Nidhi Company Registration in Vijayawada
A Nidhi Company is a type of non-banking financial entity recognized under the Companies Act, 2013 in India. Unlike traditional financial institutions, Nidhi Companies are categorized as mutual benefit societies due to their mutual ownership structure. They are predominantly formed to facilitate the borrowing and lending activities among their members within a group of individuals. Registering Nidhi Company in Vijayawada is best choice for group of individuals. Cqubes simplifies the Nidhi company registration process in Vijayawada with our expert guidance.
Activities of Nidhi Company:
- Accepting Deposits
- Nidhi Companies accept deposits from their members, which primarily consist of savings deposits and fixed deposits. These deposits are used to provide loans and advances to members for various purposes.
- Limited Banking Functions
- While Nidhi Companies are not banks and cannot engage in full-fledged banking activities, they perform limited banking functions such as accepting deposits and providing loans exclusively among their members. This distinguishes them from traditional banks and NBFCs.
- Providing Loans and Advances
- Nidhi Companies lend money to their members against the security of gold, jewelry, immovable property, or other approved securities. Loans are typically provided for personal, household, or business purposes based on the needs and repayment capacity of the members.
- Promoting Savings and Financial Literacy
- Nidhi Companies promote the habit of thrift and savings among members by encouraging regular deposits and providing attractive interest rates on savings accounts. They also conduct financial literacy programs to educate members about financial planning, savings, and investment opportunities.
- Facilitating Mutual Benefits
- The primary objective of Nidhi Companies is to promote mutual benefit among members. By pooling resources through deposits and utilizing them for loans within the membership base, Nidhi Companies facilitate access to affordable credit and financial services.
Membership and governance structure:
- Eligibility Criteria
- Members of a Nidhi Company must be individuals who subscribe to the objectives of savings and mutual benefit. Typically, membership is restricted to a defined group, such as employees of a particular organization, residents of a locality, or members of an association.
- Minimum and Maximum Members
- A Nidhi Company must have a minimum of 200 members within one year of its incorporation. There is no upper limit on the number of members, although the company must maintain a balance between inclusivity and effective management.
- Rights and Responsibilities
- Each member of a Nidhi Company enjoys equal voting rights, irrespective of their shareholding or deposit amount. Members participate in the democratic decision-making process, including the election of directors and approval of major decisions affecting the company.
- Board of Directors
- The affairs of a Nidhi Company are managed by a Board of Directors elected by the members. The board typically consists of individuals with diverse skills and expertise, including representatives from the membership base.
- Roles and Responsibilities
- Directors of a Nidhi Company have fiduciary duties to act in the best interests of the company and its members. They oversee strategic decision-making, financial management, compliance with regulatory requirements, and implementation of policies beneficial to the members.
- Compliance and Reportings
- Nidhi Companies must comply with regulatory requirements under the Nidhi Rules, 2014, and the Companies Act, 2013. They are required to maintain proper books of accounts, file annual returns with the Registrar of Companies (RoC), and disclose financial information transparently to members.
Advantages of Nidhi Company:
Nidhi Company will have many benefits, we are mentioning few of them:
- Promotion of Savings Habit
- Access to Affordable Credit
- Localized Financial Services
- Mutual Benefit
- Regulatory Ease
- Financial Inclusion
Limitations of Nidhi Company:
Nidhi Company has few limitations. Few of them are:
- Limited Scope of Operations
- Minimum Membership Requirement
- Dependence on Member Deposits
- Risk of Default
- Regulatory Compliance
- Limited Growth Potential
Process for registering Nidhi Company in Vijayawada:
- Formation of Promoters Group
- Form a group of at least seven individuals (natural persons) who will act as promoters to initiate the formation of the Nidhi Company.
- Obtain Digital Signature(DSC)
- The Proposed directors should obtain Digital Signatures(DSC). The DSC is used for signing required documents electronically.
- Director Identification Number(DIN)
- The directors must apply for a DIN if they do not already have one. DIN is a unique identification number issued by the MCA, which is mandatory for anyone appointed as a director of a Nidhi company.
- Name Reservation
- Reserve a unique name for the Nidhi Company that complies with naming guidelines specified under the Companies Act, 2013.
- Drafting of Memorandum and Articles of Association (MOA and AOA)
- Draft the MOA and AOA, which define the objectives, rules, and regulations governing the operations of the Nidhi Company. Ensuring that the MOA and AOA comply with the provisions of the Companies Act, 2013, and reflect the specific objectives and activities of the Nidhi Company.
- Incorporation and Submission of Documents
- The necessary documents will be filled with the Registrar of Companies (RoC) to incorporate the Nidhi Company in MCA portal, including the MOA, AOA, consent of directors, DSCs, and other required documents.
- Verification and Approval
- The RoC verifies the documents and compliance with legal requirements under the Companies Act, 2013. Upon satisfaction, the RoC issues the Certificate of Incorporation which serves as conclusive proof of the formation of the Nidhi Company.
Compliance Requirements for Nidhi Companies:
- Minimum Membership Requirement
- Maintain a minimum of 200 members within one year from the date of incorporation.
- Minimum Net Owned Funds (NOF)
- Ensure that the Net Owned Funds (NOF) of the company are at least Rs. 10 lakhs or more.
- Deposit Acceptance and Loan Limits
- Nidhi Companies can accept deposits only from their members and cannot accept deposits from the general public. The amount of deposits from any member, except fixed deposits, shall not exceed 20% of the aggregate of the paid-up share capital and free reserves of the company. Loans given to any member shall not exceed 2 lakhs.
- Investment Restrictions
- Invest at least 10% of deposits in specified instruments such as government securities, fixed deposits, and unencumbered term deposits in a scheduled commercial bank
- Financial Reporting
- Maintain proper books of accounts and prepare financial statements (Balance Sheet, Profit & Loss Account, etc.) annually in compliance with accounting standards prescribed under the Companies Act, 2013.
- Annual Compliance Filings
- File annual returns with the Registrar of Companies (RoC) in Form NDH-3 within 90 days from the end of the financial year. This includes information on deposits accepted, loans granted, and other financial activities.
- Board Meetings and General Meetings
- Hold at least four board meetings in a calendar year with a maximum interval of 120 days between two meetings. Conduct an Annual General Meeting (AGM) of members within six months from the end of the financial year.
- Statutory Registers and Records
- Maintain and update statutory registers such as Register of Members, Register of Deposits, Register of Loans/Investments, etc., as per the requirements of the Companies Act, 2013.
- Compliance with Nidhi Rules, 2014
- Adhere to the specific provisions laid down in the Nidhi Rules, 2014, which regulate the operations, governance, and reporting requirements of Nidhi Companies.
- Regulatory Reporting and Disclosures
- Comply with any other reporting and disclosure requirements as prescribed by the RoC or regulatory authorities from time to time.
Documents Checklist:
Following documents are required for registering Nidhi company in Vijayawada:
- Aadhar Card & PAN Card (of all Director)
- DIN & DSC (of all Director)
- Passport size photos (of all Director)
- Address proof (e.g., utility bill, rental agreement)
Start registering your Nidhi company in Vijayawada with Cqubes
Choose CQUBES to guide and register your Nidhi company in Vijayawada. Our dedicated team will navigate you in obtaining essential registrations, certifications and compliance in every step of registering your Nidhi Company.
