What points to keep in mind while registering a Nidhi Company?

If you want to register your firm as a Nidhi Company in India, then you must know all the important point for the Nidhi Company Registration. The registration process of Nidhi Company is less complex as compared to the NBFCs (Non-Banking Financial Company), and Nidhi Company don't need any license from RBI (Reserve Bank of India), and you can register a Nidhi Company as a public company, but you must include "Nidhi Limited" at the last word of the company's name. In this blog, we discuss the important checklist for the Nidhi Company Registration.

Following are some benefits of Nidhi Company Registration that you can avail after completing the registration process:

1. Limited RBI regulatory compliance.
2. Less risk proposition.
3. Limited Capital requirement.
4. The registration process of Nidhi Company is very easy without any complexities because the process requires less documentation from the beginning to end of the registration.
5. The operations of a Nidhi Company every retirement of any member, death insolvency, etc.

Following are the minimum requirements requires to complete the process of Nidhi Company Registration:

• Nidhi Company requires a minimum of 3 Directors and 7 members at the time of registration.
• The minimum capital required for the incorporation of a Nidhi Company is INR 5 lakh.
• The Nidhi Companies are not entitled to issue preference shares.
• The main objective of the Nidhi Company must be to encourage the saving habit by receiving deposits and lending to the members of the company. The directors of the company must obtain Directors identification Number (DIN).

Following are some conditions for providing loan to its members only:

• If the deposit is Rs. 2 crores, then the loan amount is Rs. 2 lakhs.
• Loan amount of Rs. 7.5 lakhs– if the deposit is more than Rs. 2 crores but less than Rs. 20 crores.
• Loan amount of Rs. 12 lakhs – if the deposit is more than Rs. 20 crores but less than 50 crores.
• Loan amount of Rs. 15 lakhs – if the deposit is more than 50 crores.

Following are some important documents required at the time of Nidhi Company Registration in India:

• Submit a certified copy of a PAN card of the company's director.
• Submit the latest passport size photographs of all the designated directors and shareholders of the company.
• Submit the identity proof of all the director and shareholders of the company such as Voter's Id, Aadhar Card, Driving License, etc.
• Address proof of the company’s registered office by submitting utility bills such as electricity bill, telephone bill, etc.
• Directors and shareholders of the company have to submit their address proof such as electricity bill or water bill or telephone bill and remember the utility bills must be not older than two months.
• If the company's registered office address is on a rented premise, then the rental agreement must be submitted along with a No Objection Certificate from the owner of the premises.
• Submit a certified copy of property papers.
• Digital Signature Certificate (DSC) and Director Identification Number (DIN) of the directors.
• Memorandum of Association (MOA) and Articles of Association (AOA) of the company.

A Company is restricted from undertaking any of the following activities in India:

1. To attempt the matter of chit funds, hire purchase, acquisition of insurance or securities, renting money, etc.
2. To issue preference shares and debentures.
3. Opening the current account with its member.
4. In Nidhi Company, it is restricted to accept deposit or loan cash to any individual other than its members.
5. To issue any advertisements.
6. Charges rates of interest more than 7.5% respectively.
7. It is restricted to enter into a partnership of borrowing money and securities.
8. It is also restricted to enter into any agreement or pay brokerage to implore any deposits.
9. Not declare dividend more than 25%.
10. Any lotteries.
11. Insurance.
12. Accepting and lending of deposits from corporate.

Following are some conditions that every Nidhi Company must obey before permitting loans:

1. The deposits accepted by the Nidhi Company should not exceed 20% of its Net Owned Funds (NOFs).
2. Rate of interest on deposit should not surpass 2% above the rate offered by the National Bank.
3. Nidhi Company cannot repay any deposits within three months of the period from the date of its acceptance.
4. The fixed deposits are accepted for a minimum of twelve months of period and a maximum sixty months of period.

Following are some essential compliances you should know before Nidhi Company Registration:

1. NDH 1: In this form, a Nidhi Company has to submit a list of its members before 90 days at the closure of the financial year.
2. NDH 2: If the company is unable to add 200 members in its financial year, then the company can make a request to MCA for the extension.
3. NDH 3: In this form, a company is also supposed to file a half-yearly return.
4. Income Tax Returns: In a financial year by September 30, a Nidhi Company File an Income Tax Returns (ITR) yearly.
5. Annual Returns with ROC: A Nidhi Company must file an annual return with the MCA (Ministry of Corporate Affairs) through the MGT-7 Form.
6. Profit, Loss, and Balance Sheet: In AOC-4 Form, a Nidhi Company must submit financial statements and other related documents.

Following are some conditions that you have to follow after completing the process of Nidhi Company Registration:

• At the end of the first financial year, a Nidhi Company must have at least 200 members.
• New owned funds must be INR 10 lakh or more.
• The ratio of Net Owned Funds (NOFs) to deposits must not exceed the 1:20 ratio.
• Unencumbered term deposits should be more than 10% of outstanding deposits.
• A Nidhi Company cannot make a minor member of the company.

It is clear from above that you must know all the essential things before Nidhi Company Registration in India. The process of a Nidhi registration is easy as compared to other NBFCs. Regarding annual compliances and taxation, Nidhi companies enjoy a lot of benefits in terms of specific exemptions. You can hire an expert who helps you in completing the registration process without wasting more time.