NIDHI COMPANY

Nidhi Company is a type of Non-Banking Financial Company (NBFC). It is formed to borrow and lend money to its members. It inculcates the habit of saving among its members and works on the principle of mutual benefit. These companies typically operate in the southern part of the country. Nidhi Company isn’t required to receive the license from Reserve Bank of India (RBI), hence it is easy to form. It is registered as a public company and should have “Nidhi Limited” as the last words of its name.

They are created mainly for promoting the habit of thrift and savings amongst its members. A Nidhi company is supposed to make 200 members in the first financial year. In case if it is not able to do so, it has to seek permission from the registrar of companies for granting an extension to make 200 members.

A Nidhi company is supposed to keep 10 percent of total deposits collected in every month as fixed deposit in any nationalized bank.
It can only close its branch if it has published an advertisement in the newspaper in vernacular language in the place where it carries on business at least 30 days prior to such closure, informing the public about such closure.
The fixed deposit plans carried out by the mutual benefit company or a Nidhi company shall be for a minimum period of six months and a maximum period of sixty months. In the case of recurring deposits, it shall be for a minimum period of 12 months and a maximum period of sixty months.
A Nidhi company registration can take almost 2 months time from the date of filing of the application. This company cannot declare dividend exceeding twenty-five percent or such higher amount as may be approved by the Regional Director.
No Nidhi shall appoint or re-appoint an individual as auditor for more than one term of five consecutive years. The rate of interest to be charged on any loan given by a mutual benefit company shall not exceed seven and a half percent above the highest rate of interest offered on deposits by Nidhi and shall be calculated on reducing balance method.
This company shall maintain net owned funds of not less than ten lakh rupees or such higher amount as may be specified by the Central Government.

List of Documents and Requirements:-

The specific documents required for Nidhi Company registration may vary, but generally, you will need the following:

1. Memorandum of Association and Articles of Association.
2. Declaration of the directors in the prescribed format.
3. Consent of directors to act as directors.
4. Affidavits and declarations from the directors and shareholders.
5. Proof of registered office address.
6. Identity and address proofs of directors and shareholders.
7. PAN cards of directors and shareholders.
8. Passport-sized photographs of directors and shareholders.
9. Copy of the utility bill of the registered office.
10. NOC from the landlord if the office is rented.