A Nidhi Company is a type of Non-Banking Financial Company (NBFC) in India, recognized under Section 406 of the Companies Act, 2013. It's essentially a mutual benefit society that encourages thrift and savings among its members. Here's a breakdown of the key aspects of Nidhi Company registration:

Key Requirements for Nidhi Company Registration

• Minimum Members: At least 7 members are required to start a Nidhi Company.
• Minimum Capital: The minimum paid-up equity share capital must be Rs. 5 lakh.
• Company Name: The name must include "Nidhi Limited" as part of the official name.
• Objectives: The primary objective must be to cultivate the habit of thrift and savings among its members, receiving deposits from, and lending to, only its members for their mutual benefit.
• Membership: Only individuals can be members of a Nidhi Company.
• Compliance: Nidhi Companies are regulated by the Ministry of Corporate Affairs (MCA) and must comply with the Nidhi Rules, 2014.

Steps for Nidhi Company Registration

1. Obtain Digital Signature Certificate (DSC) and Director Identification Number (DIN): All directors of the proposed Nidhi Company must obtain a DSC and DIN.
2. Name Reservation: Choose a unique name for the company and apply for name reservation with the MCA.
3. Draft Memorandum of Association (MOA) and Articles of Association (AOA): These documents define the company's objectives and internal rules.
4. File Incorporation Documents: File the incorporation documents with the MCA, including the MOA, AOA, and other required documents.
5. Obtain Certificate of Incorporation: Once the MCA approves the application, a Certificate of Incorporation is issued.

Post-Registration Compliance

• Minimum Membership: A Nidhi Company must have at least 200 members within one year of its incorporation.
• Net Owned Funds: The company's net owned funds (equity share capital + free reserves - accumulated losses - intangible assets) must be Rs. 10 lakh or more.
• Unencumbered Term Deposits: The company must maintain unencumbered term deposits of at least 10% of its outstanding deposits.
• NDH-1 Form: The company must file Form NDH-1 with the MCA within 90 days from the end of the first financial year after its incorporation, if it meets certain conditions.

Restrictions on Nidhi Companies

• Cannot accept deposits from or lend to anyone other than its members.
• Cannot carry on any business other than borrowing and lending in its own name.
• Cannot issue preference shares, debentures, or any other debt instruments.
• Cannot open current accounts with its members.
• Cannot acquire or lease any other business.
• Cannot carry on chit fund, hire purchase finance, leasing finance, insurance, or securities business.
• Cannot pay any brokerage or incentive for mobilizing deposits from members.

Key Benefits of Nidhi Companies

• Easy to register and operate compared to other NBFCs.
• Encourages thrift and savings among members.
• Provides a source of credit to members at reasonable rates.
• Operates on the principle of mutual benefit.