Nidhi Company:
About Nidhi Company:
Nidhi Company in the Indian context means treasure. However, in the Indian financial sector it refers to any mutual benefit society notified by the Central/Union Government as a Nidhi Company. They are created mainly for cultivating the habit of thrift and savings amongst its members. The advantage of NIDHI company is creating credibility among the shareholders/investors, Limited Liability and less compliance towards the ROC/MCA.
A Nidhi Company is one that belongs to the NBFC (Non-Banking financial sector) and is recognized under section 406 of the Companies Act, 2013. Their core business activity is borrowing and lending money only to its members. Nidhi Company can freely accept deposits from members and give money to its members only. Section 406 of Companies Act 2013 and Nidhi Rule 2014 governed the law and procedure for Nidhi Company. The fund which received from members, and further can be utilized by its members only. RBI is empowered to issue directions to them in matters relating to deposits from members. Nidhi Company cannot accept deposits from other than its member.
The formation & objective of Nidhi Company:
● Borrowing from members and lending to members only.
● Nidhi company is for the benefit of its members and their mutual benefit.
● For outsider i.e. who are not the member of the Nidhi Company are not allowed to deposit any money or doing any kind of business with the Nidhi Company.
● A Nidhi shall not accept deposits exceeding twenty times of its Net Owned Funds (NOF) as per its last audited financial statements.
● The companies which are covered under the Table in sub-rule (2) above shall not accept fresh deposits or renew existing deposits if such acceptance or renewal leads to violation of the prescribed ratio.
● The ratio specified in sub-rule (2) above shall also apply to incremental deposits.
Relevant Rules / Procedure in the Nidhi Rules, 2014 as under:
A Nidhi Company to be incorporated under the Act shall be a public company and shall have a minimum paid up equity share capital of five lakh rupees.
On and after the commencement of the Act, no Nidhi Company shall issue preference shares.
Except as provided under the proviso to sub-rule (e) to rule 6, no Nidhi Company shall have any object in its Memorandum of Association other than the object of cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit.
Every Company incorporated as a Nidhi shall have the last words ‘Nidhi Limited’ as part of its name.
Members and Net Own Fund: Relevant Rules in the Nidhi Rules, 2014 as under:
1. Nidhi Company shall, within a period of one year from the commencement of these rules, ensure that it has :-
a) Not less than two hundred members.
b) Net Owned Funds of ten lakh rupees or more.
c) Unencumbered term deposits of not less than ten% of the outstanding deposits as specified in rule 14.
d) Ratio of Net Owned Funds to deposits of not more than 1:20
2. Nidhi Company shall not admit a body corporate or trust as a member.
3. Every Nidhi Company shall ensure that its membership is not reduced to less than two hundred members at any time.
4. A minor shall not be admitted as a member of Nidhi Company.
5. A Nidhi may open branches, only if it has earned net profits after tax continuously during the preceding three financial years.
6. Nidhi Company may open up to three branches within the district.
7. NoNidhishallopenbranchesorcollectioncentresorofficesordepositcentres, or by whatever name called outside the State where its registered office is situated.
Winding up business: A Nidhi shall not close any branch unless it:-
Publishes an advertisement in a news paper in vernacular language in the place where it carries on business at least thirty days prior to such closure, informing the public about such closure;
Gives intimationtothe Register within thirty days of such closure
Deposits: Relevant Rules in Nidhi Rules, 2014 as under:-
● The fixed deposits shall be accepted for a minimum & maximum period of sixty months only.
● Recurring deposits shall be accepted for a maximum period of twelve months and a minimum period of sixty months.
● The maximum balance in a savings deposit account at any given time qualifying for interest shall not exceed one lakh rupees at any point of time and the rate of interest shall not exceed two per cent. Above the rate of interest payable on savings bank account by nationalized banks.
● A Nidhi may offer interest on fixed and recurring deposits at a rate not exceeding the maximum rate of interest prescribed by the Reserve Bank of India which the Non-Banking Financial Companies can pay on their public deposits.
Loans: Relevant Rules in Nidhi Rules, 2014 as under:-
● A Nidhi shall provide loans only to its members. For the purposes of sub-rule (2), the amount of deposits shall be calculated on the basis of the last audited annual financial statements.
● A Nidhi shall give loans to its members only against the following securities, namely: gold, silver and jewelry, immovable property, fixed deposit receipts (FDR), National Savings Certificates, other Government Securities and insurance policies.
Directors: Relevant Rules in Nidhi Rules, 2014 as under:-
● The Director shall be a member of Nidhi. And the Director of a Nidhi shall hold office for a term up to ten consecutive years on the Board of Nidhi.
● The Director shall be eligible for re-appointment only after the expiration of two years of ceasing to be a Director.
● The person to be appointed as a Director shall comply with the requirements of sub- section (4) of section 152 of the Act and shall not have been disqualified from appointment as provided in section 164 of the Act.
Dividend: Relevant Rules in Nidhi Rules, 2014 as under:-
A Nidhi Company shall not declare dividend exceeding twenty five percent to such higher amount as may be specifically approved by the Regional Director for reasons to be recorded in writing and further subject to the following conditions, namely:-
1. An equal amount is transferred to General Reserve.
2. There has been no default in repayment of matured deposits and interest.
3. It has complied with all the rules as applicable to Nidhi.
Auditor: Relevant Rules in Nidhi Rules, 2014 as under:-
1. No Nidhi Company shall appoint or re-appoint an individual as auditor for more than one term of five consecutive years.
2. No Nidhi Company shall appoint or re-appoint an audit firm as auditor for more than two terms of five consecutive years;
3. Provided that an auditor (whether an individual or an audit firm) shall be eligible for subsequent appointment after the expiration of two years from the completion of his or its term.
Requirement of creating NIDHI Company:
Minimum 7 shareholders
Minimum 3 Directors
DIN for all directors
Minimum Authorized Capital INR-5,00,000/- (Rupees Five Lakhs)
Minimum Capital of INR-10,00,000/- (Rupees Ten Lakhs)
After Registration required minimum 200 Members ( in 12 Months )
Net owned fund must be INR-10,00,000/- (Rupees Ten Lakhs) and above
Unencumbered deposits of not less than 10% of the outstanding deposits
Net own fund versus deposits should not be more than 1:20 ratio
Our services for establish your NIDHI Company:
a) Corporate Law Advisory, Corporate Compliance Management Advisory Services for Public, Private, OPC and LLP Organization.
b) Secretarial Audit / Due Diligence Audit / Corporate Governance Compliance Certification Services.
c) Advisory Services for Initial Public Offer, Right Offer, Preferential Offer, Public Offer through Book-Building
d) Process, Capital Restructuring, Public, Private and Preferential offer of Tax Free Bonds.
e) XBRL Data Conversion & E-filing of Corporate Returns with MCA and other Statutory Authorities.
f) Corporate Restructuring, Valuation & Strategic Advisory services Including Merger, Demerger, Amalgamation & Takeover Advisory Services.
g) Project Management, Profitability Analysis Study& Financial Advisory Services.
h) Implementation of Strategic Issues including preparation of documents, submission and appearances thereof before various regulatory authorities such as Ministry of Corporate Affairs, ROC, NCLT/NCLAT, RD, NCLS etc.
i) India Entry Advisory Services, FEMA Compliance Management Services, Branch / Liaison office Formation & Compliance, Joint Venture, WoS Company Incorporation & Management, Advisory services for seeking approval from Secretarial for Industrial Assistance (SIA) / Foreign Investment Promotion Board (FIPB) & E-filling Of International & Indian Corporate Returns
j) Intellectual Property Right Related Services viz Compliance Management of Trade Mark, Copy Rights & Patents.
k) Virtual Office Management Services.
l) Accountancy, Direct and Indirect Taxation & E-filing Compliance and Management Services.
Documents required for NIDHI Company:
Copy of PAN Card of all directors and shareholder
Copy of Latest Bank Statement/Telephone or Mobile Bill
Copy of Voter's ID/Passport/Driver's License
Passport-sized photograph of all directors and shareholder
Scanned Copy of Signature (signature should same as on PAN Card)
Copy of Notarized Rent/Lease Agreement (If office is on rent/lease)
Copy of Utility bills for Proposed Registered office (Residential or commercial.
In case office is in rented premises, in that case NOC from owner.
