What is a Nidhi Company?
Belonging to the classification of non-banking business firms and identified below Section 406 of the Companies Act, 2013, it is regulated by the central government. The basic business of such a company is to facilitate lending money between the core members of the company. Examples of a Nidhi Company are permanent funds, mutual benefit funds, a mutual benefit company and benefit funds. The main concept behind developing a Nidhi Company is to obtain cash deposit from associates or contribute to them, for the common gain of the two parties. All lending and acquiring must agree with the decree stated in chapter XXIV of Company Rules, 2014.
Documents Required for Nidhi Company Registration
TO BE SUBMITTED BY ALL DIRECTORS
Advantages of Nidhi Company
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Basics of a Nidhi Company
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FAQs on Nidhi Company
1. How can I start a Nidhi company and the time period it takes to register for one?
You need to appoint a minimum of three directors and have seven shareholders. So, a total of 10 individuals are needed to form a Nidhi. You need to register the company as a limited company under Companies Act, 2013. Nidhi Companies take almost a month or even longer to register.
2. How can I expand the operations of my Nidhi Company to different areas?
Yes, you can expand operations.A minimum of three branches can be opened in a particular district. In case you want to expand outside the district or want to open more than three branches, intimation needs to be issued 30 days prior to opening to the Registrar of Companies.
3. Should I dissolve my Nidhi Company because it has not gained the necessary numbers of representatives now that it has successfully completed one full year of tenure?
The conditions laid down by the Act says that a Nidhi company should acquire a minimum of 200 members within one year. However, in case you have not been able to acquire the required numbers, you can apply for an extension with the authorities.
4. In a Nidhi company, will any member be allowed to credit and debit cash to the general fund?
No, only the members are allowed to deposit, borrow or lend funds.
5. What are the criteria to become a representative of a Nidhi Company?
Any person can deposit, lend or borrow money through the provisions provided by Companies Act, 2013. They can all become members of the Nidhi provided they are not a corporation or a company.
6. In a Nidhi, what should be the set limited expectation for representatives for cash deposits?
A Nidhi can accept deposits not exceeding 20 times of its net owned assets as mentioned in the last audited statements.
Procedure for Nidhi Company Registration