{"id":710,"date":"2018-06-26T11:27:54","date_gmt":"2018-06-26T11:27:54","guid":{"rendered":"https:\/\/companyregistrationonline.in\/?p=710"},"modified":"2021-01-04T11:04:40","modified_gmt":"2021-01-04T11:04:40","slug":"difference-private-limited-section-8-nidhi-company","status":"publish","type":"post","link":"https:\/\/companyregistrationonline.in\/blog\/difference-private-limited-section-8-nidhi-company\/","title":{"rendered":"What is the difference between Private Limited, Section 8 & Nidhi Company?"},"content":{"rendered":"

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Differences between\u00a0Private Limited, Section 8 & Nidhi Company<\/h2>\n

This article contains the basic difference between Private limited, Section 8 & Nidhi Company<\/strong> in terms of their basic definitions, minimum requirements for registration, and documents required for each of these forms of entities.<\/p>\n

Definition\u00a0<\/strong><\/span><\/h2>\n

First, let us understand what are these companies and how do\u00a0Privately limited, Section 8 & Nidhi Company differ in their basic definition:<\/p>\n

What is a Private Limited Company?<\/h3>\n

A\u00a0private limited company<\/a><\/strong> is a small business entity that is privately held. This is a\u00a0 type of business entity that limits owner liability to their shares, limits the number of shareholders to 50, and also restricts the shareholders from trading of shares publicly. These are generally formed for trading and business purposes. These are profit-making entities.<\/p>\n

What is a Section 8 Company?<\/h3>\n

In India, a non \u2013 profit organization that is often known as NGO can be registered as a Company under Section 8 of the Companies Act, 2013<\/a><\/strong> (worthwhile Section 25 of the Companies Act, 1956) and it can also be registered as a\u00a0 Trust and a Society. Section 8 Company<\/a><\/strong> format of an NGO is the most popular form of NGO in India. It is, however, easy to register, run, or manage a Section 8 Company<\/strong><\/a> in comparison to a Trust and a Society. \u00a0This, however, enables the government to register any association who has charitable objectives such as to promote sports, commerce, art and culture, education, research, etc as a limited company, without adding the words \u2018Pvt. Ltd.\u2019<\/p>\n

What is a Nidhi Company?<\/h3>\n

Nidhi Company<\/strong><\/a> is one of the categories of a Non-Banking Financial Company (NBFC) that does not require any of the\u00a0 Reserve Bank licenses. It is recognized under section 406 of the Companies Act 2013. The Nidhi Company<\/a><\/strong> is very easy and cheap to form to register. They basically borrow and lend money to their members. They are also called Benefit Fund, Mutual Benefit Fund.<\/p>\n

Minimum Shareholders and Directors Required<\/u><\/b><\/h2>\n

Companies Act 2013 has stipulated the minimum number of Directors and Shareholders for each of these types of companies. Required minimum number of Directors and Shareholders in Private limited, Section 8 & Nidhi Company are:<\/p>\n

Private Limited Company<\/h3>\n

To register a private limited company<\/a><\/strong>, a minimum of 2 shareholders and 2 directors are required. A natural person can, however, be both a director and a shareholder, while a corporate legal entity can only be a shareholder.<\/p>\n

Section 8 Company<\/h3>\n

However, in section 8 company<\/a><\/strong>, there must be a minimum of 2 shareholders and 2 Directors, whereas the directors and shareholders can be the same person. At least one of the directors shall be a\u00a0 resident of India.<\/p>\n

Nidhi Company<\/h3>\n

In a Nidhi\u00a0company, it is to be seen that a minimum of 3 directors and 7 shareholders are required to start a limited company incorporation process.<\/p>\n

Minimum Capital Contribution<\/u><\/strong><\/h2>\n

At the time of company registration<\/a><\/strong>, the capital contribution is made by each of the promoters. To ensure that a company has funds to carry on business activities basic minimum capital contribution amount is fixed by the government. Minimum capital contribution for\u00a0Private limited, Section 8 & Nidhi Company are<\/p>\n

    \n
  1. Private limited company: Minimum Authorized Share Capital shall be Rs. 100000 (INR One Lac).<\/li>\n
  2. Section 8 company: No minimum requirement of capital has been specified.<\/li>\n
  3. Nidhi Company: Minimum paid-up equity share capital of Rs. 500000 is required.<\/li>\n<\/ol>\n

    Documents required for Registration<\/u><\/h2>\n

    The documents that are required for registration of the private limited company<\/span> are:<\/strong><\/h3>\n