“Nidhi” is a Hindi word, which means finance or fund. Nidhi means a company which has been incorporated with the object of developing the habit of thrift and reserve funds amongst its members and also receiving deposits and lending to its members only for their mutual benefit. Nidhi Company is a company registered under the Companies Act, 2013. Nidhi companies are allowed to take deposit from its members and lend to its members only. Therefore, the funds contributed for a Nidhi company are only from its members (shareholders) and used only by the shareholders of the Nidhi Company.
Nidhi Company is a Non-Banking Financial Company (NBFC) which does not require any license from the RBI. The Nidhi Company is very easy and cheap to form to register. Anybody can register a Nidhi Company; there is no background check, nor are there did any prescribed qualifications for its owners. Nidhi Companies cannot deal with anybody other than its members. Therefore, Nidhi Company is an ideal entity to take deposit from and lend to a specific group of people.
Nidhi Company is incorporated in the nature of Public Limited Company. Hence, all requirements for the Public limited company will be applicable. Minimum seven members and minimum three directors are required for incorporation of a Nidhi Company. There is also a myth in the industry that a Nidhi Limited Company is first incorporated as a Public Limited company, and then registration of Nidhi is initiated. Nidhi Company is registered from the beginning as a Nidhi limited. There is no separate approval process.
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Requirements after Registration of Nidhi Company
Now, we are into the section of requirements which are required to be complied within one year of Incorporation. These requirements are very much important. Otherwise, the company will be at default. The requirements are as follows: