NIDHI Company is governed under Section 406 of the Companies Act, 2013 and NIDHI Rules, 2014.
Definition of NIDHI Company: NIDHI Company means a Company which has been Incorporated as a NIDHI with the 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, and which complies with such rules as are prescribed by the Central Government for regulation of such class of Companies.
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Nidhi Company Incorporation Requirements:
1. A NIDHI to be incorporated should be a Public Company;
2. Minimum Paid Up Capital should be Rs. 5 Lakhs;
3. NIDHI Company can’t issue Preference Shares;
4. No NIDHI shall have any object in its MOA other than the 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;
5. Every NIDHI Company shall within a period of 1 year from the Incorporation Date, ensure that it has:
a) Not less than 200 members
b) Net Owned fund of 10 Lakh rupees or more;
c) Unencumbered term deposits of not less than 10% of the Outstanding deposits as specified in Rule 14 of the NIDHI Rules, 2014;
d) Ratio of Net Owned Funds to deposits of not more than 1:20
6. Within 90 days from the closure of First Financial Year, NIDHI shall file a return of Statutory Compliance in Form NDH-1 with the ROC duly certified by PCS/CA/CWA;
7. If NIDHI is not complying point 5 as mentioned above, it shall file Form NDH-2 within 30 days from the closure of first financial year to RD for extension of time and the RD may consider the application and pass orders within 30 days of receipt of application;
8. If the failure of comply of point 5 as mentioned above, extends beyond the Second Financial Year then NIDHI shall not accept any further deposits from the commencement of second financial year till it complies with the provisions.
General Restrictions and Prohibitions on Nidhi Companies
No NIDHI Shall-
1. Carry on the business of Chit Fund, hire purchase finance, lease financing, insurance or acquisitions of securities issued by any body corporate;
2. Issue preference shares, debentures or any other debt instruments by any name or in any form whatsoever;
3. Open any current account with its members;
4. 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 arrangements for the change of its management, unless it has passed a resolution in its GM and also obtained the previous approval of the RD having jurisdiction over such NIDHI;
5. Carry on any business other than the business of borrowing or lending in its own name;
6. Accept deposits from or lend to any person, other than its members;
7. Pledge any of the assets lodged by its members as security;
8. Take deposits from or lend money to any body corporate;
9. Enter into any partnership arrangement in its borrowing or lending activities;
10. Issue or cause to be issued any advertisement in any form for soliciting deposit;
11. Pay any brokerage or incentive for mobilizing deposits from members or for deployment of funds or for granting loans.
General Conditions to be fulfilled by Nidhi Companies
1. Every NIDHI shall issue equity shares of the nominal value of not less than Rs. 10/- each;
2. NIDHI shall not admit a body corporate or trust as its members;
3. A NIDHI may open branches if it has earned net profit after tax continuously during the preceding three financial year;
4. NIDHI shall not accept deposits exceeding twenty times of its Net Owned Funds as per its last audited financial statements;
5. NIDHI shall accept a fixed deposit for a minimum period of 6 months and maximum period of 60 months;
6. NIDHI shall provide loans only to its members;
7. Rate of Interest to be charged on any loan given by NIDHI shall not exceed 7.5% above the highest rate of interest offered on deposits by NIDHI and shall calculated on reducing balance method.
Documents to be required for Incorporation of Nidhi Companies via SPICE+
1. Identity (PAN Card) and Address proof (Bank Statement, Electricity Bill, Telephone Bill, Water Bill) of all the Directors cum Subscribers of the Company;
2. Identity (PAN Card) and Address proof (Bank Statement, Electricity Bill, Telephone Bill, Water Bill) of all the Subscribers of the Company;
3. Utility bill (Electricity Bill, Water Bill, Telephone Bill) of the proposed registered office address;
4. NOC from the owner of the proposed registered office for using the premises;
5. Declaration from all the Directors and Subscribers under Rule 4, 5, 6 and 10 of NIDHI Rules, 2014.
Format of Declaration under Rule 4, 5, 6 and 10 of NIDHI Rules, 2014
In connection with the Incorporation of …………………. (Name of NIDHI Company)
We, the undersigned subscribers/subscribers cum Directors of the Company, has gone through the Companies Act, 2013 and the Nidhi Rules, 2014 regarding the Incorporation of this Company and hereby declare that:
1. That the proposed Company complied with the Clause (1) to Clause (5) of Rule 4 (incorporation and Incidental Matters) of Nidhi Rules, 2014;
2. That the proposed Company will comply in the future with the Clause (1) to Clause (3) of Rule 5 (Requirements of Minimum Number of Members, Net Owned Fund, etc.) of Nidhi Rules, 2014 failing this would attract liability for penal consequences;
3. That the proposed company had complied with the Clause (a) to Clause (k) of Rule 6 (General Restrictions or Prohibitions) of Nidhi Rule, 2014;
4. That the Proposed Company would comply with the Clause (1) to Clause (6) and sub-clause (a) to (c) of clause (6) of Rule 10 (Branches) of Nidhi Rules, 2014.
Further hereby undertake, that the Company/Directors shall insure that it/he has read/understood and complied or will comply as and when necessary, with all the necessary implications on the Nidhi Company under Companies Act, 2013 and Corresponding rules stated under Nidhi Rules, 2014.
Signature:
Directors cum Subscribers Subscribers
1. Name Signature: 4. Name Signature:
2. Name Signature: 5. Name Signature
3. Name Signature: 6. Name Signature
7. Name Signature:
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