What is a Nidhi Company and its process of incorporation?

Nidhi Company is a type of Non-Banking Financial Company (NBFC) which is recognized under section 406 of the Companies Act, 2013. The basic purpose of forming a Nidhi company is to borrow and lend money to its members. Nidhi Company must have “Nidhi Limited” as the last words of its name and they are also known as Permanent Fund, Benefit Funds, Mutual Benefit Funds, and Mutual Benefit Company.

Nidhi companies work on the basic concept of Nidhi is the “Principle of Mutuality” (“Paraspara Sahayata”). These companies function for the common welfare and benefit of all their members. Although Nidhi Company They are regulated by the Ministry of Corporate Affairs and they aren’t required to receive the license from Reserve Bank of India (RBI), but RBI is empowered to issue directions to them in matters relating to their deposit acceptance activities.

These are the steps of Nidhi Company Registration Process:

Step 1: Obtaining a Digital Signature Certificate

The process of registering your Nidhi Company will pace you when you will fulfill the primary requirement first hand i.e. getting a Digital Signature Certificate (DSC). It is mandatory to get all the electronically submitted forms to be self-attested with DSC. You can get a DSC through a Certified Authority or an agency by providing them basic details including address proof, Aadhar card, pan card, photo, email id & phone number.

Step 2: Directors And Members - Begin With KYC Part

A Nidhi company must have at least three directors along with the seven members to get incorporated. An individual can be act both as a director as well as a member. First, you will need to obtain DIN of the directors by submitting their basic details and other relevant information in Nidhi Form.

Step 3: Name Approval

After obtaining DIN of directors, you have to get name approval for your company. You can submit 3 name options through SPICe, a web-based application made for the company’s registration purpose. MCA will reject two names and will approve one name only. In case of non-availability of the name, even all three names may get rejected in case they resemble the names of registered companies in the past.

Step 4: Registration of AOA & MOA (Final Incorporation)

After getting name approval, you can submit Nidhi Company’s registration application along with the Articles of Association and Memorandum of Association in electronic form in eMOA & eAOA formats. Before issuing the Certificate of Incorporation (COI), MCA will inspect your application.

Step 5: Issuance of COI

If everything goes well and MOA and AOA get approved, you will get the incorporation certificate of your company. This certificate will specify the Company’s name along with the registration number and date of Incorporation. This is the date when your company legally comes into existence. This procedure may take 1 – 5 working days after MOA-AOA approval.

Step 6: Obtaining PAN And TAN of Nidhi Company

Getting COI means your company is now finally registered and has come into existence. Now you can apply for obtaining your company’s PAN and TAN number by submitting applications in forms 49A and 49B respectively. This process is may take up to a week.

Step 7: Opening of a bank account of your Nidhi Company

After you’ve obtained your company’s PAN and TAN, you can submit approved Memorandum of Association, Articles of Association, Certificate of Incorporation, and PAN to your preferred choice of bank. The bank will undertake their due diligence procedures and will open a bank account for you.

Congratulations! Your company is all set to start its business.

Contact us +91 76 111 666 06 or mail us [email protected] for the incorporation of Nidhi Company.

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