A “Nidhi company” is a company that manages “deposits from and loans to”
members (shareholders) only, and works for their mutual benefits.
Accordingly, certain exemptions have been provided to a “Nidhi Company”, in respect of annual compliances and tax assessment.
Nidhi Companies in India are formed, administered, and controlled by Section 406 of the new, “Companies Act, 2013”, the Companies (Nidhi Companies) Rules of 2014, and the Chapter XXVI of the Companies Rules, 2014
The objective of incorporating a Nidhi Company is to encourage savings among its members. Nidhi
companies are allowed to take a “deposit from and lend to” it’s members only. At the end of the day,
the assets added to a Nidhi company come distinctly from its members and are to be utilized uniquely
by the investors of the Nidhi Company.
The name “Nidhi” in Nidhi Company signifies “treasure” and it has its roots in the Hindi vocabulary.
Nidhi Company is a specific class of NBFC. Though not directly regulated by the RBI, still RBI has powers to issue directives for them related to their deposit acceptance activities. Moreover, because these “Nidhi companies” deal with their members (shareholders) only, they have been exempted from the core provisions of the RBI Act and other directions applicable to NBFCs. Accordingly, a Nidhi Company is a perfect lawful element to take a “deposit from and loan to” a particular gathering of members.
Section 406 of the “Companies Act, 2013” and the Companies (Nidhi Companies) Rules of 2014, provide
all the arrangements concerning the joining and administration of a Nidhi Company in India.
The rules and directives for the Nidhi Companies are likewise given by the RBI. These are chiefly identified with financial activities and investments by companies including the NBFCs.
The interest charged on loans under a Nidhi Company is very sensible. The advances are given against security as it were. The deposits under Nidhi do not earn much interest as compared to deposits in the sorted out banking sector.
All lending and borrowing of the Nidhi Companies are done by its members, exclusively. Consequently, such organizations additionally allude to Mutual Benefit Societies.
In the event when you are hoping to begin a business in financing or advances in India, a Nidhi Company is the best choice for it.
The main objective behind building up a Nidhi Company is to urge its members to save so that they can easily meet their monetary requisites emerging from time to time. By being thrifty they become independent and would meet any future expense. And the advantage of getting a company enlisted as Nidhi doesn’t end here.
Though the process of enrolling a Nidhi Company is easy to handle. Still, help
from an expert is encouraged to finish different forms and to file them within time.
Furthermore, LegalRaasta is a specialist in Nidhi Company Incorporations, with more than 7 years of involvement in the field and effectively enlisting more than 500 Nidhi Companies. Our operations are spread all over India.
To begin with, the Directors of the Nidhi Company have to apply for DIN (Director’s
Identification Number) and DSC (Digital Signature Certificate).
DIN is given by the MCA and DSC is a digital signature used for an all e-filing process. This progression can be skipped for the Directors who have both DIN and DSC.
Presently, you have to pick and propose 3 distinct names to MCA for your Nidhi Company. Out of these 3 names, just one will be acknowledged for your Company by MCA. The proposed names must be special and not similar/identical to the names of previously enlisted organizations. According to Rule 8 of the Companies Act, The affirmed name will stay legitimate for 20 days.
These must specify the main motive of incorporating a Nidhi company. The “MoA and AoA” are to be filed with the ROC (Registrar of Companies) along with a subscription statement.
It takes between 15-25 days to frame a Nidhi company, and to get the incorporation certificate. This certificate proclaims that an organization has been made and it specifies the company identification number (CIN) too.
Lastly, you need to apply for both “PAN and TAN”. The PAN and TAN are usually received within 7 working days. Later, you have to get a bank account opened by submitting the “Certificate of Incorporation, MoA, AoA, and PAN” to the bank.
must follow the arrangements recommended under the Companies Act, 2013. Maintaining Book of Accounts, Return Filing, Audits, Board Meetings, and so on.
A Section 8 Company will not roll out any improvements to the arrangements of its MoA and AoA without looking for an endorsement from the Central Government first.
The voting rights of the investors of a Section 8 Company depend on the number of shares held by them. Like that of some other organization.
The Company needs to follow the arrangements of the Income Tax Act.
On the off chance that Section 8 Company goes under the domain of the GST Act, it must get registered with GST.
It may not change over itself to some other sort of organization structure without conforming to conditions, as material.
Given below are the essential conditions that must be met for registering or operating as a Nidhi Company.
Here we understand the regulations governing the loan and deposit under Nidhi Company.
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