Introduction
Nidhi company is a kind of company recognized by the Companies Act, 2005. These companies can have all the transactions with their members only. They are allowed to borrow from or lend money to their members. The capital of a Nidhi company is only from its members
Requirements of Nidhi Company
The most significant requirement to incorporate a Nidhi company is the availability of a minimum of 3 directors and 7 shareholders. The basic and only motive of these companies should be to lend and borrow money only with their members. Every financial deal the company participates in must be with their own shareholders, the purpose being the mutual benefit of both.
Criteria
After a year of the incorporation of the company, the following criterion should be met-
- They must have 200 or more shareholders.
- Unencumbered deposits should not be less than 10% of the outstanding deposit
- Net owned funds * should not be less than 10 lakhs.
- Net owned funds to deposits ratio should not be more than 1:20
*Net owned Funds = Paid up Equity share capital + Free reserves – Accumulated losses – Intangible Assets.
If criteria are satisfied
In such a case where the company fulfils the above conditions within the given time, the company will have to register for return in due of the legal assets as from NDH-1. The company will have to pay the required fee on the ROC site within three months from the end of the financial year.
If Criteria is not satisfied
In case the criteria are not met by the end of one year, the company will have to apply for the extension of the time period to the Regional Director in form NDH-2. The company is allotted an additional time period of 30 days within which it is expected to fulfil the above criteria.
If the company fails to fulfil the conditions even after the termination of the additional time period, then such a company is prohibited from accepting any more financial deposits until it satisfies the conditions. An extra penalty is also imposed in such cases.