Incorporation of Nidhi Company through SPICe+

Nidhi Company

Nidhi Companies are incorporated with motive of encouraging the habit of savings amongst its members. Nidhi Companies are allowed to deal with members only which means that Nidhi Companies can take Deposits from and lend only to its members. It is much easier to form a Nidhi Company with very less time and cost involved as compared to incorporation of NBFCs, banks, Section 8 Micro Finance Companies, etc.

Nidhi Company is defined under Section 406 (1) of the Companies Act, 2013 as follows: –

“Nidhi” or “Mutual Benefit Society” means a company which the Central Government may, by notification in the Official Gazette, declare to be a Nidhi or Mutual Benefit Society, as the case may be

Pre-requisites of Incorporation

• Minimum 7 Subscribers / Members
• Minimum 3 Directors
• Minimum Paid-up Capital of Rs. 5 Lakhs
• The Company shall be a Public Company

Following are certain important points which must be adhered to before proceeding with Nidhi Company Incorporation-

• A Nidhi Company must increase its members to 200 within 1 year from incorporation.
• A Nidhi Company must increase its Paid-up Capital to Rs. 10 Lakhs within 1 year from incorporation
• Director shall be a member of Nidhi Company
• A Nidhi Company cannot issue preference shares, debentures or any other debt instrument
• Memorandum of Association (MOA) of Nidhi Company should contain object of cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit only as Main Object.
• A Nidhi Company shall not admit a minor, body corporate or trust as a member

Incorporation Process

• Digital Signature Certificate (DSC)
• Name Reservation
• Documents Required
• Form Filing and DIN application
• Issue of Certificate of Incorporation (COI), PAN and TAN

Digital Signature Certificate- DSCs of all the subscribers must be obtained. Following documents/ Information are required for processing DSC application:

1. Passport size Photograph

2. Copy of PAN and Aadhaar Card

3. Email Id and Phone no.

Name Reservation- Name of the Company can be applied by logging in to MCA portal and using the ‘SPICe+’ utility on MCA portal under ‘MCA SERVICES’ tab (right under the ‘Company Services’). Click on the ‘New Application’ and file in SPICe+ Part A.

Here you have option to apply for:

a) either ‘Name Reservation’ only by clicking on “Submit for Name Reservation”; or

b) proceed with ‘Company Incorporation’ by clicking on ‘Proceed for Incorporation.”

> One can apply for name reservation only by giving 2 name suggestions and making payment of Rs. 1,000/- only. In this case, incorporation process could be started only once the name is approved by Central Registration Centre, CRC.

> If you wish to proceed with Incorporation simultaneously, you can just give one name for reservation. In this case, only Fee for Company Incorporation and Stamp Duty is required to be paid.

The name of the company should have ‘Nidhi Limited’ as suffix. Example- ‘XYZ Nidhi Limited’ or ‘XYZ Mutual Benefit Nidhi Limited’, where XYZ is the trade / brand name of the Company.

Documents Preparation- Following documents are required to be prepared/obtained for Nidhi Company incorporation:

1. Latest copy of Utility Bill (not older than 2 months) where the registered office of the Company is to be situated along with NOC from the owner.

2. DIR-2 of First Directors

3. Identity and address proofs of subscribers / directors

4. In case director / subscriber have no DIN, then utility bill or bank statement showing complete address of directors / subscriber for residential proof

5. Interest in other entity of director(s), if any

6. A Declaration from all the subscribers is also required to be attached stating that rule 4, 5, 6 and 10 of Nidhi Rules, 2014 shall be duly complied with.

Form Filing and DIN Application- DIN(s) of all the directors, if not available, could be applied at the time of filing the forms.

Proceed with filling up of details in SPICe+ Part B. All the attachments will be uploaded here. Once SPICe+ Part B is submitted, other forms viz., AGILE-PRO, SPICe+ AoA and SPICe+ MoA will be enabled for filling up the details. INC-9 will be auto-generated on the basis information filled in SPICe+ Part B.

After submitting all the forms successfully, these can be downloaded and DSC can be affixed wherever required. Then the above forms can be uploaded in following sequence-

1. SPICe+ Part B

2. SPICe+ MoA

3. SPICe+ AoA

4. AGILE-PRO

5. INC-9

Issue of COI, PAN and TAN- On satisfying that all the formalities has been complied with, the Department will issue COI, PAN & TAN to the Company

Following points must be noted while preparing SPICe+ forms:-

1. Interpretation clause of Articles of Association (AOA) to be modified to contain the definition of Nidhi Company

2. Other important clauses in AOA related to Share capital, preference shares applicability, debentures, etc should also be modified or removed according to the provisions applicable to the Nidhi Companies.

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Disclaimer: The information provided above is for general informational purposes only in good faith. The content of the above article has been drawn with utmost care and diligence on the basis of applicable provisions and procedures. Efforts have been made to provide accurate, adequate and complete information with no responsibility of the author whatsoever.