Nidhi Company Registration in India 4 Must-Follow Rules!

Under the Companies Act, 2013, the government of India introduced a well-established company registration form, Nidhi company registration in India. Imagine a world where a person establishes a firm to focus on savings and fosters thrift. That’s where the Nidhi company formation performs an instrumental role. Registering your business as a company can prove beneficial. It is advantageous to boost the trust, focus on savings by members, and many more. However, the registration procedure is covered with multiple steps, including complex requirements, documentation, and many more. 

Whether you are serving as a startup owner or a motivated financial saver, solving the complex company registration steps can be overwhelming. Let’s dive into this blog to explore the four common rules to streamline Nidhi registration steps, and also solve the challenges faced by applicants. Kick-start your business in India now. 

What is the meaning of online Nidhi company registration?

• The online Nidhi company registration process eliminates the use of traditional paper-based methods. The formation of a Nidhi company represents an entity that is dedicated to the lending and borrowing of funds between non-public companies.

• Interestingly, the process can be done through digital platforms, which is seamless and safe. The aim is to build this legal company framework to encourage saving and bring thrift among members.

• Additionally, a registered Nidhi company acts as a public limited company, which follows the same legal structure.

• The membership of such a company is in such a way that all registered members are individuals who are eligible to invest and can also borrow money.

• A registered Nidhi company adheres to the regulatory guidelines set forth by the Nidhi Rules, 2014, as well as the Companies Act, 2013.

Also Read This: Build Your Finance System with Nidhi Company

Nidhi Company Act- the Power of Mutual Benefit

Before discussing the rules, let’s explore why establishing a Nidhi company in India is beneficial for entrepreneurs. The registration of a Nidhi Limited is recognized as a distinct type of Non-Banking Financial Company. It has been designed to increase thrift and savings among the company members. Now, a member is allowed to offer the loan and accept deposits in a closed-loop framework.

 The regulatory framework is defined as a game-changer as it eliminates the financial event risks and builds confidence among members. Additionally, the registered Nidhi companies are exempt from the rules and regulations of the RBI. It means you and your company are independent to build your own operational guidelines. Breakdown of rules that will make or break your journey:

Rule #1: Legal Structure for Nidhi Registration

According to the Companies Act, 2013, a registered Nidhi company is required to be formed as a public limited company. This is the common and primary rule to establish a company. If it comes with errors, it can cause costly setbacks. The requirements for online company formation in India are: 

• Regarding directors and shareholders: The Nidhi Company Act stipulates that a registered company must consist of at least seven shareholders and three directors.

• Unique Name: Before establishing a company as a Nidhi company registration in India, you need to choose a unique name. It is mandatory that the name of a company must end with “Nidhi Limited.” Must ensure the selected name by you is not already registered.

Rule #2: Company Registration Online Process

The physical company registration online process and the submission of documents days are gone now. In the digital era, online company registration makes the process seamless. There is no need for more authority office visits. Approach to fully online company registration.  Here’s how to ace it:

• Obtain DIN and DSC: All designated directors of a registered Nidhi company must secure the Director Identification Number and a Digital Signature Certificate. It is required to sign the application digitally.

• File SPICe+ Form: It is a golden application form that covers from PAN, TAN, DIN allocation to the company incorporation certificate. Also, add the company name reservation proof with MoA/AoA, and many more.

• Certificate of Incorporation (CIN): Within one to week-to-two weeks, the incorporation certificate will be issued by MCA after application approval. Get a chance to open a business bank account for your startup.

Rule #3: Business Registration in India

The business registration in India is the primary step. The real venture starts with the maintenance of the company’s status. It is necessary to align with the outline framework within one year of incorporation. Here are the reasons for maintaining oversight:

• Minimum 200 Members: Within one year of incorporation, the register Nidhi company registration in India must be designated by 200 members. Start this step by building the trust of consumers by focusing on networks.

• Net-Owned Funds (NOF): A Nidhi company equity share capital + free reserves – accumulated losses – intangible assets, in short, NOF must be nearly Rs 10 lakh or above. The low NOF can affect business status.

• Form NDH-1: Ensure legal compliance by completing the Form NDH-1. It should be fulfilled within 90 days of the first financial year. But the delay can result in potential penalties like a fine of nearly Rs 5,000.

Rule #4:Nidhi Company Registration Regulations

A successful registered Nidhi company in India stands with compliance, which acts as a backbone. Business transparency and the safety of members are ensured under the Companies Act, 2012, and Nidhi Rules, 2014. Always stay compliant with the rules and regulations of the Nidhi Company Act. 

• Restricted Activities: Under the Nidhi company process, the organization is only allowed to accept deposits. They offer loans to the members. But, they can not regulate activities like chit funds, insurance, leasing, or microfinance.

• Annual Filings: Before September 30 every year, complete the annual returns, financial statements, and income tax returns. The non-compliance with annual filings can lead a Nidhi company to potential fines.

• Branch Restrictions: After three years of constant profits, establish at least three branches in the same district. Approach to Regional Director approval for branches outside the location.

Also Read This: Nidhi Registration Process in Bengaluru

Conclusion | Start Your Nidhi Company Registration Journey

In essence, the Nidhi company formation is just a process, but it is more than a legal requirement. The online Nidhi company registration in India encourages savings and easily lends money among members. With the advent of online company registration in India, it is essential to concentrate on the company, savings, empower members, and establish a strong legacy. With years of experience, we have helped multiple successful businesses with company formation. Connect with us now!

Frequently asked questions related to Nidhi company rules

1. What is a Nidhi Company?

Ans. A Nidhi limited registration company acts as a non-banking financial company. Such companies can accept deposits from the members and can also provide them.

2. Who manages the online Nidhi company Registration?

Ans. The Ministry of Corporate Affairs is responsible for managing all activities from registration to establishment. 

3. What are the drawbacks of Nidhim’s company rules?

Ans. A Nidhi-registered company is not allowed to regulate business within a regional area for the first three years. The other limitations are:

• Restricted to accepting deposits from non-members.
• Cannot engage in other business activities
• Prohibited from conducting business in the form of leasing, chit funds, and others.
• Not allowed to advertise their schemes to the general public.

4. What are the other known names of a Nidhi company?

Ans. The other recognized names of a Nidhi company are permanent fund, benefits fund, mutual benefit company, and mutual benefits fund. 

5. How much deposit can a Nidhi company accept from its members?

Ans. From the members, a registered Nidhi company in India can accept nearly Rs 2 lakh.