What is Nidhi Company Registration Online?
A non-banking finance firm that is governed by the central government is called a Nidhi Company. The basic function of a Nidhi Limited Company Registration is to facilitate easy lending of money between the various core members of the concerned company. The concept of a Nidhi Company was introduced in Section 406 under the Companies Act of 2013. The funds are either borrowed from a party or provided to another party on the basis of mutual benefit of both sides. A Nidhi Company Online Registration Process is the cheapest and safest way of raising money from the general public in a faster way than other agencies. It is also called a Mutual Benefit Company as it tried to benefit both the lender and the loan seeker. Any individual can register for becoming a member of a Nidhi Limited Company without going through any background check. In this article, we will be learning All about Nidhi Company Registration online, its characteristics, its advantages, disadvantages, the online registration process, documents required for Nidhi company registration.
Characteristics of Nidhi Limited Company Registration:
If you are looking for a business in the loan/ finance sector, then Nidhi Company Registration Online will be the best fit for you. Here are some of the major characteristics of a Nidhi Company Incorporation in India:
1. A Nidhi Company does not require any licensing from the Reserve Bank Of India. All the other banking firms or non-banking money lending firms require a necessary license issued by the Reserve Bank of India to operate and function in the market but a Nidhi company doesn’t need to do so.
2. A Nidhi company is the only type of non-banking legal entity which comes under the direct control of the Reserve Bank of India. A gist of its functions and proceedings are kept in check by the Reserve Bank actively. This characteristic of a Nidhi Limited Company registration Online gives it a unique presence in the whole market.
3. A Nidhi Company is a small-scale legal entity. It is an easy means of savings for the middle class and the lower class people with minimum documentation that is required for approval.
4. There is a very rigid system of membership and lending loans in a Nidhi company. Unlike other non-banking entities, Nidhi Companies provide more secure monetary investment. This is a characteristic that is responsible for investments from middle-class people on a smaller scale.
5. The minimum amount of capital investment in a Nidhi Company is only Rupees 5 lakhs. It is a smaller amount than any other company types like private limited company etc. demand for initial investment.
List of Documents Required for Nidhi Company Registration Online:
Since the process is 100% online, therefore all the Nidhi Company Registration documents are required to be filed directly on the MCA website. Here is the list of documents required for the Nidhi Company Online Registration process:
1. Proof of Identity of all the proposed directors and shareholders of the Nidhi company registration. PAN card and Aadhar card are the identity proofs that need to be submitted by Indian nationals. For foreign nationals, a copy of their Passports is required as proof of their identity.
2. A proof of the address of all the proposed shareholders and directors is also a required document for the Nidhi Company Registration process online. Electricity bills, phone bills and bank statements that are not older than 2 months can be used as address proof. Any one of these documents needs to be submitted along with other requirements.
3. After the Nidhi Limited Company Registration process online, you also need a workspace to run your business. This place may be rented or your own property. The Ministry of Corporate Affairs needs proof of the office address of the Nidhi Company as well. Electricity bill, phone bill, water bill, etc. of the office can be used as address proof for spaces that are your own property. But if you have rented a place for your company’s office, then you need to submit a No Objection Agreement ( NOA ) or a rental agreement signed by your landlord to the Ministry.
Requirements for Nidhi Company Online Registration Process:
For a Nidhi Limited Company Registration Process online, the following basic requirements must be kept in mind:
For Shareholders: A minimum of 7 shareholders or members is essential for the incorporation of a Nidhi Company. The members or shareholders can be in blood relation as well.
For Directors: A minimum of 3 directors are required for the online registration of Nidhi Limited Company. Out of 7 above-mentioned shareholders or members, three of them can be directors, and the rest 4 can be assigned as shareholders or members. Including directors, shareholders, or members, a total of 7 people are required for Nidhi Company Registration.
Paid-Up Capital: The minimum paid-up capital that is required for the incorporation of a Nidhi Company is Rs. 5 Lakhs, i.e., with a nominal amount, a Nidhi Company can start its working.
DIN: A Director Identification Number i.e., DIN is a must for all the directors that are going to take part in Nidhi Company Incorporation.
Objective: The primary objective of a Nidhi Limited Company Registration Online is to instill the habit of savings among its members and shareholders. They can deposit their money and lend them among themselves for their mutual benefits.
Share Value: As per the guidelines, the equity share value for each share must not be less than Rs. 10.
Process of Registration of Nidhi Company Online:
The Process of Incorporation of a Nidhi Company Registration Online is quite easy. One needs to take care of the below-mentioned points:
1. All the proposed directors of a Nidhi Company need to obtain their Digital Signature Certificates. This is a mandatory step as the Nidhi Company Registration Online can never be initiated by the concerned government agencies before all the directors submit their Digital Signature Certificates.
2. Like in the process of registration of all other kinds of companies, a Nidhi Company Registration Process also needs to apply for a name approval for the company. The MCA allows opting for two options for the name of the Nidhi Company at once. If any one of the names is approved, then the process moves further. But if the name is not approved that is, it is already the name of an existing Nidhi Company; you need to propose another name option for the company to the MCA and wait for it to get approved.
3. Spice Form : The Spice Form includes many official forms like the Memorandum Of Association ( MOA ), Articles Of Association ( AOA ), etc. For a Nidhi Company registration online, you need to submit these forms along with all the required information of the proposed directors and shareholders of the concerned company. All this information is provided to the Ministry of Corporate Affairs and after approval of all the documents, they proceed with the registration process of the Nidhi company.
4. After a month or so, the whole registration process of the Nidhi Company is completed by the Ministry of Corporate Affairs. The successful registration of the company is followed by the incorporation of the Nidhi company legally. A certificate of incorporation and a company identification number is provided by the MCA. These Nidhi Company registration documents are important as they work as proof of successful registration with the ministry of corporate affairs.
With the help of professionals like Vakilgiri, Best Nidhi Company Registration Consultants, the process can be completed within 10 Working Days. The Cost of Nidhi Limited Company Registration Process online is also quite less.
Must Read: Annual Tax Compliances for Nidhi Company
Advantages of Online Nidhi Company Registration:
Sure Existence of the company :
A Nidhi Company Registration acts as a Separate Legal Entity thus, any change in the management does not hider the work or functioning of the company. For example, if one of the shareholders or directors resigns or departs from the company untimely, the operations of the company does not collapse. Only if the Nidhi Company Registration process is dissolved through a legal process (according to the provisions provided by law), the company can cease to exist.
Individual Entity :
As discussed above, a Nidhi Company Registration acts as a separate legal entity, meaning, all the directors, shareholders or members act as separate entities. This ensures that the company’s liabilities or debts are not owned by its directors or members.
Unlike changes in business structures like a Public Limited or a Private Limited Company (which is a very lengthy and costly process), the introduction of any change in the management of a Nidhi Company is quite easy and the process can be completed by filing a form informing about the changes and the cause to the MCA department. This feat gives an edge to the Nidhi Company Registration in India.
Market Value :
The functioning and internal management of a Nidhi Company is in control of the Central Government or Registrar of Company (ROC). Thus, making the registration of Nidhi Company more trustworthy as compared to aby other money lending legal business structures in India.
Loans at lower rates :
The Nidhi Company incorporation is completed with an objective to provide easy loan facilities to its members. The loans disbursed by the company are on lower interest rates as compared to other loan-providing institutions. This helps in saving money for the members seeking a loan.
Disadvantages of a Nidhi Company Registration:
Low Credit :
The major drawback of a Nidhi Company Registration is the limited credit availability. This hinders the main objective of the company which is to provide loans to its members at lower interest rates.
Fund Raising Issues :
A Nidhi company can only accept deposits in the form of cash from its members. If the number of members is less in a company, then the funds available for loan disbursement will be less too. Thus, fundraising issues are one of the major drawbacks in a Nidhi Bank registration.
Get started with your Nidhi Company Registration Process with Vakilgiri, Best Nidhi Company Registration Consultants in India.