Company registration so you can focus on promoting thrift and mutual benefit among your members.

Check Business Name Availability

Find if business name can be registered with MCA in India

To register a company in India, the first step is to obtain name approval for the business from the Ministry of Corporate Affairs (MCA). This process takes about 24-48 hours. A private limited company name in India must end with the words private limited. One Person Company ends with (OPC) private limited. LLP end with LLP and Section 8 companies can end with words like foundation, association or institution.

A company name proposed to be registered cannot be identical or similar to an existing company name. Also, every company name must include a word that denotes the activity undertaken. For example, in VERVE Financial Services Private Limited - Financial Services denote the activity undertaken. Check Business Name Availability

Online Trademark Search

Enter a brand name to search across all trademark classes

All trademarks are registered in India with the Office of the Controller General of Patents, Designs and Trade Marks. A trademark application has to be filed under a class that denotes the type of goods or services the brand or logo represents. There are 45 trademark classes and each class represent a distinct type of goods or service.

Trademark search can be conducted using the tool above to check if any identical or similar brand or logo is registered or applied for under the same class. If there is an existing application, care must be taken while reapplying to ensure that the application is not rejected by the Trademark Registrar. Trademark Search

Proprietorship vs Limited Liability Partnership (LLP) vs Company

Features Proprietorship Partnership LLP Company
Definition Unregistered type of business entity managed by one single person A formal agreement between two or more parties to manage and operate a business A Limited Liability Partnership is a hybrid combination having features similar to a partnership firm and liabilities similar to a company. Registered type of entity with limited liability to the owners and shareholders
  • Sole Ownership
  • Min 2 Partners
  • Max 50 Partners

For One Person Company
  • 1 Director
  • 1 Nominee Director
Registration Time 7-9 working days
Promoter Liability Unlimited Liability Limited Liability
  • LLP Deed
  • Incorporation Certificate
Governance - Under Partnership Act LLP Act, 2008 Under Companies Act,2013
Transferability Non Transferable Transferable if registered under ROF Transferable
Compliance Requirements
  • Income tax filing if turnover is more than Rs.2.5 lakhs
Know More

Nidhi Company FAQ's

How many people are required to register a Nidhi Company?

A minimum of 3 directors and 7 shareholders are required to register a Nidhi company in India.

What are the requirements to be a Director?

The Director needs to be over 18 years of age and must be a natural person.

Is an office required to start a Nidhi Company?

An address in India where the registered office of the Company will be situated is required. The premises can be commercial/industrial/residential where communication from the MCA will be received.

Do I have to be present in-person to incorporate a Nidhi Company?

No, you don’t have to be present at our office or appear at any office for the registration of a Nidhi Company.

What is a Digital Signature Certificate?

A Digital Signature establishes the identity of the sender or signee electronically while filing documents through the Internet. The Ministry of Corporate Affairs (MCA) mandates that the Directors sign some of the application documents using their Digital Signature.

What are the documents required for Nidhi Company registration?

Identity proof and address proof are mandatory for all the proposed Directors of the Nidhi Company. PAN Card is mandatory for Indian Nationals. In addition, the landlord of the registered office premises must provide a No Objection Certificate for having the registered office in his/her premises and must submit his/her identity proof and address proof.

How long it will take to incorporate a Nidhi Company? can incorporate a Nidhi Company for 20-30 days. The time taken for registration will depend on the submission of relevant documents by the client and the speed of Government Approvals. To ensure speedy registration, please choose a unique name for your Company and ensure you have all the required documents prior to starting the registration process.

How long is the registration of the Company valid?

Once a Nidhi Company is incorporated, it will be active and in existence as long as the annual compliances are met with regularly. A Nidhi Company must have a minimum of 200 shareholders and comply with other criteria within one year of incorporation. In case, annual compliances are not complied with, the Nidhi Company will be asked to refund the deposits.

What is DIN?

Director Identification Number is a unique identification number assigned to all existing and proposed Directors of a Company. It is mandatory for all present or proposed Directors to have a Director Identification Number. Director Identification Number never expires and a person can have only one Director Identification Number.

Who regulates the Nidhi Companies?

Ministry of Corporate Affairs regulates Nidhi Company and is also accountable for Nidhi Company Registration.

Can Nidhi Companies issue debt securities or preference shares?

No Nidhi Companies cannot issue debentures, preference shares, or any other kinds of debt securities.

Can Nidhi Companies operate in another state?

No, Nidhi Company cannot perform its operations outside the boundaries of the state in which the registration has taken place.

Can Nidhi Companies issue unsecured loans

No, Nidhi Company cannot issue unsecured loans. However, it can issue secured loans to its members.

Zero Late Fee Platform

Many small businesses pay lakhs in penalty every year to the Government for late filing various statutory returns. Such penalty or late fee paid is not tax deductible and is a drain on profitability. At IndiaFilings, our mission is to provide the most affordable services to our customers and help them avoid all late fee.To achieve our mission - we have built enterprise grade technology to help you proactively know the upcoming compliance and avoid penalty.Checkout our compliance services below, talk to an Advisor and stop paying unwanted late fees.

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Related Business Registrations

In addition to registration or incorporation, a business may require other registrations depending on the business activity undertaken. Talk to an Advisor to find out registrations your business may require post registration.

MCA Compliance

Every registered entity must fulfill its compliance obligations at the end of each financial year. These typically encompass tasks such as auditing financial records, filing income tax returns, and submitting annual forms to the MCA.

Form Company Compliance Due date Penalty
COB Filing Commence of Business Certificate To be filed before 180 days of company Incorporation Rs.50,000 for non-compliance
DIR 3 EKYC Any director with DIN Before 30th September every year Deactivation of the DIN
A late filing fee of Rs.5,000
Disqualification of the Directors
Form ADT 1 Appointment of auditor Within 15 days from the date of appointment of the Auditor Late fees will be applicable, with fees ranging from 2 to 12 times the nominal fee, depending on the number of days of delay.
Form AOC 4 Filing financial statements of the company 30 days from the conclusion of the AGM Late fees will be applicable, with fees ranging from 2 to 12 times the nominal fee, depending on the number of days of delay.
Form MGT 7 Annual Returns of the Company 60 days from the conclusion of the AGM

In addition to the above filings, depending on the type of entity and business activity more compliance filing maybe applicable. Please check with an IndiaFilings Advisor to help you with the compliance for your company.

All Limited Liability Partnerships (LLP) registered in India are required to file statutory returns with the Ministry of Corporate Affairs (MCA) each year. IndiaFilings can help you maintain your LLP Compliance at a very affordable price.

Form LLP Compliance Due date Penalty
DIR 3 KYC For every designated partners of a limited liability partnership (LLP) with DIN Before 30th September every year Deactivation of the DIN
A late filing fee of Rs.5,000
Disqualification of the Partners
Form 11 Annual Returns May 30th every year Late fees will be applicable, with fees ranging from 1 to 50 times the nominal fee, depending on the number of days of delay.
Form 8 Statements of Accounts and Solvency 30th October every year Late fees will be applicable, with fees ranging from 1 to 50 times the nominal fee, depending on the number of days of delay.

Apart from the aforementioned filings, there might be additional compliance filings that could be relevant for LLPs. Please consult with an IndiaFilings Advisor to assist you with the compliance needs of your LLP.

Entity Form Due date
Private Limited Company Annual Return (Form MGT-7) 60 days from the conclusion of the AGM or 28th November 2024 (Which Ever is Earlier)
Financial Statements (Form AOC-4) 29th October 2024
DIR-3 KYC 30th September 2024
Form DPT-3 30th June 2024
Form ADT-1 15th October 2024
ITR 6 (Non audit case) 31st July 2024
ITR 6 (Audit Cases) 31st October 2024
GSTR 9 31st Dec 2024
Limited Liability Partnership ITR 5 (Non audit case) 31st July 2024
ITR Form 5 (Audit case) 30th September 2024
Annual return - Form 11 30 May 2024
Financial Statements - Form 8 30 October 2024

Note : Get in touch with our experts to efficiently handle your compliance filings, whether you are an LLP, a company, partnership firm or a proprietorship. Contact us to ensure your compliance is filed before the due date.

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