Process for Nidhi Company Registration
There is a set procedure for a Nidhi Company Registration that must be followed. The process is stated below –
1. Application for DSC & DIN
The first step for a Nidhi Company Registration is for the directors to acquire the Digital Signature Certificate and apply for the Director’s Identification Number issued by the Ministry of Corporate Affairs. Directors who already have the DIN can skip the process. The DSC is essential for all e-filling processes.
2. Memorandum of Association & Articles of Association
Drafting of Memorandum of Association & Articles of Association is essential for establishing the purpose of the Nidhi Company. These are necessary things in an organization and should be filed with the registrar of the companies.
3. Name Approval
The Nidhi company seeking registration needs to obtain approval over the entity’s name through the Ministry of Corporate Affairs. The chosen name must be unique and should not be copied from the name of any other company or trademark. The objective and business nature should be reflected through the name selected for such entities. They need to propose at least three names out of which MCA chooses the appropriate one. The application for approval is sent through PART A of the SPICe+ application form.
4. Incorporation Application
After the name is approved by the MCA, the company can begin the process of incorporation. For incorporation, you must go to the MCA official website and fill out the SPICe+ application form. After filling out the application form online, divided into two parts, PART A & PART B, any one director has to sign it. The signed application form must be submitted online along with the other required documents attached to it.
5. Certificate of Incorporation
The form is sent to the registrar of companies, who is responsible for looking at the application. A thorough check is made to be sure that all the documents and the form being filled and submitted correctly and in the right manner. If everything is alright, a certificate of incorporation is issued to the applicant for Nidhi Company Registration. A unique Corporate Identification Number is provided to the Nidhi Company by the ROC.
6. Nidhi Company License
Following its incorporation, a business must apply for a NIDHI Company license by fulfilling criteria about member count, net assets, term deposits, and other conditions outlined in the Companies Act of 2013. The company has four months from the date of its incorporation as a NIDHI Limited Company to file an application to the Central Government using form NDH 4. This time frame may be extended with the regional director’s consent if necessary.
Nidhi Limited Company Mandatory Compliance
Though Nidhi Limited Company can be incorporated without RBI consent, they are still responsible for its regulation, the same as NBFCs. They must include ‘Nidhi Limited’ as a suffix to their company name. the other mandatory compliances for a Nidhi company are stated below –
- A Nidhi Pvt Ltd has to mandatorily fill out Form NDH – 1 within 90 days of the end of such financial year.
- In the event that Nidhi Pvt Ltd fails to accumulate 200 members in its organization in the first financial year, it must fill out Form NDH-2 with the Ministry of Corporate Affairs.
- For filling the half-yearly returns, Form NDH-3, along with the certificate of CA/CS, is submitted.
- A Nidhi Finance Company/ Nidhi Company has to hold a board meeting quarterly and annually hold a members meeting.
- A Nidhi Finance Company/ Nidhi Company must fill out Form AOC 4 & Form MGT 7 on an annual basis.
- They must maintain their books of accounts regularly.
- A Nidhi Pvt Ltd must file the income tax returns by September 30th every year.
- The rental income generated through providing lockers to the members must be less than 20% of the total revenue generated by the entity in a financial year.
Prohibition Activities for a Nidhi Company
Certain activities are prohibited for a Nidhi Company, and these are as follows –
- Dealing with chit funds is prohibited for a Nidhi Company.
- Dealing with hire-purchase finance is prohibited for a Nidhi Company.
- Dealing with the leasing of finances is prohibited for a Nidhi Company.
- Dealing with insurance business is prohibited for a Nidhi Company.
- Dealing with securities business is prohibited for a Nidhi Company.
- Other than members, Nidhi companies are prohibited from accepting deposits by another person.
- Other than members, Nidhi companies are prohibited from lending funds to any other person.