Nidhi Company is also known as a Mutual Benefit Company. Nidhi company falls under the non-banking financial sector in India, and it regulates with the idea of the 'Principle of Mutuality' while promoting the ideal of savings. And there are many reasons to register a Nidhi company, including low capital investment. But if you don't have any idea about Nidhi company then keep reading this article.
In this article, we've covered everything about Nidhi company, its benefits and how you can do Nidhi company registration online.
Without any further delay, Let's begin!
An Overview about the Nidhi Company
A company that has Nidhi registration under Section 406 under the Companies Act of 2013 is known as a Nidhi Company. And when you start, 'Nidhi LTD' gets attached to the initials of your company. Only the members can engage in the financial workings, such as receiving money or lending an amount. And only these membership holders are permitted to make use of the funds.
The Nidhi rules 2014, alongside the Companies Act 2013, have put forth the necessary rules to be followed. Although RBI does not directly regulate them, it can issue its separate guidelines if need be.
Why is forming a Nidhi company beneficial for you?
A Nidhi company registration offers various aids in business. The most common of them is the smooth flow of operations. If a member is found to have died or, due to any cause, has not been able to return to work, the organization can still run without any significant interruptions. It is due to the principle of perpetual succession, which guarantees the continuation of the company's existence despite any member's death or abrupt leave.
Also, as the Nidhi rules dictate saving as a prime factor, there is a lot more surety of the business with enough funds always held to let it function effectively and with a backing.
Nidhi company registration is also relatively easier and doesn't have much legal hassle. A few basic requirements include having 200 members at a minimum and three directors. A minimum of ₹10 Lakhs of Net Owned Funds is expected for a Nidhi registration. Apart from these, the settlement does not have any more complex procedures.
RBI regulations also drop to a comfortable minimum, with no stifling guidelines or approval needed. It makes it extremely easy to perform tasks at its own pace and cuts down the necessary rigidity and structure.
However, the company is sometimes directed by a set of guidelines by the bank when needed, but that is a rarer case. These benefits altogether make Nidhi registration an extremely wanted option.
What is the Nidhi registration process and the fees?
As talked about before, Nidhi company registration has its own unique (and more straightforward) requirements, such as:
- The desired company should be capable of having at least 200 members.
- It must set three members as directors, and seven shareholders are welcome.
- Net Owned Funds or NOF of the company must be equal to Rs 10 Lakhs.
- Nidhi Limited is attached to the company's official name.
Now, the Nidhi registration process may be more straightforward, but it needs to be discussed in detail and understood even when starting with it. Below are the prerequisites for conducting a Nidhi company registration online:
Identity proof of the involved members and directors. These can pan cards or passports.
Residential proof can contain copies of Aadhar cards, DL, Passports, Voter ID cards, etc.
Director Identification Number for the directors.
The company also should have an established office in India with valid registration.
After all the documents are obtained, the further procedures for Nidhi company registration online is:
Get the name approved: You'll have to suggest three words to the MCA or Merchant Cash Advance. It must be original and one-of-a-kind.
Application: Once the name has been authorized, you must apply for incorporation with the Memorandum and Articles of Association.
Certificate Grant: It can take from a fortnight to 20 days to get a certificate for incorporation. The CIN is included in it.
Inclusive of all the documents required on each step, the Nidhi company registration can cost up to Rs 17,000.
What are the various restrictions on the Nidhi companies?
Despite having one of the most convenient ways to establish a finance business of your own, Nidhi companies do have to face a lot of restrictions that they simply cannot overrule.
Other forms like chit funds and insurance are not permitted, adding to leasing finance.
They cannot promise funds or lend to any other body than their members. It includes banks and other companies being non-eligible for the loans by Nidhi companies.
Mutual benefit is its main principle, and hence while entering an agreement, it has to face dozens of restrictions and cannot always act on its will while being with a commercial entity. It can cause minimal issues, but an agreement without their core principle is not allowed for a Nidhi company.
No advertisements. Unlike most private sector companies and banks, it cannot promote its newly launched products and schemes outside of its members. It may seem like not much of a good proposal for any firm, but if you are a Nidhi company, you have no option but to abide by it.
Apart from having a savings account, not working directly under RBI, and having only access to the members, they cannot open any current accounts.
The only type of business it can participate in is lending or receiving money. Any other form is simply not allowed to be carried out under its guidelines.
However, with only many restrictions, Nidhi companies can perform full-fledged actions whenever under their power. It is undoubtedly not a deal of loss.
Conclusion
Building and establishing take time, but with fast-growing tools available on the internet and other web practices, we can double up the speed of the process. Getting a Nidhi company registration online is for sure a win-win situation. But the competition has filled up to the brim, and therefore you may need the help of a legal firm that can do the Nidhi company registration of your company. You need a reliable firm to assure your company's Nidhi registration like Lawgical India helps you with Nidhi Company registration, and we have a team of experts to help you out. Contact Us today to complete your Nidhi Registration faster.
