Nidhi Company can’t deal with chit funds, hire-purchase finance, leasing finance, insurance or securities business. It is strictly prohibited from accepting deposits from or lending funds to, any other person except members.
Note:-Also, it can’t advertise itself to ask for any deposits.
Minimum of seven members is required to start a Nidhi Company out of which three members must be the directors of the company.
A minimum of 5 lakh rupees, is required as the equity share capital to start a Nidhi Company. Nidhi Company can’t issue preference shares.
Nidhi Company should have minimum 200 members within one year from commencement
Also, the net owned funds should be 10 lakh rupees or more. Net owned funds = Equity share capital + free reserves (-) accumulated losses (-) intangible assets Unencumbered term deposits must be 10% or higher of the outstanding deposits The ratio of net owned funds to deposits shouldn’t be more than 1:20 If Nidhi Company satisfies all above conditions, it should file NDH-1 along with prescribed fees within 90 days from the end of the first financial year after incorporation. Practicing CA/ CS/ CWA must duly certify the form.
Extension of another financial year can be availed upon submission of NDH-2 to the Regional Director within 30 days from the end of the first financial year.
If even after the second financial year, it doesn’t fulfill the requirements, it can’t accept deposits till it complies with the provisions, and also penalty will be imposed.