In India, Nidhi Companies are formed with the object of cultivating habit of thrift and savings among its members, receiving deposits from, and lending to its members only, for their mutual benefit.
Section 406 of the Companies Act, 2013, the Companies (Nidhi Companies) Rules, 2014 and Chapter XXVI of the Companies Rules, 2014 deals with the provision of Nidhi Companies.
Nidhi Rules, 2014 shall be applicable to the following:
(a)Every company which had been declared as a Nidhi or Mutual Benefit Society under sub-section (1) of
Section 620A of the Companies Act, 1956;
(b) Every company functioning on the lines of a Nidhi company or Mutual Benefit Society but has either not applied for or has applied for and is awaiting notification to be a Nidhi or Mutual Benefit Society under sub-Section (1) of Section 620A of the Companies Act, 1956; and
(c) Every company incorporated as a Nidhi pursuant to the provisions of Section 406 of the Act.
(d)Every Company declared as Nidhi or mutual Benefit Society under sub-section (1) of Section 406 of the Act.
Obtaining PAN has been made inevitable by the Income Tax Department for any Partnership Firm operating in India. Also, you get liable to deduct taxes at source very soon after you start your full-fledged operation. Thus TAN also becomes inevitable for you. In your association with DCS you don’t have to go anywhere else for these services auxiliary to the start up of your Firm. In addition to your Firms start up we will also look into the PAN & TAN Registrations with the Income Tax Department.
- A Nidhi Company shall be a Public Company;
- Five lakhs is required as minimum paid-up equity share capital of the Company.
- Every “Nidhi” Shall have last words “Nidhi limited” as part of its name.
- A Nidhi cannot issue Preference share.
- A Nidhi Company shall not admit Body Corporate or trust as a member.
- Minimum 7 members are required to start a Nidhi company, out of which 3 members must be director of the Company;
- Every Nidhi shall ensure that its membership is not reduced to less than two hundred members at any time.
- A minor shall not be admitted as a member of Nidhi.
Documents of Directors and Shareholders:
- PAN Card
- Passport-sized photographs;
- Address proof (Bank Statement/ Driving License/ Residence card)
- Residential Proof(Mobile Bill/ Telephone Bill/ Electricity Bill/ Bank Statement);
- Passport(in case director is a foreign national)
- Digital Signature(DSC);
- Director Identification number(DIN)
Office Proof Documents:
- Registered office Proof (Electricity Bill/ Water Bill/Property Tax).
- Ownership Documents (In case of owned Property)
- Rent agreement & No-objection Certificate (in case of Rented Property)
- Memorandum of Association(MOA);
- Articles of Association (AOA).
According to Rule 5 of Nidhi Rules, 2014:
Every Nidhi within one year from the date of its Incorporation, ensures that it has-
- Not less than 200 members;
- Net Owned funds of Ten lakhs Rupees or more;
- Unencumbered term deposits of not less than ten percent of the outstanding deposits as specified in Rule 14;
- Ratio of Net owned funds to deposits of not more than 1:20.
Every Nidhi Company within a period of 90 days from the closure of its financial year shall file a Return of Statutory Compliances in FORM NDH-1 with ROC.
The Form shall be certified by a Company Secretary in Practice or Chartered Accountant in practice or Cost Accountant in practice.
Extension of another financial year: If Nidhi is not complying with clause (a) or (d) i.e., minimum 200 members and ratio of Net owned funds to deposits not more than 1:20, it shall within thirty days from the close of the first financial year, apply to the Regional Director in Form NDH 2 for extension of time and the Regional Director may consider the application and pass orders within thirty days of receipt of the application.
The Regional Director may extend the period upto one year from the date of receipt of application.
If the failure to clause (a) or (d) continues beyond Second financial Year, the Nidhi company shall not accepts any further deposits from the commencement of Second financial year till it complies with the conditions mentioned in Clause(a) or (d) and also penalty will be imposed.
Company falling under Rule-2 of Nidhi Rules, 2014 shall file half-yearly return in Form NDH-3. The Return shall be filed within 30 days from conclusion of each half-year. The form shall be certified by a Company secretary in Practice or Chartered Accountant in Practice or Cost Accountant in Practice.
As per Rule 6 of Nidhi Rules, 2014, No Nidhi Company Shall-
- carry on the business of chit fund, hire purchase finance, leasing finance, insurance or acquisition of securities issued by any Body corporate;
- issue preference shares, debentures or any other debt instrument by any name or in any form whatsoever;
- open any current account with its members;
- acquire another company by purchase of securities or control the composition of the Board of Directors of any other company in any manner whatsoever or enter into any arrangement for the change of its management, unless it has passed a special resolution in its general meeting and also obtained the previous approval of the Regional Director having jurisdiction over such Nidhi;
- carry on any business other than the business of borrowing or lending in its own name: