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A Nidhi Company is a type of non-banking financial company (NBFC) that primarily focuses on borrowing and lending money between its members. It operates under the provisions of the Companies Act, 2013, and the Nidhi Rules, 2014. To ensure smooth functioning, a Nidhi Company must adhere to certain compliance requirements.
First, a Nidhi Company must be incorporated as a public limited company with a minimum of seven members and three directors. It is crucial to maintain a minimum net owned funds (NOF) of ₹10 lakh, as specified under the Nidhi Rules.
Regular filings with the Registrar of Companies (RoC) are mandatory, such as annual financial statements (Form AOC-4) and annual return (Form MGT-7). A Nidhi Company must also submit a statement of its members (Form NDH-1) every six months, ensuring its compliance with the statutory requirements. Moreover, the company must conduct a general meeting once a year to present its accounts and operations.
A key compliance requirement is the restriction on the number of members. A Nidhi Company cannot accept deposits from the public or conduct any activities other than those permitted under the Nidhi Rules. Failure to comply with these regulations can lead to penalties or the cancellation of its license.
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How do you registerd a nidhi company under section 620-A of companies act?
In order to register as a nidhi company in India under section 620-A of companies act, you will have to apply at the Ministry of Corporate Affairs headquarters.
Is it mandatory to have the word “Nidhi” in the company name?
Yes, as per the rules, it is mandatory for a Nidhi company to have the word “Nidhi” as part of its name.
Is Nidhi Company treted as Cheeting Company?
Any company are not a cheeting company including nidhi company. But any company can cheet with people.
What are the post-registration requirements and compliances for a Nidhi Company?
After registering a Nidhi Company, it must meet the following post-registration requirements: Membership Growth: Within one year of incorporation, the company must have at least 200 members. Net Owned Funds (NOF): The company must maintain a Net Owned Funds (NOF) to deposits ratio of 1:20. This means the company’s NOF should not be less than ₹10 lakhs, and the deposits cannot exceed 20 times the NOF. Restrictions on Loans and Deposits: A Nidhi Company can only accept deposits and lend money to its members. It is not allowed to issue loans or take deposits from non-members. Annual Compliance Filing: Nidhi Companies must file annual returns and financial statements with the Registrar of Companies (ROC). Additionally, they must file Form NDH-1 (return of statutory compliances), NDH-2 (application for extension if they fail to meet member requirements), and NDH-3 (half-yearly return) regularly.
What is a Nidhi company?
Nidhi company is a company registered under Companies Act and notified as a nidhi company by Central Government under Section 620-A of Companies Act. It is a non-banking finance company doing the business of lending and borrowing with its members or shareholders.
What are the basic compliance requirements for a Nidhi Company?
The basic compliance requirements for a Nidhi Company under the Companies Act, 2013, include: Registration: It must be registered as a public company with a minimum of 7 members and 3 directors. Net Owned Funds (NOF): It must maintain a minimum NOF of ₹10 lakh or higher as prescribed. Deposit-Taking: It can only accept deposits from its members, not exceeding 20% of its NOF. Membership: It must have at least 200 members within one year of incorporation. Filing: Annual filings like Form NDH-1 (return of deposits) and Form NDH-3 (half-yearly compliance) are mandatory. Interest Rates: It must adhere to prescribed interest rates on deposits and loans. Loan Restrictions: Loans can only be given to members, with limits based on the company’s NOF. Audit: Annual audits and compliance with RBI guidelines are required.
How a Nidhi company is formed in India?
Nidhi Companies are Companies notified by the Central Government as such under Section 620A of the Companies Act, 1956.These Companies mainly engage in the business of collecting deposits in the form of Savings Deposit, Recurring Deposit etc.... and also lend to the same to the members of the Company. One of the important feature of a nidhi Company is that it deals only with members (share holders). Thus if you want to deposit any amount in a nidhi Company or want to avail a loan from a Nidhi Company, first you have to become a member by subscribing to shares of the Company.Moreoover, Nidhi Companies can open SB Accounts for its members. Moreover, there are certain restrictions like a Director can hold office for a contimuos period of 10 years only and an Auditor for a period of 5 years.Warm RegardsBirendra Banka9661805650
How a nidhi company is formed in west Bengal?
A Nidhi company is formed in West Bengal easily. The company just needs to apply for a permit with the local authorities to get the company established and set up properly.
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What are the key Advantages of a Nidhi Company in India?
Following are the key advantages of a Nidhi Company in India: Encouragement of Savings and Thrift: Nidhi companies are specifically designed to foster thrift and saving practices among their members. They offer a platform for people to save and invest their money, creating a culture of financial discipline and responsibility. Credit: Nidhi companies lend to their members, which can be especially advantageous for individuals who do not have easy access to formal financial institutions. Members can borrow money for a variety of reasons, such as small enterprises, education, and crises. Local Economic Development: Nidhi companies are frequently found in semi-urban and rural locations where access to financial institutions is limited. Nidhi companies contribute to the economic development of these regions by offering financial assistance to local inhabitants and businesses. Financial Inclusion: Nidhi companies play an important role in financial inclusion by reaching out to underbanked and unbanked populations. They provide services to those who may not have access to traditional banks, eliminating financial inequality. Building Community: Nidhi companies are often member-driven, generating a feeling of community among their members. This can lead to enhanced community trust and collaboration, which can be good for social and economic development. Ease of Membership: Joining a Nidhi company is frequently easier than following the rigorous standards of regular banks. This makes it easier for people to join and profit from their services, especially in remote areas. Limited Government Intervention: While Nidhi companies are regulated by the government, they generally face fewer regulatory constraints than traditional financial institutions. This gives them greater flexibility in meeting the demands of its members. Transparency and Accountability: Nidhi companies must keep correct financial records and make frequent reports to regulatory authorities to ensure transparency and accountability in their operations. Affordability: Nidhi companies frequently have streamlined operational structures, lowering the costs associated with maintaining a financial institution. Members may benefit from cheaper fees as a result of this. Support for Small and Micro Businesses: Nidhi companies typically lend financing to small and micro-enterprises, assisting in their growth and sustainability. This has the potential to significantly promote local entrepreneurship and employment creation. Liquidity Management: Nidhi companies assist members in managing their liquidity requirements. Members can access their funds as needed, creating a financial safety net for unforeseen emergencies. While Nidhi companies provide several advantages, they are also subject to stringent regulatory regulations and Compliance to protect the safety of members’ funds and the overall integrity of the organization as a whole. By adhering to these standards, Nidhi companies can continue to provide these benefits to their members while also positively contributing to India’s financial inclusion and economic development. Now let’s discuss the Nidhi Company Compliance.
What are the eligibility criteria for registering a Nidhi Company in India?
To register a Nidhi Company, the following criteria must be met: Minimum Shareholders and Directors: The company must have at least 7 shareholders and 3 directors. The directors and shareholders can be the same individuals. Capital Requirement: A Nidhi Company must have a minimum paid-up equity capital of ₹5 lakhs at the time of incorporation. No Preference Shares: The company is not permitted to issue preference shares. Purpose and Business Activity: The company must be incorporated with the primary objective of promoting savings and providing loans to its members. It cannot engage in activities like dealing with outside parties, chit funds, or insurance. Resident Members: All members of the Nidhi Company must be Indian residents.
