Nidhi Company Registration Online in India

A Nidhi company is a special kind of Non-Banking Financial Company (NBFC). Its main job is to borrow and lend money, but only among its members. The core idea is "mutual benefit," meaning everything the company does is for its members' good.

These companies are set up under Section 406 of the Companies Act, 2013. The Ministry of Corporate Affairs (MCA) oversees them through the Nidhi Rules, 2014.

Is a Nidhi Company an NBFC?

Yes, a Nidhi Company is classified as a Non-Banking Financial Company (NBFC). However, it differs from traditional NBFCs in several ways.

Important Distinctions:

• No RBI Registration Required: Nidhi Companies are exempt from registering with the Reserve Bank of India (RBI).
• Limited Regulation by RBI: Since they only deal with their members, the RBI provides certain exemptions under the RBI Act, 1934. The RBI can issue directives, but does not oversee the company's daily operations.
• They cannot:
  • Issue preference shares, debentures, or any other debt instruments.
  • Conduct business such as chit funds, hire purchase, leasing, or insurance.

Who Regulates Nidhi Companies in India?

Nidhi Companies are not regulated by the RBI like other NBFCs. Instead, they are controlled by the MCA.

Key Regulations:

• Nidhi Companies must follow the Companies Act of 2013.
• They must also comply with the Nidhi Rules, 2014, and any changes made later.
• They are required to file annual returns and financial reports with the Registrar of Companies (RoC).

Areas Monitored by MCA:

• Compliance with minimum members requirement (e.g., 200 members within 1 year).
• Maintenance of Net Owned Funds (NOF).
• Limits on how much the company can deposit.
• Proper and safe lending practices.

Role of the RBI:

• The RBI does not directly manage Nidhi Companies.
• However, it can give directions if needed to protect the overall financial system.
• The RBI also monitors systemic risks, particularly when a Nidhi Company functions beyond its permitted scope.

Setting up a Nidhi company offers several advantages. It's a good choice for groups wanting to combine their money and offer financial aid to their members.

• Simple and Easy Formation: Compared to other financial entities, the process is straightforward with less stringent regulations, making it easier for community groups to start and operate.
• Limited Liability Protection: Since it's a company registered under the Companies Act, 2013, a Nidhi company protects its members' and directors' assets. This means their wealth is safe from the company's debts.
• Lower Capital Requirement: The initial capital needed is significantly less than for other NBFCs, making it more accessible for smaller groups.
• Easy Access to Funds for Members: Members can easily get loans with less paperwork and flexible terms. Loans are usually given against gold, property, or deposits, making the process smooth under the mutual benefit model.
• Encourages a Culture of Savings: By accepting deposits from members, Nidhi companies naturally promote saving and smart money habits within their community. This helps gather local savings for community projects.
• Perpetual Succession: A registered Nidhi company lasts forever. Its existence isn't affected if a member or director dies, goes bankrupt, or leaves. The company continues to operate as a legal entity.
• No Third-Party Intervention: Nidhi companies only deal with their members for deposits and loans. This means no outside parties are involved, building trust and openness within the member group and leading to stronger relationships.
• High Degree of Credibility: MCA registration gives Nidhi Companies legal recognition and boosts member confidence. However, since they aren’t regulated by the RBI (unless they exceed limits), they lack the same credibility as RBI-licensed NBFCs.

Before you start the Nidhi company registration procedure, it's important to know the key requirements.

• Legal Structure: A Nidhi company must be registered as a Public Company under the Companies Act, 2013.
• Minimum Members and Directors:

• • Minimum 7 Members: When you first set up the company, a Nidhi company must have at least 7 members.
  • Minimum 3 Directors: The company must have at least 3 directors. All directors must also be members of the company, which strengthens the mutual benefit rule.

• Minimum Capital Requirement: The minimum paid-up capital is Rs. 5 lakhs at incorporation, which must be raised to Rs. 10 lakhs within 1 year as per Rule 5(1) of the Nidhi Rules, 2014.

Note: This is separate from the Net Owned Funds (NOF) requirement of ₹20 lakh, which must also be met within the first year.

• Company Name: The name of a Nidhi company must always end with "Nidhi Limited." For example, "ABC Nidhi Limited."
• Share Capital Structure: The company should issue equity shares, each with a face value of at least Rs. 10. This helps ensure many members can participate.
• Membership Eligibility: Only individuals can be members of a Nidhi company. Companies or trusts cannot be members, which keeps the focus on individual savings and loans.
• Registered Office: The company must have an official registered office in India. This will be the address for all official communications and government filings.

Preparing the following documents in advance will speed up the Nidhi company registration process. It's important to make sure each document is current and properly attested.

Documents for Directors and Members

To confirm who the people involved are and where they live, specific documents are needed.

• PAN Card: A self-attested copy of the Permanent Account Number (PAN) card for all directors and members.
• Identity Proof: A self-attested copy of Aadhar Card/Voter ID/Driving License/Passport for all directors and members.
• Address Proof: A self-attested copy of the latest bank statement or utility bill (like electricity, telephone, or gas bill) that is not older than 2 months for all directors and members.
• Passport Size Photographs: Recent passport-size photos of all directors and members for identification.
• Digital Signature Certificate (DSC): Required for all proposed directors to file forms electronically on the MCA portal.

Documents for the Registered Office

The registered office address is very important for all official communications and rules.

• Proof of Registered Office Address: The latest utility bill (electricity, telephone, or gas bill) not older than 2 months, in the company's name or the property owner's name.
• No Objection Certificate (NOC): If the premises are rented or leased, you need a No Objection Certificate from the landlord or owner.
• Rent Agreement/Lease Deed: If the premises are rented, a copy of the rent agreement or lease deed must be given as proof that you occupy the space.

Other Essential Incorporation Documents

Besides personal and office documents, certain legal forms and statements are also required.

• Declaration from Directors: A statement from the directors confirming they are not disqualified from being directors under the Companies Act, 2013.
• Consent to Act as Director: Each director needs to provide a DIR-2 form, showing they agree to be a director of the company.

The Nidhi company registration online process involves several steps. Most of these steps are done through the MCA portal. Following these steps carefully helps ensure a smooth setup.

Step 1: Obtain a DSC and DIN

The first step involves getting the necessary digital IDs for the people who will run the company.

• Digital Signature Certificate (DSC): All proposed directors need to get a Class 3 DSC. This certificate is legally required for signing and filing documents electronically with the MCA. It ensures the documents are authentic and secure.
• Director Identification Number (DIN): Each director also needs a DIN. This unique ID number is given by the MCA to people who want to be company directors. You can apply for it along with the company incorporation application.

Step 2: Reserve the Company Name (SPICe+ Part A)

Reserving a suitable name is a critical first step.

• First, you apply to check if your chosen Nidhi company name is available. You do this using the SPICe+ Part A form on the MCA portal, which is specifically for name reservations.
• You need to suggest at least two names, making sure they end with "Nidhi Limited." The name should be unique and not too similar to existing company names or trademarks to avoid rejection.

Step 3: Draft the MoA and AoA

These two documents are the foundation of your company. They explain its purpose and how it will be managed.

Memorandum of Association (MoA):

• The MoA document shows the main goals of the company and explains what the Nidhi Company can and cannot do.
• It also states the business purpose, which is to accept deposits from and lend money to its members.
• The MoA must state that deposits and loans are limited to members, as per the Nidhi Rules.

Articles of Association (AoA):

• The AoA lays out the internal rules for running the company, and it includes the roles and responsibilities of directors and members.
• It also explains how meetings, voting, and other operations will be handled.

Both documents must follow the Nidhi Rules, 2014, to make sure the company complies with the law.

Step 4: File the Main Incorporation Form (SPICe+ Part B)

After the company name is approved and the key documents are ready, the next step is to file SPICe+ Part B.

This is the main form used to register the company. It must be submitted along with the e-MoA (electronic Memorandum of Association) and e-AoA (electronic Articles of Association).

SPICe+ Part B is a combined application that includes:

• DIN (Director Identification Number)
• PAN (Permanent Account Number) for the company
• TAN (Tax Deduction and Collection Account Number)
• EPFO Registration
• ESIC Registration
• GST Registration (if required)

This combined process saves time and simplifies the overall setup. All the documents required (refer to the section below) for registration of a Nidhi Company are also attached to this form. This ensures that everything needed for approval is submitted in one place.

Step 5: Receive the Certificate of Incorporation (COI)

The final step is receiving official legal recognition for your company.

• After all submitted documents and forms are successfully checked, the Registrar of Companies (RoC) will issue the Certificate of Incorporation (COI).
• The COI proves your Nidhi company legally exists and includes your Corporate Identification Number (CIN), which is a unique ID for the company.

The cost of Nidhi company registration can change based on several things, including government fees, stamp duty, and professional fees. It's wise to consider all these parts when planning your budget.

Government Fees (MCA Fees)

These are the official fees paid to the Ministry of Corporate Affairs (MCA) for filing the company registration forms. The amount depends on the authorized capital of your Nidhi Company.

• For an authorized capital of Rs. 5 lakh (which is the minimum required):
  • The MCA filing fees are usually between Rs. 4,000 and Rs. 6,000.

These charges are fixed by the government and cannot be changed.

Stamp Duty

Stamp duty is a tax from the state government applied to legal documents, including the MoA and AoA. The amount varies a lot from one state to another, making it a key part of the total cost.

Stamp duty is a major variable cost in the overall Nidhi company registration charges. The rates are different in each Indian state. Here are the details:

Note: The numbers above are estimates and can change. It's best to talk to a professional for exact figures based on your specific situation and state.

Other and Professional Fees

These include charges for:

• Digital Signature Certificate (DSC): Rs. 1,000 – Rs. 1,500 per director
• Consultant or legal professional fees: Rs. 5,000 – Rs. 15,000
• Miscellaneous costs: Rs. 500 – Rs. 1,000

Fees can vary depending on:

• The experience of your Nidhi Company registration consultant.
• The complexity of your documents and service package.

After your Nidhi company registration is complete, there are ongoing rules you must follow to ensure the company runs legally and efficiently. Following these rules is key to the company's long-term success.

First-Year Compliance Requirements

Within one year of incorporation, a Nidhi Company must achieve the following:

• Minimum 200 Members
• Net Owned Funds (NOF): As per Rule 3(1)(d) of the Nidhi Rules, 2014, the company must have NOF of at least ₹20 lakh (Paid-up equity share capital + Free Reserves – Accumulated Losses – Intangible Assets) to ensure a strong financial base.
• NOF to Deposit Ratio: You must keep a ratio of Net Owned Funds to deposits of no more than 1:20. This means for every Rs. 1 of NOF, the company can take up to Rs. 20 in deposits, which helps control its lending amount.
• Unencumbered Term Deposits: You must keep unencumbered term deposits equal to at least 10% of the outstanding deposits as per the Nidhi Rules. These deposits should be kept in a scheduled commercial bank or post office in the company’s name. This acts as a reserve to maintain enough liquid funds.

Filing NDH-1 Form

Filing Form NDH-1 on time is very important to prove your company met the initial rules as per Rule 5(2).

• Every Nidhi Company must file this form within 90 days after the end of its first financial year or from the date it became a Nidhi Company.
• NDH-1 provides details about:
  • Members
  • Net Owned Funds (NOF)
  • Unsecured deposits
• It confirms the company has followed the initial requirements.

Filing NDH-2 Form

NDH-2 is a request for more time to meet these rules. If the company does not meet initial requirements, it must take extra steps.

• If the company fails to have 200 members or Rs. 20 lakh NOF within one year, it must file Form NDH-2.
• This form is submitted to the Regional Director within 30 days after the end of the first financial year.

Filing NDH-3 Form

The NDH-3 form shows the company’s financial health and rule compliance.

• Every Nidhi Company must file Form NDH-3 twice a year.
• This half-yearly report is submitted within 30 days from the end of each half-year.
• You need to file NDH-3 twice a year, once for the period ending March 31 and again for the period ending September 30. Make sure it’s digitally signed before submission.

Filing Form NDH-4

This form is key to getting official recognition as a Nidhi Company.

• Once the company meets the criteria of 200 members and Rs. 20 lakh NOF, it must file Form NDH-4 with the Central Government.
• Filing NDH-4 officially declares the company as a Nidhi under the Nidhi (Amendment) Rules, 2022.
• As per the Nidhi (Amendment) Rules, 2022, NDH-4 must be filed within 120 days of incorporation to apply for official recognition as a Nidhi Company.

Regular Statutory Filings

Besides Nidhi-specific forms, general company rules are also mandatory. Like all companies set up under the Companies Act, 2013, Nidhi companies also need to follow regular legal filings, including:

• Annual Return (Form MGT-7/7A): This must be filed with the MCA within 60 days from the date of the Annual General Meeting. It includes details about the company’s shareholders, directors, and overall management structure.
• Financial Statements (Form AOC-4): Filed every year with the MCA, including the balance sheet, profit and loss account, and the auditor's report. It must be filed within 30 days from the date of the AGM.
• Board Meetings: You must hold at least four Board meetings in a calendar year, with no more than 120 days between any two meetings, to ensure active leadership.
• General Meetings: An Annual General Meeting (AGM) must be held once every calendar year, within six months of the financial year's end, to present financial results to members.

Nidhi companies follow specific rules and limits to ensure they stick to their goal of mutual benefit and don't get involved in unauthorized financial activities. These restrictions protect their members and keep the Nidhi model honest.

What a Nidhi Company Can Do?

Nidhi companies have clear boundaries that help them serve their members effectively.

• Accept Deposits: A Nidhi company can accept deposits from its members. These can be savings deposits, recurring deposits, or fixed deposits, offering members flexible ways to save.
• Provide Secured Loans: They can give secured loans to their members. These loans are backed by things like gold, silver, property, or fixed deposit receipts held with the company. The loan amounts and terms must follow the limits in the Nidhi Rules, ensuring smart lending.
• Offer Locker Facilities: Nidhi companies are allowed to offer locker facilities to their members. This comes with specific conditions and limits on how many lockers they can provide, adding another benefit for members.

What a Nidhi Company Cannot Do?

To prevent misuse and keep their special status, Nidhi companies are not allowed to do certain things.

• Cannot carry on businesses like chit funds, hire purchase finance, leasing finance, insurance, or buying shares from any other company. This makes them different from other financial institutions.
• Cannot issue preference shares, debentures, or any other debt instruments. They raise funds mainly through member deposits and can issue only equity shares with a face value.
• Cannot open current accounts for its members. Only savings, recurring, and fixed deposits are allowed.
• Cannot buy another company by purchasing shares or control of who is on the Board of Directors of any other company. This stops them from moving into unrelated businesses.
• Cannot do any business other than borrowing and lending money in its name. This strict focus maintains their mutual benefit goal.
• Cannot use any assets given by its members as security for other purposes.
• Cannot enter into any partnership for its borrowing or lending activities. All operations must be done directly by the Nidhi company itself.
• Nidhi Companies are not allowed to advertise for deposits and can accept deposits only from their existing members. However, as per Rule 7, they can display a simple notice board at their office with details like interest rates and terms.
• Cannot pay any commission or bonus for getting deposits from members, for using funds, or for giving loans. This prevents aggressive selling and ensures deposits come purely from members' savings.

The Nidhi (Amendment) Rules, 2022, brought big changes to how Nidhi companies are regulated. These changes mainly aim to make governance stronger and protect members' interests. These updates show the government's commitment to stricter regulation in this sector.

• Mandatory Declaration as Nidhi Company: Companies now set up as Nidhi companies (meaning their name ends with "Nidhi Limited") must apply to be declared a Nidhi company using Form NDH-4 within 120 days of being set up. Before, this was only for existing companies wanting the Nidhi title. This ensures compliance is checked early on.
• Enhanced Eligibility Criteria for Declaration: For a company to be officially declared a Nidhi company, it must meet stricter financial and membership rules:

• Minimum 200 members.
• Net Owned Funds of Rs. 20 lakhs (this was increased from Rs. 10 lakhs).

• Increased Paid-up Share Capital: The minimum paid-up share capital needed when setting up the company was increased to Rs. 5 lakhs. This ensures the company has a stronger financial base from the start.
• Director Eligibility: Only individuals who are members can be directors. This strengthens the "mutual benefit" rule by keeping the company's leadership within its member community.
• Restriction on Branch Opening: Nidhi companies can only open new branches after getting approval from the Regional Director, and only after filing Form NDH-4. This allows for closer monitoring of their expansion.
• Increased Deposit Limits: The rules updated the limits on how much a Nidhi company can accept in deposits from its members, based on its Net Owned Funds. These new limits aim to balance growth with careful risk management.
• More Stringent Compliance: The changes introduced tougher rules and penalties for not following them. This highlights the need for timely and correct filings, improving accountability and openness in the Nidhi sector.

These amendments aim to make sure that only truly compliant and financially sound businesses operate as Nidhi companies, protecting their members' interests and preventing potential abuses.

Once your Nidhi Company is registered with the Ministry of Corporate Affairs (MCA), you will get a Certificate of Incorporation (COI). This official paper proves your company is legally formed under the Companies Act, 2013, and follows the Nidhi Rules, 2014.

The COI shows important details like:

• Your company’s legal name
• Corporate Identification Number (CIN)
• Date of incorporation
• Registered office address

You need this:

• To open a company bank account
• To apply for PAN, TAN, and GST registrations
• To enter into legal agreements
• To get licenses and government approvals
• To build trust with members and authorities

This certificate is proof that your company exists legally and can operate as a Nidhi Company.

How to Download Your Nidhi Company Registration Certificate?

Follow these steps to download the Nidhi Company Registration Certificate:

1. Visit the MCA website at mca.gov.in.
2. Log in with your Business User ID and password.
3. Go to MCA Services and select “Get Certified Copies” or “View Public Documents.”
4. Search your company using the CIN or name.
5. Pay the small fee, if required.
6. Download your Certificate of Incorporation in PDF format.
7. Save and print the certificate for your records.

This certificate is important for audits, legal filings, and official approvals. Keep it safe and easy to access for smooth business operations.