Registration of a Nidhi Company | Documents Required for Nidhi Company Registration

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What is a Nidhi company?
Nidhi companies are non-banking financial company formed to borrow and lend money to the associated members. These companies work on the principle of providing mutual benefit to the members and encourage members to adopt the habit of saving money regularly.

Nidhi companies are found mostly in southern India and are not required to obtain any RBI license or authorisation. These companies will have to be registered as a public company, and their name must end with 'Nidhi Limited'.

Number of members
At least seven members are required to commence the operations of a Nidhi Company. Out of these, three members should be designated as the directors of the company. However, within one year of its commencement, there should be a minimum of 200 members.

Share Capital and Owners' Funds
To start a Nidhi company, you are required to have at least Rs 5 lakh as equity share capital. Please note that a Nidhi company cannot issue preference shares.

The following are the documents required for the registration of a Nidhi company:

Proof of the registered place of business (Ownership documents)
NOC (signed by the landlord)
Identity proofs
Address proofs of the members
Photos of the members
PAN card copies of the members
Digital Signature (DSC)
Director Identification Number (DIN) of the directors
Memorandum of Association of the Company (MoA)
Articles of Association of the Company (AoA)

Please note that just one object is going to be mentioned in the MoA of the Company, which is as follows: ""cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit.""

Once you have the required documents handy, you can proceed to register your Nidhi company by filling the SPICe+ Form along with form INC 9 and DIR 2 with the Ministry of Corporate Affairs.

Form INC9 is to be filled by each subscriber of the MoA, while Form DIR 2 must be filled by the company's directors. Also, all subscribers must sign the declaration as per Rule 5&6 of Nidhi rules 2014.

You have to meet these conditions to obtain the Nidhi status within one year of registration:

The company must have a minimum of 200 members within one year from the date of commencement
The net owned funds must be equal to or more than Rs 10 lakh.
The net owned funds is calculated as follows:
Equity share capital + free reserves (-) accumulated losses (-) intangible assets
The unencumbered term deposits should be at least 10% of the outstanding deposits
The ratio of net owned funds to deposits must not exceed 1:20

A Nidhi company meeting all these conditions is required to file NDH-1 by paying the prescribed fee within a period of 90 days from the end of the first fiscal year after incorporation. This Form must be certified by a practising CA, CS or CWA.

The Regional Director can provide an extension to the tune of one financial year on submitting NDH-2 within a period of 30 days from the end of the first financial year.

Failure to meet the requirements will result in penalties being imposed. Also, the company cannot accept deposits until it complies with the norms.

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