In India, a Nidhi Company is a type of non-banking financial company (NBFC) that primarily operates for the mutual benefit of its members by promoting the habit of thrift and savings. The business model of a Nidhi Company revolves around accepting deposits and providing loans to its members. If you’re interested in establishing a Nidhi Company, it’s important to understand the registration process, the associated fees, and the documentation required for the registration.
This article will provide a comprehensive overview of the Nidhi Company registration process, fees, and the necessary documents for a smooth and compliant registration.
What is a Nidhi Company?
A Nidhi Company is a member-based financial institution that offers various financial services such as loans and deposits to its members. It works on the principle of mutual benefit — encouraging its members to save money and provide loans within the community.
Nidhi Companies are regulated by the Ministry of Corporate Affairs (MCA) under the Companies Act, 2013 and are governed by the Nidhi Rules, 2014. The primary objectives of a Nidhi Company include:
- Promoting thrift: Encouraging members to save money.
- Providing financial assistance: Offering loans at lower interest rates to members.
- Creating a community-based financial institution: Exclusively catering to the financial needs of its members.
Let’s now move on to the details of how you can register a Nidhi Company.
Nidhi Company Registration Process
Step 1: Choose the Company Name
The first step in registering a Nidhi Company is to choose a unique name for your business. The name should:
- Be unique and not resemble the name of an already registered company or trademark.
- Include the word “Nidhi” in the name.
- Not be offensive or misleading.
Once you have finalized the name, you need to check its availability using the MCA’s Name Approval System. If the name is available, it can be reserved through the MCA portal.
Step 2: Obtain Digital Signature Certificate (DSC)
Since the registration process for a Nidhi Company is conducted online, you must obtain a Digital Signature Certificate (DSC) for all proposed directors. The DSC is required to sign the electronic documents and forms that are submitted during the registration process.
To obtain a DSC, you can approach a government-approved certifying agency and submit necessary documents for verification.
Step 3: Apply for Director Identification Number (DIN)
A Director Identification Number (DIN) is a unique identification number issued to individuals who wish to become directors of a company. You need to apply for a DIN for each of the proposed directors.
To apply for a DIN, you need to fill out Form DIR-3 on the MCA portal. You will be required to submit documents such as proof of identity (Aadhar card, passport, or voter ID) and proof of address.
Step 4: Draft the Memorandum of Association (MOA) and Articles of Association (AOA)
The Memorandum of Association (MOA) and Articles of Association (AOA) are crucial documents for the incorporation of a Nidhi Company. These documents lay out the structure, purpose, and internal regulations of the company.
- MOA: This document defines the objectives of the company, and it must state that the company is being established to promote savings and provide financial services to its members.
- AOA: This document specifies the internal rules and regulations that govern the operations of the company, such as the rights and duties of shareholders and directors, meeting procedures, etc.
Both of these documents must be signed by the company’s directors and shareholders.
Step 5: Filing the SPICe+ Form
Once all the documents are ready, you need to file the SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) form with the MCA. The SPICe+ form is an integrated form that helps in incorporating the company, allotting the DINs to the directors, and obtaining the PAN (Permanent Account Number) and TAN (Tax Deduction and Collection Account Number) for the company.
Documents that need to be uploaded with the SPICe+ form include:
- Identity and address proof of directors,
- Signed MOA and AOA,
- Registered office proof (such as a utility bill or lease agreement),
- Photographs of directors.
Step 6: Payment of Fees
Once you submit the SPICe+ form along with the required documents, the ROC (Registrar of Companies) will verify the details. If everything is in order, the ROC will issue the Certificate of Incorporation.
The registration fees are paid during this stage and vary depending on the authorized capital of the company. The ROC will verify all documents and issue the incorporation certificate.
Step 7: Apply for PAN and TAN
After incorporation, you must apply for the PAN and TAN of the Nidhi Company. PAN is needed for tax filings, while TAN is required for TDS (Tax Deducted at Source) compliance. Both can be applied for online through the NSDL website.
Step 8: Open a Bank Account
With the Certificate of Incorporation, PAN, and TAN, you can now open a corporate bank account in the name of your Nidhi Company. This bank account is essential for the financial transactions of the company, including accepting deposits and disbursing loans to members.
Step 9: Comply with Post-Incorporation Requirements
After your Nidhi Company is incorporated, you need to hold your first board meeting to pass important resolutions such as the appointment of key officials, adoption of the company’s policies, etc. You also need to issue share certificates to the shareholders and file the necessary forms with the ROC.
You must also comply with the provisions of the Nidhi Rules, 2014, which include maintaining a minimum number of members (200), ensuring a minimum net-owned fund of ₹10 lakh, and maintaining proper accounting records.
Fees for Nidhi Company Registration
The fees for Nidhi Company registration depend on several factors, including the authorized capital of the company. Generally, the registration cost includes:
- Name Approval Fees: ₹1,000 (Non-refundable).
- SPICe+ Form Filing Fees: The fees for filing the SPICe+ form depend on the authorized capital:
- For authorized capital up to ₹1 lakh: ₹500.
- For authorized capital exceeding ₹1 lakh: ₹1,000 plus additional charges.
- Digital Signature Certificate (DSC): ₹1,500 to ₹3,000 (varies based on the certifying authority).
- Director Identification Number (DIN): ₹500 per DIN.
- PAN and TAN Application Fees: ₹107 per application (excluding GST).
Thus, the total registration cost for a Nidhi Company can vary, but it typically ranges from ₹5,000 to ₹10,000 or more, depending on the services availed.
Documents Required for Nidhi Company Registration
Here’s a list of the documents you need to provide during the Nidhi Company registration process:
For Directors:
- Identity Proof: Aadhar card, passport, voter ID, or driving license.
- Address Proof: Utility bill, bank statement, or property tax receipt.
- Photographs: Passport-sized photos of all directors.
- DIN Application: If the directors don’t already have DIN.
For the Company:
- Memorandum of Association (MOA): Stating the objectives and purpose of the company.
- Articles of Association (AOA): Defining the internal rules and regulations of the company.
- Registered Office Proof: Lease agreement or utility bill of the registered office address.
- Bank Account Details: Proof of the company’s bank account, which can be opened after receiving the Certificate of Incorporation.
Conclusion
Registering a Nidhi Company in India involves a clear and well-defined process that includes selecting a name, obtaining necessary documents, submitting applications, and complying with legal requirements. By following the correct procedure and submitting the right documents, you can successfully incorporate a Nidhi Company that serves the financial needs of its members.
The fees involved in Nidhi Company registration are reasonable and depend on the company’s capital structure. If you’re interested in setting up a Nidhi Company, it is crucial to ensure compliance with all the regulatory requirements and seek professional guidance to make the process smooth.
By registering a Nidhi Company, you can create a community-driven financial institution that offers essential services such as savings and loans to its members, while benefiting from the legal protections and operational advantages offered by this business model.
