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INCORPORATION PROCEDURE OF NIDHI COMPANY


Overview of Nidhi Company Registration

Nidhi Company belongs to a type of company in the non-banking financial sector as recognized under Section 406 of the Companies Act, 2013. Its main business is borrowing and lending between its members. They are also considered mutual funds, mutual funds, mutual funds and mutual benefit fund companies. The Ministry of Corporate Affairs administers these entities in India and reserves the right to issue instructions regarding depository activities. The main objective of these institutions is to encourage the habit of thrift and thrift among their serving members. The concept of Nidhi company is very popular in the south region of India.


Benefits of Incorporating Nidhi Companies in India

  • Simple Formation

The formation of a Nidhi society is done by a very simple process. There are certain requirements for incorporation of a Nidhi company such as: B. At least seven members, three of whom are appointed as directors, and a simple and hassle-free documentation process.

  • Non-Compliance of Reserve Bank of India

Nidhi Company shall not comply with any directive of the Reserve Bank of India. So Nidhi Company is free to publish its own rules.

  • Less Risk

Lending, borrowing or escrow transactions are done by members only, which reduces the risk of financial problems in Nidhi's company.

  • Economic registration

Registration of Nidhi corporation does not burden the director's pocket, because it is very simple compared to the registration process in other BFFC, so it does not affect the director's finances. It also helps Nidhi company to get business loans anytime for company development.

  • Safe Savings

The concept and objective of Nidhi society is to encourage savings among Indians.

  • Net Equity Financing System

Nidhi Company follows a net equity financing system viz. X) a transaction in which funds are deposited with the company to obtain funds for it. This feature makes Nidhi business more efficient for the owners and helps the business grow.


Documents for Nidhi Company registration

  • Directors Identification Number, i.e. DIN. What is DIN ? DIN is a unique Identification Number allotted to an individual who is appointed as a director of a company.

  • PAN number of the proposed directors and members

  • Residential proof and address proof of the proposed directors and members

  • Photographs of the proposed directors and members

  • Identification Documents like Aadhar card

  • Registered business place proof such as lease or rent agreement

  • Ownership proof of the business place in case the premises are owned

  • NOC if required

  • MOA i.e., Memorandum of Association

  • AOA, i.e., Article of Association


Benefits of Nidhi Company

  • It is easy for Nidhi's company to finance or borrow capital from or lend to group members.

  • Minimum Capital Requirements

  • Easy Management

  • No External Participation in Management

  • Ease of Compliance

  • Easy Transfer of Ownership

  • Low Interest Rates

  • Secured Investments

  • Clear Targets for Gifts and Easy Loans.

  • Exemptions and Privileges under Companies Act, 2013

  • Least intervention of R.B.I


Procedure for Nidhi Company Registration


1. For Incorporation of Nidhi company you will have to go to the website of the Minister of Corporate affairs.

And have to create an account to log in.

2. Once you login to the website, next you will have to click on MCA services and click on Spice+.

3. After this go for a new application and you will get your Spice+ form on the window.





4. Above picture is of Spice+ form. Fill the details in your form as shown in the picture. In main division section type "65" only otherwise your company will get rejected. Next you will have to enter two names for your company . Name should end with "Nidhi Limited".

5. Once you complete the above procedure, click on auto check. You will get a confirmation alert after the approval, with two options one is incorporated now and other is reserve now. If you want to reserve the name for future and don't want to incorporate, then go for the second option otherwise select the first one.

6. With all the due procedure part A of Spice form is completed. Next is Part B of the Spice form.



7. Now in the above picture you can see the Part B of the spice form.

8. In the first point of the form select no , as there won't be any changes in the article of association.




9. Next section is the capital structure of the company. Under Nidhi, the company is required to raise 10 lakh capital in one year. Now Nidhi company can be incorporated for a minimum 5 lakh but after a year you will have to fill the company again to complete the one year compliance, so it's better to start your company with 10 lakh capital.

What is authorized share capital? The authorized capital of a company is the maximum amount of share capital that the company is authorized to issue to shareholders under the articles of association. A part of the authorized capital may remain unused. The authorized capital can be changed with the consent of the shareholders.

What is subscribed share capital? Subscribed share capital refers to all capital raised by subscribed shares. Simply put, this is the value of all the shares that investors want to buy in the new issue. Subscribed shares are a certain number of shares that investors promise to buy during an offering, usually through an IPO.


Fill in the details as shown in the picture. After this click on save and continue.

10. After this you will have to enter the details of your company address .




11. As you can see in the picture above , it's related to the subscribers and directors information and their DIN's. What is DIN?

(Minimum of members is required to start a company, and three of them must be directors of the Company). Once you are done with filling the details , click on save and continue.

12. Next you will have to enter the personal details of all the members and directors of the Company.



13. Next section is of PAN and TAN information.

14. For searching Area code you of PAN click on https://tin.tin.nsdl.com/pan/servlet/AOSearch

15. For searching Area code you of TAN click on https://tin.tin.nsdl.com/pan/servlet/AOSearch

16. Now select your source of income and the code of your business by Clicking on this https://www.registerkaro.in/main-division-of-industrial-activity-code . After all this click on save and continue.





17. The next part of the form is attachment of documents related to your company. All the documents should be in pdf form.

18. Next is the declaration, firstly you will have to enter any of your director details, second you will have to enter the CA details. After this you will see the declaration and certification by a professional, here you will have to mention the head office details of the CA. After filing all the details click on prescrutiny. Once done select submit.

Your part B of the Spice+ form is submitted.

19. Next is Agile pro form.

20. Agile pro form is for registration of the Goods and Services Tax Identification Number (GSTIN), Employees' State Insurance Corporation (ESIC) registration and Employees Provident Fund Organization

(EPFO) registration.





21. The image shows how agile pro form looks . Here the name of the company automatically appears . If you want to apply for GSTIN no. Click on yes otherwise select no ( if you will select no, it's better as all these procedures can be done after company incorporates).




22. In the next part fill in the details same as shown in the picture.




23. Now fill in the director's details.

24. Once you follow the steps as mentioned above , agile pro form also gets submitted.

25. After this you will have to download all the above filled forms.

26. You will have to put the DSC of all the directors on those downloaded files.

What is DSC ? Digital Signature Certificates (DSC) are the digital (i.e. electronic format) equivalent of physical or paper certificates.

27. Next Go to home on the MCA website. Click on MCA services and select upload e-forms .




28. Now next click on normal forms and then click on linked forms. Browse and upload all the files. After this your SRN number Will be generated. What is the SRN number ?very application submitted on the MCA portal is identified by a unique number known as Service Request Number (SRN). It is a string of nine alphanumeric numbers that starts with the alphabet (A-Z) and is printed on the top left side of the receipt or challan.

29. After this pay the stamp duty, and in 3-4 days your company will get registered.



Restrictions on Nidhi Company

Nidhi companies are not allowed to engage in the following business activities:

  • Trading in Chit funds, financing rentals, financing hire purchase and repurchase of securities issued by any legal entity.

  • Issuance of preferred shares, bonds or debt securities in any name or form

  • Opening a checking account with its active members

  • Acquiring another entity by purchasing securities or controlling the CA composition of any other company in any way.

  • Entering into a legal agreement to change its management in the absence of a special resolution passed by the board and the consent of the regional director operating in the respective jurisdiction .

  • Carrying out activities that deviate from the company's purpose.

  • Receiving or lending deposits to non-members.

  • Guarantee to secure a member's assets

  • Take deposits or finance anyone from a company

  • Enter into partnership agreements to borrow or lend

  • Exploit any form of publicity to collect deposit withdrawal

  • Incentive payment or deposit mobilisation from members deploying funds or issuing loans.

  • In the new rules, it has been stipulated that the Nidhi society will not borrow from banks or financial institutions or any other source to advance the loans of its members.

  • Another restriction is placed on acquiring or purchasing securities or controlling the composition of the board of directors of any other company, or entering into an agreement to change that company's board of directors.


Following all the necessary steps as mentioned above, you can register your Section 8 company registration. For further query you contact me on my email address joel@registerkaro.in




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