“Nidhi” is defined as a firm that has been constituted as a Nidhi Company with the following strategic objectives;
The Ministry of Corporate Affairs is responsible for the regulation of Nidhi Company. Reserved Bank of India has the authority to instruct them on their acceptance and deposit-related matters.
Nidhi Company is a kind of Non-Banking Financial Company (NBFC). These businesses primarily operate in the southern region of the country. Nidhi Company is easy to establish as they are not required to obtain a license from the Reserve Bank of India. It is registered as a public company and should contain “Nidhi Limited” at the end of its name.
The Central Government published the Nidhi Rules 2014 to implement the powers granted by Sections 406 and 469 of the Companies Act of 2013 which took effect from April 1st, 2014. The applicability of these regulations is described below:
The following are some limitations imposed by the 2014 Nidhi Rules on Nidhi Companies. According to Rule 6 of the 2014 Nidhi Rules, a Nidhi Company shall NOT:
A Nidhi Company must have a minimum of seven members, of whom three must serve as the company's directors.
Starting a Nidhi Company requires an equity share capital of at least 5 lakh rupees. Preference shares cannot be issued by Nidhi Company.
The following documents are required for a company to be registered as a Nidhi company:
The following forms must be filed and submitted in order to register a company as a Nidhi Company:
Needs to be filed by all the subscribers of the Memorandum of Association(MOA).
|Must be filed by all the directors of the company. The declaration must be signed by each subscriber in accordance with rules 5 and 6 of the Nidhi rules 2014.
Within a period of one year from its incorporation, every Nidhi needs to ensure that it has:
If the Nidhi Company complies with the aforementioned requirements, it must submit Form NDH-1 within 90 days from the end of the first fiscal year following incorporation, along with the required costs. The form needs to be duly certified by an active CA, CS, or CWA.
An extension of another financial year may be obtained upon submission of form NDH-2 to the Regional Director within 30 days from the end of the first financial year.
If even after the end of the second financial year, it doesn’t comply well with the requirements, it cannot accept deposits till it follows the provisions, and also a penalty amount would be imposed for such non-compliance of the prescribed provisions.
A Nidhi Company must have a minimum of seven members, of whom three must serve as the company's directors. A Nidhi Company can have a maximum of 15 directors.
A person, in order to become a director of a Nidhi Company has to be a member of the company first and should be above 18 years of age. Furthermore, he/she must abide by the requirements of Section 152(4) of the Companies Act, 2013.
No, in accordance with the established criteria, a Nidhi Company can only use the collected capital to give loans to its own members. A Nidhi Company does not accept loan applications from or grant loans to any other person.
No, a body corporate will not be permitted to join a Nidhi Company as a member.
Yes, a salaried person is eligible to become a director of a Nidhi Company.
Yes, A Nidhi Company can set up branch offices. Although eligibility requirements for operating a branch office must be satisfied.
The maximum balance of savings account for a member of the Nidhi company must not exceed Rs. 1 Lakh. The maximum interest rate that can be paid on any deposit shall not exceed 2% of the interest rate charged by nationalized banks on such deposits.
The Nidhi Rules, 2014 govern Nidhi Companies. These regulations, which were put in place by the central government, comprise the operating procedures for the Nidhi company.
According to the 2013 Companies Act, you must register the business as a limited company. The amount of time required to register will depend on the time taken by the client to submit the necessary documents and how quickly government approvals are granted. Approximately 30 to 40 days are needed to register a Nidhi Company.
No, Nidhi Company is not permitted to do its business outside of the state in which it was registered.