Nidhi Company

NIDHI COMPANY

Nidhi Company is a type of Non-Banking Financial Company (NBFC). It is formed to borrow and lend money to its members. It inculcates the habit of saving among its members and works on the principle of mutual benefit. These companies typically operate in the southern part of the country. Nidhi Company isn’t required to receive the license from Reserve Bank of India (RBI), hence it is easy to form. It is registered as a public company and should have “Nidhi Limited” as the last words of its name.

Activities Prohibited in a Nidhi Company

Nidhi Company can’t deal with chit funds, hire-purchase finance, leasing finance, insurance or securities business. It is strictly prohibited from accepting deposits from or lending funds to, any other person except members.
Also, it can’t advertise itself to ask for any deposits.

Number of members

Minimum of seven members is required to start a Nidhi Company out of which three members must be the directors of the company.

Share Capital and Owners’ Funds

A minimum of 5 lakh rupees is required as the equity share capital to start a Nidhi Company. Nidhi Company can’t issue preference shares.

Documents required for registration

  1. Proof of the registered place of business (Ownership documents/ rent or lease agreement)
  2. No Objection Certificate (signed by the owner/ landlord)
  3. Identity proofs
  4. Address proofs of the members
  5. Photos of the members
  6. PAN card copies of the members
  7. Digital Signature (DSC)
  8. Director Identification Number (DIN) of the directors
  9. Memorandum of Association of the company (MoA)
  10. Articles of Association of the company (AoA)
Only one object will be mentioned in MoA of the company: “cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit.”

Forms to be filed

There are two forms which are required to be filed.
  1. INC 9
  2. DIR 2