Nidhi Company Registration Online in India

What is a Nidhi Company?

A Nidhi company is a special kind of Non-Banking Financial Company (NBFC). Its main job is to borrow and lend money, but only among its members. The core idea is "mutual benefit," meaning everything the company does is for its members' good.

These companies are set up under Section 406 of the Companies Act, 2013. The Ministry of Corporate Affairs (MCA) oversees them through the Nidhi Rules, 2014.

Is a Nidhi Company an NBFC?

Yes, a Nidhi Company is classified as a Non-Banking Financial Company (NBFC). However, it differs from traditional NBFCs in several ways.

Important Distinctions:

• No RBI Registration Required: Nidhi Companies are exempt from registering with the Reserve Bank of India (RBI).
• Limited Regulation by RBI: Since they only deal with their members, the RBI provides certain exemptions under the RBI Act, 1934. The RBI can issue directives, but does not oversee the company's daily operations.
• They cannot:
  • Issue preference shares, debentures, or any other debt instruments.
  • Conduct business such as chit funds, hire purchase, leasing, or insurance.

Who Regulates Nidhi Companies in India?

Nidhi Companies are not regulated by the RBI like other NBFCs. Instead, they are controlled by the MCA.

Key Regulations:

• Nidhi Companies must follow the Companies Act of 2013.
• They must also comply with the Nidhi Rules, 2014, and any changes made later.
• They are required to file annual returns and financial reports with the Registrar of Companies (RoC).

Areas Monitored by MCA:

• Compliance with minimum members requirement (e.g., 200 members within 1 year).
• Maintenance of Net Owned Funds (NOF).
• Limits on how much the company can deposit.
• Proper and safe lending practices.

Role of the RBI:

• The RBI does not directly manage Nidhi Companies.
• However, it can give directions if needed to protect the overall financial system.
• The RBI also monitors systemic risks, particularly when a Nidhi Company functions beyond its permitted scope.

Benefits of Nidhi Company Registration in India

Setting up a Nidhi company offers several advantages. It's a good choice for groups wanting to combine their money and offer financial aid to their members.

• Simple and Easy Formation: Compared to other financial entities, the process is straightforward with less stringent regulations, making it easier for community groups to start and operate.
• Limited Liability Protection: Since it's a company registered under the Companies Act, 2013, a Nidhi company protects its members' and directors' assets. This means their wealth is safe from the company's debts.
• Lower Capital Requirement: The initial capital needed is significantly less than for other NBFCs, making it more accessible for smaller groups.
• Easy Access to Funds for Members: Members can easily get loans with less paperwork and flexible terms. Loans are usually given against gold, property, or deposits, making the process smooth under the mutual benefit model.
• Encourages a Culture of Savings: By accepting deposits from members, Nidhi companies naturally promote saving and smart money habits within their community. This helps gather local savings for community projects.
• Perpetual Succession: A registered Nidhi company lasts forever. Its existence isn't affected if a member or director dies, goes bankrupt, or leaves. The company continues to operate as a legal entity.
• No Third-Party Intervention: Nidhi companies only deal with their members for deposits and loans. This means no outside parties are involved, building trust and openness within the member group and leading to stronger relationships.
• High Degree of Credibility: MCA registration gives Nidhi Companies legal recognition and boosts member confidence. However, since they aren’t regulated by the RBI (unless they exceed limits), they lack the same credibility as RBI-licensed NBFCs.

Nidhi Company Registration Requirements

Before you start the Nidhi company registration procedure, it's important to know the key requirements.

• Legal Structure: A Nidhi company must be registered as a Public Company under the Companies Act, 2013.
• Minimum Members and Directors:
  • Minimum 7 Members: When you first set up the company, a Nidhi company must have at least 7 members.
  • Minimum 3 Directors: The company must have at least 3 directors. All directors must also be members of the company, which strengthens the mutual benefit rule.
• Minimum Capital Requirement: The minimum paid-up capital is Rs. 5 lakhs at incorporation, which must be raised to Rs. 10 lakhs within 1 year as per Rule 5(1) of the Nidhi Rules, 2014.

Note: This is separate from the Net Owned Funds (NOF) requirement of ₹20 lakh, which must also be met within the first year.

• Company Name: The name of a Nidhi company must always end with "Nidhi Limited." For example, "ABC Nidhi Limited."
• Share Capital Structure: The company should issue equity shares, each with a face value of at least Rs. 10. This helps ensure many members can participate.
• Membership Eligibility: Only individuals can be members of a Nidhi company. Companies or trusts cannot be members, which keeps the focus on individual savings and loans.
• Registered Office: The company must have an official registered office in India. This will be the address for all official communications and government filings.

Documents Required for Nidhi Company Registration

Preparing the following documents in advance will speed up the Nidhi company registration process. It's important to make sure each document is current and properly attested.

Documents for Directors and Members

To confirm who the people involved are and where they live, specific documents are needed.

• PAN Card: A self-attested copy of the Permanent Account Number (PAN) card for all directors and members.
• Identity Proof: A self-attested copy of Aadhar Card/Voter ID/Driving License/Passport for all directors and members.
• Address Proof: A self-attested copy of the latest bank statement or utility bill (like electricity, telephone, or gas bill) that is not older than 2 months for all directors and members.
• Passport Size Photographs: Recent passport-size photos of all directors and members for identification.
• Digital Signature Certificate (DSC): Required for all proposed directors to file forms electronically on the MCA portal.

Documents for the Registered Office

The registered office address is very important for all official communications and rules.

• Proof of Registered Office Address: The latest utility bill (electricity, telephone, or gas bill) not older than 2 months, in the company's name or the property owner's name.
• No Objection Certificate (NOC): If the premises are rented or leased, you need a No Objection Certificate from the landlord or owner.
• Rent Agreement/Lease Deed: If the premises are rented, a copy of the rent agreement or lease deed must be given as proof that you occupy the space.

Other Essential Incorporation Documents

Besides personal and office documents, certain legal forms and statements are also required.

• Declaration from Directors: A statement from the directors confirming they are not disqualified from being directors under the Companies Act, 2013.
• Consent to Act as Director: Each director needs to provide a DIR-2 form, showing they agree to be a director of the company.

Nidhi Company Registration Process: How to Apply?

The Nidhi company registration online process involves several steps. Most of these steps are done through the MCA portal. Following these steps carefully helps ensure a smooth setup.

Step 1: Obtain a DSC and DIN

The first step involves getting the necessary digital IDs for the people who will run the company.

• Digital Signature Certificate (DSC): All proposed directors need to get a Class 3 DSC. This certificate is legally required for signing and filing documents electronically with the MCA. It ensures the documents are authentic and secure.
• Director Identification Number (DIN): Each director also needs a DIN. This unique ID number is given by the MCA to people who want to be company directors. You can apply for it along with the company incorporation application.

Step 2: Reserve the Company Name (SPICe+ Part A)

Reserving a suitable name is a critical first step.

• First, you apply to check if your chosen Nidhi company name is available. You do this using the SPICe+ Part A form on the MCA portal, which is specifically for name reservations.
• You need to suggest at least two names, making sure they end with "Nidhi Limited." The name should be unique and not too similar to existing company names or trademarks to avoid rejection.

Step 3: Draft the MoA and AoA

These two documents are the foundation of your company. They explain its purpose and how it will be managed.

Memorandum of Association (MoA):

• The MoA document shows the main goals of the company and explains what the Nidhi Company can and cannot do.
• It also states the business purpose, which is to accept deposits from and lend money to its members.
• The MoA must state that deposits and loans are limited to members, as per the Nidhi Rules.

Articles of Association (AoA):

• The AoA lays out the internal rules for running the company, and it includes the roles and responsibilities of directors and members.
• It also explains how meetings, voting, and other operations will be handled.

Both documents must follow the Nidhi Rules, 2014, to make sure the company complies with the law.

Step 4: File the Main Incorporation Form (SPICe+ Part B)

After the company name is approved and the key documents are ready, the next step is to file SPICe+ Part B.

This is the main form used to register the company. It must be submitted along with the e-MoA (electronic Memorandum of Association) and e-AoA (electronic Articles of Association).

SPICe+ Part B is a combined application that includes:

• DIN (Director Identification Number)
• PAN (Permanent Account Number) for the company
• TAN (Tax Deduction and Collection Account Number)
• EPFO Registration
• ESIC Registration
• GST Registration (if required)

This combined process saves time and simplifies the overall setup. All the documents required for registration of a Nidhi Company are also attached to this form. This ensures that everything needed for approval is submitted in one place.

Step 5: Receive the Certificate of Incorporation (COI)

The final step is receiving official legal recognition for your company.

• After all submitted documents and forms are successfully checked, the Registrar of Companies (RoC) will issue the Certificate of Incorporation (COI).
• The COI proves your Nidhi company legally exists and includes your Corporate Identification Number (CIN), which is a unique ID for the company.

Nidhi Company Registration Fees

The cost of Nidhi company registration can change based on several things, including government fees, stamp duty, and professional fees. It's wise to consider all these parts when planning your budget.

Government Fees (MCA Fees)

These are the official fees paid to the Ministry of Corporate Affairs (MCA) for filing the company registration forms. The amount depends on the authorized capital of your Nidhi Company.

• For an authorized capital of Rs. 5 lakh (which is the minimum required):
  • The MCA filing fees are usually between Rs. 4,000 and Rs. 6,000.

These charges are fixed by the government and cannot be changed.

Stamp Duty

Stamp duty is a tax from the state government applied to legal documents, including the MoA and AoA. The amount varies a lot from one state to another, making it a key part of the total cost.

Stamp duty is a major variable cost in the overall Nidhi company registration charges. The rates are different in each Indian state. Here are the details:

Note: The numbers above are estimates and can change. It's best to talk to a professional for exact figures based on your specific situation and state.

Other and Professional Fees

These include charges for:

• Digital Signature Certificate (DSC): Rs. 1,000 – Rs. 1,500 per director
• Consultant or legal professional fees: Rs. 5,000 – Rs. 15,000
• Miscellaneous costs: Rs. 500 – Rs. 1,000

Fees can vary depending on the experience of your Nidhi Company registration consultant and the complexity of your documents.

Compliances After Your Nidhi Company is Registered

After your Nidhi company registration is complete, there are ongoing rules you must follow to ensure the company runs legally and efficiently. Following these rules is key to the company's long-term success.

First-Year Compliance Requirements

Within one year of incorporation, a Nidhi Company must achieve the following:

• Minimum 200 Members
• Net Owned Funds (NOF): As per Rule 3(1)(d) of the Nidhi Rules, 2014, the company must have NOF of at least ₹20 lakh.
• NOF to Deposit Ratio: You must keep a ratio of Net Owned Funds to deposits of no more than 1:20.
• Unencumbered Term Deposits: You must keep unencumbered term deposits equal to at least 10% of the outstanding deposits.

Filing NDH-1 Form

Filing Form NDH-1 on time is very important to prove your company met the initial rules as per Rule 5(2). Every Nidhi Company must file this form within 90 days after the end of its first financial year.

Filing NDH-2 Form

NDH-2 is a request for more time to meet these rules. If the company does not meet initial requirements, it must file Form NDH-2 within 30 days after the end of the first financial year.

Filing NDH-3 Form

The NDH-3 form shows the company’s financial health and rule compliance. Every Nidhi Company must file Form NDH-3 twice a year (half-yearly return).

Filing Form NDH-4

This form is key to getting official recognition as a Nidhi Company. Once the company meets the criteria of 200 members and Rs. 20 lakh NOF, it must file Form NDH-4 with the Central Government within 120 days of incorporation.

Regular Statutory Filings

Besides Nidhi-specific forms, general company rules are also mandatory:

• Annual Return (Form MGT-7/7A): Filed within 60 days of AGM.
• Financial Statements (Form AOC-4): Filed within 30 days of AGM.
• Board Meetings: At least four Board meetings in a calendar year.
• General Meetings: An Annual General Meeting (AGM) must be held once every calendar year.

Rules and Restrictions for Nidhi Companies

Nidhi companies follow specific rules and limits to ensure they stick to their goal of mutual benefit and don't get involved in unauthorized financial activities.

What a Nidhi Company Can Do?

• Accept Deposits: Savings, recurring, or fixed deposits from members.
• Provide Secured Loans: Loans backed by gold, silver, property, or deposits.
• Offer Locker Facilities: Allowed with specific conditions.

What a Nidhi Company Cannot Do?

• Cannot carry on businesses like chit funds, hire purchase finance, leasing finance, insurance, or buying shares.
• Cannot issue preference shares, debentures, or any other debt instruments.
• Cannot open current accounts for its members.
• Cannot buy another company or control the Board of Directors of any other company.
• Cannot do any business other than borrowing and lending money in its name.
• Cannot advertise for deposits (except for a simple notice board at the office).
• Cannot pay any commission or bonus for getting deposits.

Major Changes in the Nidhi (Amendment) Rules, 2022

The Nidhi (Amendment) Rules, 2022, brought big changes to how Nidhi companies are regulated:

• Mandatory Declaration: Companies must apply to be declared a Nidhi company using Form NDH-4 within 120 days of being set up.
• Enhanced Eligibility: Minimum 200 members and Net Owned Funds of Rs. 20 lakhs.
• Increased Paid-up Share Capital: Minimum paid-up share capital increased to Rs. 10 lakhs.
• Director Eligibility: Only individuals who are members can be directors.
• Restriction on Branch Opening: New branches need Regional Director approval.

Nidhi Company Registration Certificate

Once your Nidhi Company is registered with the Ministry of Corporate Affairs (MCA), you will get a Certificate of Incorporation (COI). This official paper proves your company is legally formed.

The COI shows: Company’s legal name, CIN, Date of incorporation, and Registered office address.

How to Download Your Nidhi Company Registration Certificate?

• Visit the MCA website at mca.gov.in.
• Log in with your Business User ID and password.
• Go to MCA Services and select “Get Certified Copies” or “View Public Documents.”
• Search your company using the CIN or name.
• Pay the small fee, if required.
• Download your Certificate of Incorporation in PDF format.