Overview of Nidhi Company Registration

A Nidhi company refers to a type of entity in the non-banking finance sector, recognized u/s 406 of the Companies Act, 2013. Their primary business is borrowing as well as lending funds between their members. They are also regarded as Benefit funds, permanent funds, Mutual Benefit and Mutual Benefit Funds Company. MCA governs these entities in India and reserves rights to issue directions related to deposit acceptance activities. The core object of these entities is to foster the habit of thrift and reserve funds amongst its serving members. The concept of Nidhi Company came to effect before the advent of the Companies Act, 2013. These entities support the paradigm of Principle of Mutuality" and are quite popular in the southern region of the country. Presently, around 80 per cent of Nidhi companies are established in the state of Tamil Nadu.

Notable Facts Regarding Nidhi Companies

• No RBI consent is required to form the Nidhi company in India. Therefore, it can be incorporated with a minimum of hassles. Nidhi Companies are incorporated as Public Companies.
• Such entities must affix "Nidhi Limited" at the end of their name.
• Nidhi Companies' undertakings are quite similar to NBFCs as they fall under the ambit of the Reserve Bank of India.
• The core objective of Nidhi Company essentially revolves around in-house lending and borrowing activities with no third-party intervention whatsoever.
• Nidhi Rules, 2014 permits Nidhis to facilitate locker facilities to its members on rent. The rental income should not surpass 20% of the company's overall income at any instance during the FY.

Underlying Conditions for Incorporating Nidhi Companies in India

Following conditions are set out by the governing authority for incorporating Nidhi Company in India;

• Minimum number of members: 7 (3 members should be the designated directors)
• minimum equity share capital: Rs. 5 lakh
• Must have limited company status under Company Act, 2013
• Mandatory inclusion of the company's object in MOA reflects its intention to foster the habit of thrift and savings among the members.

Documents required for Nidhi Company registration in India

Following is the list of documents required for registering a Nidhi Company in India:

• Directors Identification Number, i.e. DIN
• PAN number of the proposed directors and members
• Residential proof of the proposed directors and members
• Photographs of the proposed directors and members
• Identification Documents like Aadhar card
• Registered business place proof such as lease or rent agreement
• Ownership proof of the business place in case the premises are owned
• NOC if required
• MOA i.e. Memorandum of Association
• AOA, i.e. Article of Association

Procedure of Nidhi Company Registration in India

The following section encloses the detailed procedure of securing an incorporation certificate for Nidhi Company:

1: Acquire DSC from MCA certified agencies

The first step is to secure the DSC, i.e. Digital Signature Certificate from the MCA certified agencies. The said agencies charge standard fees for rendering such a service and seek basic documentation for the same. DSC is essentially used to authenticate the document electronically. It is by far the most secure and legit way of signing the e-form and others documents.

2: File Spice+ form for incorporation

Spice+ form is available on the MCA portal, and it allows the applicant to incorporate entity with less paperwork and compliances.

Applicants can access this e-form after creating an account on the portal. Spice+ is an integrated web-based application that is divided into two essential parts, i.e. Part A and B.

Part A serves as a basic form for registering the proposed business name. After receiving the proposed business names, the portal coordinates with its database to determine the legal viability of the same. After getting name approval, the applicant can proceed to address the formalities of PART B that facilitate the following services;

• Company Incorporation
• DIN allotment
• TAN allotment
• PAN allotment
• EPFO allotment
• GSTIN allotment
• ESIC allotment
• Opening of Bank Account for the Company
• Profession Tax Registration (only for Maharashtra)

Step 3: Upload the linked forms to SPICE+

Upload the linked forms to SPICE + in the order shown below:

• SPICe+ Part BeMOA[if applicable]
• eAOA [if applicable]
• URC-1[if applicable]
• AGILE-PRO [mandatory for all]
• INC-9[if applicable]

Note: Make sure to enclose the signature of the authorized signatory via DSC in the above forms wherever applicable.

Step 4: Secure the SRN and submit the requested fees

Immediately after uploading the said forms, the portal shall generate the Service Request Number (SRN). The next step is the submission of the requested fees, which can be done via a payment gateway. After fee submission, the payment receipt will be generated.

Note: A consolidated challan shall be generated by the portal towards;

• Form fee
• MoA
• AoA
• TAN
• PAN

Stamp Duty Challan will be generated separately.

Benefits of Incorporating Nidhi Companies in India

• Confront minimal business-oriented compliances
• Keeps third-party intervention out of the equation
• Exemption from several RBI's guidelines
• Ensures limited liability for company and the serving members

Restricted Undertakings for Nidhi Company as Per the Nidhi Rules, 2014

As per Nidhi Rules, 2014, Nidhi companies are not permitted to engage with the following undertakings:

• Business of Chit fund, lease finance, hires purchase finance, & acquisition of securities issued by anybody corporate.
• Issuance of preference shares, debentures, or debt instruments by any name or form
• Opening Current account with its serving members
• Acquisition of another entity via the purchase of securities or control the composition of BODs of any other company in any way whatsoever
• Entering into a legal arrangement for altering its management in the absence of the board approved special resolution and consent of the Regional Director functioning in the respective jurisdiction.
• Conducting activities that deviate from the object of the company.
• Accepting or lending deposits to non-members.
• Pledging member's assets as security
• Taking deposits or granting funds to anybody from corporate
• Entering into any partnership arrangement for borrowing or lending activities
• Leveraging any form of advertisement for soliciting deposit
• Paying incentive or for mobilizing deposits from serving members or for the fund deployment or issuing loans.

Mandatory Post-Incorporation Conditions for Nidhi Company

• Inclusion of at least 200 members within one year of incorporation
• Escalation of NOFs at least up to 10 lakh rupees within one year of incorporation
• Procurement of encumbered deposits ≥ 10% of the outstanding deposits
• Managing Ratio of Net owned funds, i.e. NOFs to deposit within prescribed limit, i.e. 1:20 as specified in Rule 14 of the NIDHI Rules, 2014;
• Submission of Form NDH 1 for intimating authority about the members' details that are in effect for the time being. The form should find its way to authority within 90 days of Incorporation.
• Submission of Form NDH 2 in case there is a requirement of increasing the member limit.
• Submission of Form NDH 3 for filing half-yearly returns
• Submission of form AOC 4 for disclosing profits and loss statement and Balance sheets
• Filing of IT returns in line with the applicable tax slab rate.

Avail Arvisa Services to Secure Incorporation Certificate for Nidhi Companies

Gaining authority over registration compliances is a tricky affair for new entrepreneurs. The margin of error is next to negligible when it comes to firm incorporation. One has to remain on point with the paperwork and compliances to ensure a seamless grant of the incorporation certificate. Arvisa has ample experience in the licensing regime and can deliver incorporation certificates in a prompt time span. The professionals serving this platform are well-versed in all the legalities that affect the incorporation process in one way or another.

Frequently Asked Questions