STARTING A NIDHI COMPANY IN INDIA

1. STARTINGANIDHICOMPANYININDIA 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 asa... • NIDHI COMPANIESIS REGULATED BY SECON 406OF COMPANIES ACT 2013 AND COMPANIES (NIDHI COMPANIES) RULES,2014 • MEANING: • Nidhi Companymeans a company which has been incorporated as a public company withthe • object of-Culvang the habit of thri and savings amongst its members and receiving deposits from, and lending to, its members only, for their mutualbenefit. • OBJECT TO INCORPORATE NIDHICOMPANY: • Nidhi Companyis incorporated with followingobjectives: • To stimulate savings among itsmember • To lend Loans and receive money as deposits for the purpose from only itsmembers. • 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 toNBFCs. • APPLICABILITY: • The Central Government made ‘Nidhi Rules, 2014’ for the purpose of carrying out the objectives of ‘Nidhi’ companies. These rules shall be applicableto • 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;

2. Every company incorporated as a Nidhi pursuant to the provisions of Secon 406of the Companies Act,2013. • PRE-REGISTRATION REQUIREMENTS FOR REGISTERINGA NIDHI COMPANY: • Minimum ThreeDirectors: • Minimum three Directors are required to incorporate Nidhi Company. All this three director has to act as members of thecompany. • Minimum SevenMembers: • Nidhi Companycan be started with seven members. Out of which 3 are also to be appointed as directors. • Minimum Capital Requirement: • Nidhi Companyas Public Limited Company Should have Capital of Rs.5,00,000/- Like Public LimitedCompany. • No Preference Shares shall be issued. Object of theCompany • 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 itsmembers;. • The name of the company must have word as Nidhi Limited at theend. • PROCEDURE FOR INCORPORATION OF NIDHI COMPANY: • Get Digital Signature Certificate (DSC) of all sevenmembers. • Get Director Idenficaon number (DIN) of three Directors by using DSC. Suggest at least Six Company name. We will do a search for nameavailability. • 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 Consentof • Director, Affidavit and declaration from directorsetc.

3. Once Incorporaon form is approved by ROC, ROC shall issue Certificate of Incorporation with PAN and TANNo. • Requirement to Apply forDSC: • All 7 members should haveDSC • Pan Card SelfAested • Residenal Proof SelfAested • Dully fill and sign DSC applicaonform. • The requirement to Apply forDIN: • (Minimum Three Directors are required for Incorporation of NidhiCompany) • Photograph of the Applicant – To beSelf-arrested. • PAN – To be Self-aested Mobile No. Emailid. • EducationalQualification • Occupation • Proof of residence ofapplicant • 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 2months). • DSC ofIndividual. • Requirement to Apply for NameAvailability: • Six Proposed name with the significance ofName • Authorized Capital- Minimum 5Lacs • Jurisdicon of Registrar ofCompanies. • Main Object to be pursued byCompany • Requirement to Apply for Incorporation of NidhiCompany: • The registered office address ofCompany. • Recent Address proof with NOC fromOwner. • Consent from allDirectors

4. Affidavit and declaration from all directors andsubscribers. • TIMEPERIOD: • Time Required for Incorporation of Nidhi Company Shall be 20-30 days, depending on governmentapproval. • 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 ithas • Not Less than 200Members: • 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 RegionalDirector. • Net OwnedFund: • Net owned funds shall be Rs.10,00,000/- or more (‘Net owned funds’ means theaggregate • of paid up equity share capital and free reserved as reduced by the accumulated and intangible assets appearing in the last audited balancesheet). • 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 limitwould • be INR 2Crore. • Deposit: • Unencumbered term deposits of not less than 10% of the outstanding deposits as specified in Rule14. • Membersrestriction: • A Nidhi Companyshall 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 ofNidhi

5. GENERALRESTRICTIONS: • Rule 6 provides generalrestricons. • Carry on the businessof • ChitFund, • Hire PurchaseFinance, • LeasingFinance, • Insurance or Acquisition of Securities issued by any bodycorporate; • Issue • PreferenceShares, • Debenturesor • Any Other Debt Instrument by any name or in any formwhatsoever; • Open any Current Account with its members; Acquire another companyby; • Purchase of securitiesor • Control the composition of the Board of Directors of any other company in any manner whatsoever or • Enter into any arrangement for the change of its management, unless it has passeda • special resolution in its general meeting and also obtained the previous approval of the Regional Director having jurisdiction overNidhi; • Carry on any business other than the business of borrowing or lending in its ownname; • Accept Deposits from or lend to any person, other than itsmembers; • Pledge any of the assets lodged by its members assecurity; • Take Deposits from or lend money to any bodycorporate; • Enter into any Partnership Arrangement in its borrowing or lendingacvies; • Issue or cause to be issued any advertisement in any form for soliciting deposit; • Pay any brokerage or incentive for mobilizing deposits from members or for deployment of funds or the grantingloans. • Share capitalallotment: • Every Nidhi shallallot

6. To each deposit holder at least a minimum of 10 equity shares or shares equivalent toRs.100/-. • To each savings account holder and a recurring deposit account holder at least 10 equity shares of Rs.10/-. • Acceptance ofdeposits: • A Nidhi shall not accept deposits exceeding 20 miles of its Net Owned Assets as per last audited financial statements. • The fixed deposits shall be accepted for a minimum period of 6 months and a maximum period of 60 months. • Recurring deposits shall be accepted for a minimum period of 12 months and a maximum period of 60months. • In case of recurring deposits, relating to mortgage loans, the maximum period of recurring deposits shall correspond to the repayment period of such loans granted byNidhi. • The maximum balance in a savings deposit account at any given me qualifying for interest shall not exceed Rs.1,00,000/- and the interest shall not exceed 2% above the rate of interest payable toa • savings bank account by nationalizedbanks. • Interest for fixed and recurring deposits shall be at a rate not exceeding the maximum rate of interest prescribed by RBI which the NBFC can pay on their publicdeposits. •  • Every Nidhi shall invest and continue to keep investing, in unencumbered term deposits with a scheduled commercial bank or post office deposits in its own name an amount which shall not be less than 10% of the deposits outstanding at the close of the business on the last working day of the second precedingmonth. • In case of unforeseen commitments, temporary withdrawal may be permitted with the prior approval of the Regional Director for the purpose of repayment to depositors, subject to such conditions and me limit which may be specified by the Regional Directorto • ensure restoration of the prescribed limit of10% AGS BUSINESS FILINGS INCORPORATEDCOMPANY FORMATION IN INDIANIDHI COMPANYNIDHI COMPANY INCORPORATIONNIDHI COMPANY REGISTRATIONNIDHI COMPANY REGISTRATION FEESONLINE NIDHI COMPANY REGISTRATIONPVT LTD COMPANY REGISTRATIONREGISTER ACOMPANY