Nidhi Company

Incorporating a Nidhi Company in India involves specific requirements and legal procedures aimed at promoting the culture of savings and thrift among its members. Nidhi Companies are mutual benefit societies that primarily deal with accepting deposits and lending to their members. Here are the basic requirements and steps involved in incorporating a Nidhi Company:

Minimum Requirements:

a. At least 7 shareholders/members: A Nidhi Company must have a minimum of 7 individual shareholders/members at the time of incorporation.

b. Minimum capital requirement: The minimum paid-up equity capital required for incorporating a Nidhi Company is Rs. 5 lakhs.

c. No External Funding: Nidhi Companies cannot accept deposits or loans from persons other than their members and cannot issue preference shares or debentures.

Name Reservation:

Choose a unique name for your Nidhi Company and ensure it complies with the naming guidelines specified by the Ministry of Corporate Affairs (MCA). The name should include the term "Nidhi Limited" at the end.

Incorporation Documents:

Prepare the necessary documents for incorporation, including Memorandum of Association (MoA) and Articles of Association (AoA). The MoA and AoA must outline the objectives, rules, and regulations governing the Nidhi Company's operations.

Digital Signature Certificate (DSC) and Director Identification Number (DIN):

Obtain DSC for all proposed directors and apply for DIN, which is mandatory for directors of a company.

Application for Incorporation:

File the application for incorporation of the Nidhi Company, along with the required documents, with the Registrar of Companies (ROC) through Form SPICe (Simplified Proforma for Incorporating Company Electronically).

Certificate of Incorporation:

Once the ROC processes the application and verifies compliance with the Companies Act, 2013, they issue a Certificate of Incorporation, officially establishing your Nidhi Company.

Commencement of Business:

Within one year from the date of incorporation, a Nidhi Company must obtain a Certificate of Commencement of Business from the ROC to start its operations.

Compliance Requirements:

a. Maintain a minimum of 200 members within one year of incorporation.

b. Ensure that at least 10% of the profits are transferred to a reserve fund.

c. Adhere to the restrictions and regulations specified under the Nidhi Rules, 2014, and the Companies Act, 2013.

d. Conduct annual compliances such as filing of annual returns, holding annual general meetings, etc.

It's crucial to seek professional advice and guidance from legal and financial experts familiar with Nidhi Company regulations to ensure a smooth and compliant incorporation process.