STARTING A NIDHI COMPANY-
The word ‘Nidhi’ is derived from a root word traditionally meaning ‘treasure’. In the recent context of Indian financial sector, it refers to mutual benefit society notified by the Central government as a Nidhi Company. Their main aim is of cultivating the habit of thrift and savings among its members.
The companies under Nidhi business i.e. borrowing from members and lending to members only, are under Nidhi Permanent Fund. Nidhi companies are most popular is south India, and 80% of Nidhi company in India are located in Tamil Nadu. Their dealings are restricted only to the members and they are therefore regarded as mutual benefit societies. The source of funds is from the members itself. The loans are given at comparatively less rate of interest than the banks in India.
PROHIBITIONS-
MEMBERSHIP-
The membership of a Nidhi Company is restricted to individuals. A Nidhi Company must never admit any corporate body or any trust as its member. A teenager shall also not be allowed to become a member of Nidhi Company.
However, deposits can be accepted in the name of a minor, only if they are made by the legal guardian who is a member of Nidhi. Every Nidhi Company in India must ensure that its membership does not reduce to less than two hundred members at any point of time.
SHARE CAPITAL AND ALLOTMENT-
Every Nidhi shall issue equity shares of nominal value of not less than ten rupees each. No service charge shall be put upon for issue of shares of the company. Nidhi shall allow at least a minimum of ten equity shares equivalent to one hundred rupees. At least one equity share of ten rupees should be allotted to a savings account holder and a recurring deposit holder.
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