nidhi company registration

Nidhi company registration, procedure, documentation and nidhi rules

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Nidhi company registration is a kind of a Company Registration which allows a company to Accept from its Members 

1.   RD (Recurring Deposit), 

2.   FD (Fixed Deposit), 

3.   Opens Savings Account of its Members, 

4.   Advance Loan

Nidhi Company has the main object in its Memorandum of Association (MOA);

1.   To encourage and afford all facilities for cultivating thrift ,saving habits and to render all financial assistance to its member only by receiving long and short term deposits and in particular recurring, fixed and other deposits, not being current accounts from the members as are allowed by law for Nidhi or Mutual Benefits Companies . The company shall also not carry on chit fund business, insurance business, hire purchase finance business and business of trading in share and securities.

2.   To lend, grand loans to the members on the security of immovable properties either by way of registered mortgage or by deposit of title deed, various types of deposit receipts, movable assets such as Gold, Silver, Jewellery, Kisan Vikas Patras, National Savings Certificates,
Insurance Policies, Government Securities and other securities on favorable rates of interest.

Nidhi Company Registration is governed by its Nidhi Rules 2014

Nidhi Company can only advance Secured Loan to its Members

Nidhi Company is required to make 200 members within 1 year of its incorporation

Nidhi Company can accept FD for a minimum period of 6 months and maximum period of 60 months

Every Nidhi Company incorporated as a “Nidhi” shall have the last words ‘Nidhi Limited’ as part of its name

As per Rule 5 of Nidhi Rules;

Requirements for minimum number of members, net owned fund etc.—

(1) Every Nidhi shall, within a period of one year from the commencement of these rules, ensure that it has—

(a) not less than two hundred members;

(b) Net Owned Funds of ten lakh rupees or more;

(c) unencumbered term deposits of not less than ten per cent of the outstanding deposits as specified in rule 14; and
(d) ratio of Net Owned Funds to deposits of not more than 1:20.

A Nidhi Company shall not admit a body corporate or trust as a member

A Nidhi Company may open branches, only if it has earned net profits after tax continuously during the preceding three financial years.

Amount of Deposits that a Nidhi Company can Accept: - A Nidhi Company shall not accept deposits exceeding twenty times of its Net Owned Funds (NOF) as per its last audited financial statements

Every Nidhi Company shall obtain proper introduction of new depositors before opening their accounts or accepting their deposits and keep on its record the evidence on which it has relied upon for the purpose of such introduction.

Every Nidhi Company accepting Recurring deposits can accept for a minimum period of twelve months and a maximum period of sixty months.

A Nidhi Company may offer interest on fixed and recurring deposits at a rate not exceeding the maximum rate of interest prescribed by the Reserve Bank of India which the Non-Banking Financial Companies can pay on their public deposits

A Nidhi Company shall provide loans only to its members

The loans given by a Nidhi Company to a member shall be subject to the following limits, namely:—

(a) two lakh rupees, where the total amount of deposits of such Nidhi from its members is lessthan two crore rupees;

(b) seven lakh fifty thousand rupees, where the total amount of deposits of such Nidhi from itsmembers is more than two crore rupees but less than twenty crore rupees;

(c) twelve lakh rupees, where the total amount of deposits of such Nidhi Company from its members is more than twenty crore rupees but less than fifty crore rupees; and

(d) fifteen lakh rupees, where the total amount of deposits of such Nidhi from its members is
more than fifty crore rupees:

A Nidhi Company shall give loans to its members only against the following securities, namely:—

(a) gold, silver and jewellery: Provided that the re-payment period of such loan shall not exceed one year.

(b) immovable property:

(c) fixed deposit receipts, National Savings Certificates, other Government Securities and insurance policies

Rules relating to Directors.—

(1) The Director shall be a member of Nidhi Company

(2) The Director of a Nidhi Company shall hold office for a term up to ten consecutive years on the Board of Nidhi Company

(3) The Director shall be eligible for re-appointment only after the expiration of two years of ceasing to be a Director.

(4) Where the tenure of any Director in any case had already been extended by the Central Government, it shall terminate on expiry of such extended tenure.

(5) The person to be appointed as a Director shall comply with the requirements of sub-section (4) of Section 152 ofthe Act and shall not have been disqualified from appointment as provided in section 164 of the Act.

Dividend.- 

A Nidhi Company shall not declare dividend exceeding twenty five per cent or such higher amount as may be specifically approved by the Regional Director for reasons to be recorded in writing and further subject to the following conditions, namely:—

(a) an equal amount is transferred to General Reserve;

(b) there has been no default in repayment of matured deposits and interest; and

(c) it has complied with all the rules as applicable to Nidhi Company

Filing of half yearly return.—

Every Nidhi Company covered under rule 2 shall file half yearly return with the Registrar

in Form NDH-3 along with such fee as provided in Companies (Registration Offices and Fees) Rules, 2014 within thirty days from the conclusion of each half year duly certified by a company secretary in practice or chartered accountant in practice or cost accountant in practice.

Auditor’s certificate.—The Auditor of the company shall furnish a certificate every year to the effect that the company has complied with all the provisions contained in the rules and such certificate shall be annexed to the audit report and in case of non-compliance, he shall specifically state the rules which have not been complied with.