Nidhi Company Registration

Activities Prohibited in a Nidhi Company

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.

Number of members

Minimum of seven members is required to start a Nidhi Company out of which three members must be the directors of the company.

Share Capital and Owners’ Funds

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.

Documents required for registration

1. Proof of the registered place of business (Ownership documents/ rent or lease agreement)
2. No Objection Certificate (signed by the owner/ landlord)
3. Identity proofs
4. Address proofs of the members
5. Photos of the members
6. PAN card copies of the members
7. Digital Signature (DSC)
8. Director Identification Number (DIN) of the directors
9. Memorandum of Association of the company (MoA)
10. Articles of Association of the company (AoA)

Conditions to be fulfilled for getting ‘Nidhi’ status Within one year of its registration

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.