Procedure of Registration & Operation of Nidhi Companies
Registration & operation of NFFC (non-banking financial business ) Companies is a tedious task and so often person who want to do financing business don’t prefer to form and operate NBFC. An alternative could be in the form of Nidhi Company. Let us know about the procedure for formation of the Nidhi Company.
First of all, Nidhi Company is a also non-banking financial business but with little more relaxations. Nidhi Company also performs lending and borrowing of money job with its members & do all the related activities. It is carried out with the primary objects of mutual benefits of all the members of the Nidhi company and thereby resulting in promoting saving and utilization of its funds amongst members. It may be noted here that Nidhi Companies are governed by the provisions of Section 406 of the Companies Act, 2013 and rules issued by the Ministry of Corporative Affairs.
How Nidhi Company Works:
As discussed earlier, it is solely formed to create a habit of saving and benefits for each and every members of the Nidhi Company. Funds are induced by the members in the form of contribution & after aggregating all the contribution, amount is advanced to the members in need at a reasonable rate of interest. Ministry of Corporate affairs notified Nidhi Rules, 2014, in order to carry out the purposes of Nidhi Companies. It provides that it is applicable to every Company which is being declared as Nidhi company under the Companies Act i.e., companies working for the mutual benefit of society.
Here is a Procedure of Registration of Nidhi Company
How to obtain eh Registration for Nidhi Company:
As already discussed, the process is comparatively easy as compared to normal NBFC. Here is a step wise procedure for forming Nidhi Company.
- For registration of a Nidhi Company, there must be a minimum of 3 Directors & minimum of 7 Members. Unlike other normal NBFC, there is no Minimum Capital Requirement & Nidhi Company is not allowed to issue Preference Shares.
- Objects have to be limited to receiving of funds only from its members and lending to its members for mutual benefits.
- One has to keep ready the Digital Signature Certificate (DSC) of proposed Directors for company registration.
- One has to Apply for Name Reservation using ‘RUN’ facility. The use of the word Nidhi Limited must be there at the end of the name of the proposed Company.
- Now, one would be File Form SPICe 32 with the ministry along with the following attachments:
a) MOA & AOA.
b) PAN Card of all subscribers;
c) Identity Proof & Address Proof of First Directors;
d) Address Proof of Registered premises
e) Latest Utility Bill
f) NOC of Owner of Registered Office, if premises is rented
g) Consent and Declaration of first Directors
h) Self-Declaration from First Directors and Subscribers in Nidhi Company.
After completing with the submission of documents/ information and complying with deficiencies pointed by the authorities, Registrar of Company issues a Certificate of Incorporation.
[CA Sharad Thawali @ 90676-63473 @ cassrpn@gmail.com]
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