Registering a Nidhi Corporation
The creation of Nidhi companies allows all of the members to borrow and give loans. This promotes the practice of saving among all of its members and is founded on the idea of mutual benefits. Meanwhile, for information, let us inform you that the southern regions of India consist of the higher concentration in Nidhi Business.
Nidhi Companies are exempt from registering with the Reserve Bank of India (RBI) for a licence.
They must, however, be registered as a public company, and that must end with “Nidhi Limited.”
The Advantages of Registering a Nidhi Business
By registering as a Nidhi corporation, you can receive a number of benefits.
Here are the benefits written below:
Legal Standing
An organisation becomes a distinct entity once it is registered as a Nidhi Corporation. As an officially registered Mutual Benefit Society, it has a distinct legal existence. The company is unique then a legal person, members, and others. Thus it has the complete right to acquire and dismiss property underneath its own name.
Limited Liability
The corporation’s members’ responsibilities would be constrained by the sums they have contributed or invested. Only their portion of the corporation would be found responsible for the members. Members’ personal expenditures cannot be used to cover the company’s liabilities.
Availability of Funds
The funds that the members have personally contributed are available for borrowing at cheaper interest rates.
What Steps Are Involved in Establishing a Nidhi Company?
To form a Nidhi Corporation, the processes listed below must be taken into account:
- DSC and DIN
The applicant needs to obtain both the Digital Signature Certificate (DSC) and Director Identification Number (DIN) from each of the company’s board of directors.
- Name Approval
The phrase “Nidhi Limited” must always follow the firm name. The company name must therefore be authorised as a Public Limited Corporation with the phrase “Nidhi Limited” at the end.
- Filing a COI
The candidate is required to submit the conflict of interest (COI) form. The director must include the forms INC-7, INC-22, and DIR-12 in a COI filing.
- Submitting the Members’ Details
At the moment of application, the firm must have a minimum of 200 members in order to be registered. Under MCA/ROC, the Nidhi board must obtain the information of every member.
Things to Consider While Choosing a Name for a Nidhi Business
A company’s name is extremely important because it creates the company’s first impression. While choosing a name for a Nidhi Corporation, keep the following things in mind:
Meaning: The initial and most important factor to take into account is the name’s meaning. The title must ideally relate to the business’s operations.
Name length: The name should really be brief and meaningful.
Uniqueness: The name’s distinctiveness is crucial. It shouldn’t sound like or be the same as the name of any other company that already exists. If the name is not unique enough, then it may get rejected.
Legal: The Letterings and Names Act of 1950 should not be broken by the corporate name.
No names that are unpleasant or illegal: The firm name shouldn’t be illegal. Avoid using derogatory names or using names in a way that would violate the conventions or beliefs of any class, race, or religion.
British India: The word “British India” shouldn’t be present in the name.
Documents required:
- DSC of the directors
- NOC from the owner of the premises
- Passport size photograph of directors
- DIN of the directors
- MoA of the company
- AoA of the company
- PAN card: It is essential for filing the financial transactions and taxation of the company
- Proof of address: Any government-issued identity proof with address such as bank statement, driving license, residence card, etc.
- Proof of residence: Any utility bill or bank statement with name and address
- Passport: only for foreign directors
- Proof of registered office
