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Documents Required for Nidhi Company Registration in India

Documents Required for Nidhi Company Registration in India

Most prominent in the southern parts of the country, Nidhi Company has evolved as a popular financing measure. A Nidhi Company in India fulfils its financial requirements through mutual funding between the members. The working of a Nidhi Company is based on the principle of mutual benefits. These Nidhi Companies are also referred to as Mutual Benefit Societies. A Nidhi Company in India has been mentioned in the Nidhi Rules as well as the Companies Act. While the Companies Act guides what is a Nidhi Company, the Nidhi rules provide for the rules and regulations that are to be followed by a Nidhi Company in India. In this blog we are particularly going to talk about the documents required for nidhi company registration in India . 

What is a Nidhi Company? 

A Nidhi Company is a type of Non-Banking Financial Company that works in loans and advances. A Nidhi Company under the Companies Act is a type of NBFC which focuses on creating a lender-borrower relation amongst the members of the company, fulfilling their mutual requirements.

A Nidhi Company does not have the duty to obtain a license from the RBI, but since the functioning of a Nidhi Company is similar to that of a Non-Banking Financial Company, a Nidhi Company does fall under the domain of the RBI.

The meaning of a Nidhi Company can be seen in Section 406 of the Companies Act, 2013. As per the said section, a Nidhi Company in India is one which has been incorporated with the object of cultivating the habit of thrift and savings amongst its members, receiving deposits and lending among its members only, for their mutual benefit. A Nidhi Company has to comply with the Nidhi Rules provided by the central government of India.

The Nidhi rule provides for the rules related to:

  • Incorporation matters
  • Basic requirements for a Nidhi Company
  • General restrictions
  • Share capital and allotment
  • Memberships and branches
  • Deposits and loans by the Nidhi
  • And others.

Features of a Nidhi Company in India

  • A Nidhi Company is a public company.
  • The main objective of a Nidhi Company registration is cultivating the habit of thrift and saving and developing mutual benefits.
  • A Nidhi Company shall have a minimum paid-up equity share capital of Rs 5 Lakh and no preference share is to be issued.
  • A Nidhi Company in India is suffixed with ‘Nidhi Limited’.
  • A Nidhi Company in India cannot indulge in businesses such as a chit fund business, insurance or acquisition of securities by companies, leasing finance, etc.
  • A Nidhi Company in India cannot lend or provide assistance to anyone other than its members.

Documents Required For a Nidhi Company Registration in India

Registration of Nidhi Company in India is an online procedure. Similar to any other form of company to be incorporated, a Nidhi Company is also required to fulfill certain documental obligations for its registration as a Nidhi Company.

  1. Memorandum of Association – A Memorandum of Association detailing the aims and objectives of the said Nidhi Company. As per the Nidhi rules, the Memorandum of Association of a Nidhi Company in India must only have “cultivating the habit of thrift and savings amongst its members” as the objective. 
  2. Article of Association – The Articles of Association of a Nidhi Company details the rules and regulations, the distribution of shares, roles and responsibilities, duty and liabilities of the member of the company.
  3. Directors Identification Number – DIN is a 8-digit number identifying the directors of the company.
  4. PAN number of the proposed directors and members – For having no discrepancies in the taxation department of a company, PAN details of all directors and members are required in the registration process of a Nidhi Company in India.
  5. Photographs and identity proofs of the proposed directors and members – To prevent any case of fraud and promote authenticity photographs and identity proofs of the proposed directors and members are required.
  6. Residential proof and address proof of the proposed directors and members – To prevent any case of fraud and for communication purposes, the address proofs of the proposed directors and members are required.
  7. Address proof of the registered office – A Nidhi Company in India needs to have a registered office for all its documents and communications to be made with.
  8. Ownership proof of the business place in case the premises are owned – The proof of ownership of the registered business place promotes the authenticity of the company. 
  9. Lease or rental agreement of the registered business place – In case the registered place of business is not personally owned, the lease or rent agreement is required.
  10. NOC if required – No objection certificate[1] from the land owner or any other required authority is also required, as necessary.

Once all the documents are filed correctly with the appropriate authority, the fees are to be paid. Once the filing is done, and the concerned authority is satisfied, the Nidhi Company is provided with an incorporation certificate and the process of Nidhi Company registration is completed.

Conclusion
A Nidhi Company in India though a type of NBFC and expanding its footing over the country still lacks certain guidelines. Formed on the objective to cultivate the habit of thrift and savings among the members of the company, the Nidhi Companies had a little less of the generally provided guidelines and regulations. Feeling the lack of regulatory guidelines for an operational Nidhi Company in India, the 2022 amendment was brought forth. While the major rules and requirements remain the same, the revision has changed certain outlines of the post-incorporation compliances. For further queries contact Bizadvisors.

Read our article:Nidhi Company and its Compliances

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