Nidhi Company is most popular form for giving small loan to its members and accept deposits from its members. It is also called mutual benefit Company. For Providing Loan and Accepting Deposits you have to register Nidhi Company and with the Capital of Nidhi Company subject to Condition provided in Nidhi Rules you can lend money and accept deposit from Its members.
Nidhi Company will always be public limited company and its name should end with ‘Nidhi Limited”, Presently Nidhi Company is becoming very popular for lending business.
Nidhi Company Registration Procedure:
- Obtaining DSC for All the members and Directors
- Obtaining DIN for All the Directors
- Application for Approval of name
- Preparation and Drafting of Incorporation documents
- Signing of Incorporation Documents
- Application for Incorporation of Nidhi Company with ROC
- Approval by ROC, after verifying all the required documents and information.
Basic Features about Nidhi Company for Registration:
1. Required Minimum 3 Directors and 7 Shareholders
2. Can Accept Deposits From its members
3. Body Corporate and Benifit of Limited Liability
4. Can Land Money to its Members
5. Can Provide Locker Faciltity to its members
6. Required to have Minimum 200 members within one Year
7. Best suited for Small lending and desposit Business
8. Minimum Capital Rs. 5 Lakh at the time of Incorporation and Thereafter required to have Rs. 10 Lakh.
Documents Required For Nidhi Company Registration
1. PAN of all Directors
2. Voter ID/DL/Aadhar Card/Passport of All Directors /members
3. Passport Photo of all Directors
4. Latest Bank Passbook/Statement or Electricity/Boradband Bill
5. Latest utility bill (electric bill/telephone bill) and Rent Agreement or latest tax receipt/ownership deep of the property for the property to be used for registered office
How To Add Members In Nidhi Company
As Nidhi Company can provide loans to its members and can also accept deposits from its members only in accordance with the requirements of Nidhi Rules. Nidhi Company is Public limited Company so at the time of formation of Company minimum seven members are required and as par requirements of Nidhi Rules and Companies Act, 2013 a Nidhi Company should have 200 members within 1 year from the date of incorporation. Now it is important that how members are added in the Nidhi Company so Nidhi can provide loans to its members and accept deposits to its members.
There are two ways through which members are added in the company:
#1. By Way Of Allotment Of New Shares:
Nidhi Company may allot new shares to its members as par the provisions of the companies act, there is present exemption through which section of right issue and private placement is not applicable to Nidhi Company, so the shares can directly be allotted by Board Of Directors of the Company through a resolution passed. It is to be noted that no of shares allotted should not exceed authorized share capital of the Company.
#2. By Way Of Transfer Of Shares Of Existing Members :
As Nidhi company is a Public Limited Company , the shares of public limited company are freely transferable and existing shareholder of Nidhi Company may transfer his shares to another person , in this case he will also become member of nidhi company once his name is entered in the register of members.
Form For Transfer Of Shares : Form SH-4
Every Nidhi Company is required to have Minimum Net Owned Funds of Rs. 10Lakh all the time.
Aggregate Amount of paid up equity share capital and free reserves as reduced by accumulated losses and intangible assets appearing in the last audited balance sheet, provided the amount representing the proceeds of issue of preference share shall not be included for calculating net owned funds.
Every Nidhi Company is required to comply with provisions of Companies Act, 2013 and Nidhi Rules, 2014, as Nishi Company is Public Limited Company is required to follow all the provisions applicable to Public Limited Company unless exempted from compliance of specific section with or without any modification.
ROC Compliance As Per Nidhi Rules, 2014 :
Filing Of Form NDH-3 :Half Yearly Return By Nidhi Company
Every Nidhi Company is required to File Form NDH-3 with ROC within 30 days from the close of each half year. i.e. 30th April for the half year ending on 31st March and 30th Oct for the half year ending on 30th Sept. Form NDH-3 contains the details of Number of Members admitted during the half year, number of members ceased to be members and total number of members as on the date, Loan granted by Nidhi company along against the particular security and Deposits accepted by the Nidhi company form its members. Form NDH-3 should be certified by Company Secretary of CA , CMA in Practice.
Filing Of Form NDH-1 : Yearly Return By Nidhi Company
Every Nidhi Company is required to file Form NDH-1 with ROC within 90 days form the close of Financial Year, this form contains all the details regarding the members, loans , deposits, reserves etc for the full financial years.
What Nidhi Company Cannot Do As Par Nidhi Rules :
- A Nidhi Company shall not carry any chit fund, hire purchase finance leasing finance insurance or acquisition of securities issued by any Body corporate
- Nidhi Company is not allowed to issue any kind of preference shares or any debt instruments by any name whatsoever.
- Nidhi company is prohibited to open any current account with its members
- Nidhi company is prohibited to do any compromise or arrangement or takeover unless it is passed by a Special Resolution in the General Meeting and also obtained the previous approval from the Regional Director having jurisdiction over such nidhi company
- Carry on any business other than the business of borrowing or lending in its own name
- Nidhi company is prohibited to accept deposits or lend amount other than its members
- Pledge any of the assets lodged by its members as security
- Nidhi company is prohibited to take deposits or lend money to any Body corporate
- These companies are prohibited to enter into any partnership arrangement in its borrowing or lending activities
- Nidhi company prohibited to issue any advertisement in any form for soliciting deposits
Minimum Members And Net Owned Funds Requirements For Nidhi Company :
- Every Nidhi Company Should have Minimum 200 members within 1 years from the date of incorporation and all time thereafter
- Every Nidhi Company should have Net-owned funds of Rs. 10 Lakh within 1 year from the date of incorporation.
How Much Loan A Nidhi Company Can Give To Its Members :
- Rs. 2 Lakh where a total amount of Deposits form its members is less than Rs. 2 crore
- Rs. 7.50 Lakh where the total amount of Deposits form its members is more than Rs. 2 crore but less than twenty crore rupees
- Rs. 12 Lakh where the total amount of Deposits form its members is more than Rs. 20 crore but less than Fifty crore rupees
- Rs. 15 Lakh where the total amount of Deposits form its members is more than Rs. 50 crore
- No fresh loans exceeding 15% of above can be if Nidhi is not profitable for continuously three preceding financial years.
- Members who have taken a loan from Nidhi and defaulted in repayment of such loan shall not be allowed to take fresh loans form Nidhi.
- Only Members of Nidhi Company can take loan form Nidhi Company
How Much Interest Can Be Charged On Loans By Nidhi Company
The rate of Interest to be charged on loan given by Nidhi shall not go above seven and a half percent(7.5%) above the highest rate of interest offered on deposits by Nidhi.
i.e.7.5% the gross margin that a Nidhi Company is able to earn from the operations.
Annual Filing Of Financial Statements And Annual Return By Nidhi Company :
Every Nidhi company is required to file its Financial Statements, along with Notice calling General Meeting, Directors Report, Auditors Report and Balance sheet to ROC within 30 days from the date of Annual General Meeting of the Company.
Every Nidhi company is required to file its Annual Return along with List of members of Nidhi Company within 60 days from date of Annual General Meeting.
Reporting Of Resolutions :
As a Public Limited Company Nidhi Company is required to File form MGT-14 for Disclosure of Directors interest, Approval of Financial Statements and Directors Report.