STARTING A NIDHI COMPANY IN INDIA

1. STARTING A NIDHI COMPANY IN INDIA NIDHI COMPANIES IS REGULATED BY SECON 406 OF COMPANIES ACT 2013 AND COMPANIES (NIDHI COMPANIES) RULES, 2014 MEANING: Nidhi Company means a company which has been incorporated as a public company with the object of-Culvang the habit of thri and savings amongst its members and receiving deposits from, and lending to, its members only, for their mutual benefit. OBJECT TO INCORPORATE NIDHI COMPANY: Nidhi Company is incorporated with following objectives: To stimulate savings among its member To lend Loans and receive money as deposits for the purpose from only its members. Since Nidhis come under NBFCs, the RBI is empowered to issue direcons to them in matters relang to their deposit acceptance acvies. However, since Nidhis deal with their shareholder-members only, RBI has exempted such notified firms from the provisions of the RBI Act and other directions applicable to NBFCs. APPLICABILITY: The Central Government made ‘Nidhi Rules, 2014’ for the purpose of carrying out the objectives of ‘Nidhi’ companies. These rules shall be applicable to Every company which had been declared as a Nidhi or Mutual Benefits under Secon 620A(1)of Companies Act, 1956; Every company functioning on the lines of a Nidhi company or Mutual benefit society but has either not applied for or has applied for and is awaiting nonfiction to be a Nidhi or Mutual Benefit Society under Secon 620A(1)of Companies Act, 1956; Every company incorporated as a Nidhi pursuant to the provisions of Secon 406of the Companies Act, 2013.

2. PRE-REGISTRATION REQUIREMENTS FOR REGISTERING A NIDHI COMPANY : Minimum Three Directors: Minimum three Directors are required to incorporate Nidhi Company. All this three director has to act as members of the company. Minimum Seven Members: Nidhi Company can be started with seven members. Out of which 3 are also to be appointed as directors. Minimum Capital Requirement: Nidhi Company as Public Limited Company Should have Capital of Rs.5,00,000/- Like Public Limited Company. No Preference Shares shall be issued. Object of the Company The objecve of such a firm would be to imbibe in the members a habit of this and saving and the services would only be restricted to its members;. The name of the company must have word as Nidhi Limited at the end. PROCEDURE FOR INCORPORATION OF NIDHI COMPANY : Get Digital Signature Certificate (DSC) of all seven members. Get Director Idenficaon number (DIN) of three Directors by using DSC. Suggest at least Six Company name. We will do a search for name availability. Apply to ROC for name approval with adding word Nidhi Limited. Once the name is approved by ROC File Incorporation document with ROC-like MOA AOA Consent of Director, Affidavit and declaration from directors etc. Once Incorporaon form is approved by ROC, ROC shall issue Certificate of Incorporation with PAN and TAN No. Requirement to Apply for DSC: All 7 members should have DSC Pan Card Self Aested Residenal Proof Self Aested Dully fill and sign DSC applicaon form.

3. The requirement to Apply for DIN: (Minimum Three Directors are required for Incorporation of Nidhi Company) Photograph of the Applicant – To be Self-arrested. PAN – To be Self-aested Mobile No. Email id. Educational Qualification Occupation Proof of residence of applicant Address proofs like passport, election (voter identy) card, raon card, driving license, electricity bill, telephone bill or bank account statement shall be attached and should be in the name of applicant ( shall not be later than 2 months). DSC of Individual. Requirement to Apply for Name Availability: Six Proposed name with the significance of Name Authorized Capital- Minimum 5 Lacs Jurisdicon of Registrar of Companies. Main Object to be pursued by Company Requirement to Apply for Incorporation of Nidhi Company: The registered office address of Company. Recent Address proof with NOC from Owner. Consent from all Directors Affidavit and declaration from all directors and subscribers. TIME PERIOD: Time Required for Incorporation of Nidhi Company Shall be 20-30 days, depending on government approval. POST-REGISTRATION REQUIREMENTS FOR A NIDHI COMPANY : There are certain Compliances which Nidhi Company has to do are incorporation of Nidhi Company. Every Nidhi Company shall, within a period of one year from Incorporation of the company, ensure that it has Not Less than 200 Members:

4. Aer incorporation, a Nidhi company must add at least 200 members to comply with this requirement of law. Further, it has to maintain this during the course of me. If the total members fall less than 200 at any me there are, it will leave the company at default. However, if the company is not able to reach the limit of 200 members, then you must apply for me within 30 days of closure of the financial year in Form NDH-2 with Regional Director. Net Owned Fund: Net owned funds shall be Rs.10,00,000/- or more (‘Net owned funds’ means the aggregate of paid up equity share capital and free reserved as reduced by the accumulated and intangible assets appearing in the last audited balance sheet). Ratio: The ratio of net owned funds to deposit shall be not more than 1:20. This ratio is very easy to understand. Suppose, if you have net owned funds of 10 lakh, then your total deposit limit would be INR 2 Crore. Deposit: Unencumbered term deposits of not less than 10% of the outstanding deposits as specified in Rule 14. Members restriction: A Nidhi Company shall not admit a body corporate or trust as a member. A minor shall not be admired as a member of Nidhi Company. But deposits may be accepted in the name of a minor if they are made by the natural or legal guardian who is a member of Nidhi.