Nidhi Company Registration in Chennai - An Overview
Nidhi Company registration is a business structure incorporated under Section 406 of the Companies Act, 2013 read with Nidhi Rules 2014 and is governed by the Ministry of Corporate Affairs. It works on the principle of mutual benefits that are regulated by the Ministry of Corporate Affairs. Nidhi Company is a class of Non-Banking Financial Company and Reserve Bank of India has powers to issue directives for them related to their deposit acceptance activities.
The principal aim of a Nidhi company is to inculcate a habit of frugality and savings among its members. These companies do the business of borrowing from members and lending to members only, under the ambit of Nidhi Permanent Fund. Deposits with nidhi companies are safe and secure because the Ministry of Corporate Affairs and Reserve Bank of India has framed rules and regulations to ensure the safety and security of Deposits.
Benefits of Nidhi Company Registration in Chennai
Nidhi Company works with the objective of increasing the savings of its members. The loans given to the members at a lower rate compared to the market rate hence it attracts the members to do more savings. The investments in the Nihi Company are secured ones.
- The formation of the Nidhi Company is a very easy process.
- It requires only 7 members out of which 3 members would be the directors.
- Nidhi Company does not require to obtain a licence from RBI.
- The Nidhi company takes hardly 10-5 days to get registered.
- Also the number of documents required for the registration are very less.
- The capital requirement for the registration of Nidhi company is very less compared to other types of finance companies.
Advantages
Easy of Formation
Unlike other NBFCs, Nidhis don’t have to obtain a license from RBI. They just have to incorporate themselves as a public company with the MCA with the required capital as per Nidhi Rules 2014
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Lower Rate of Credit
The loans given to the members are at a lower rate of interest than the market rate. This brings greater savings to the members.
Business Continuity
A Nidhi company has ‘perpetual succession’, that is uninterrupted existence until it is legally dissolved. A Nidhi company is unaffected by the death or other departure of any member.
Separate Legal entity
A Nidhi Company is a legal entity and a juristic person established under the Act. Therefore, a Nidhi company has wide legal capacity and can own property and also incur debts.
Channelizing small savings
The main aim of such companies is to promote the habit of saving and thrifts among lower and middle section of the society.
Limited Liability
Personal assets of the shareholders will not be at risk, in the event of the company facing financial distress. Liability of the shareholder is limited to the unpaid amount on his shareholding.
PRE-REQUISITES FOR INCORPORATION OF NIDHI COMPANY
Benefit of Members
The objective of such a firm would be to imbibe in the members a habit of thrift and saving and the services would only be restricted to its members.
Minimum Required Capital
A minimum capital of Rs. 5,00,000 is required to incorporate a Nidhi Company.
Company Formation
A Nidhi company has to be a public company
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Documents required for Nidhi Company Registration in Chennai
How to Register a Nidhi Company in Chennai
- Apply for Director Identification Number (DIN) and Digital Signature Certificate (DSC). Procurement of DSC easily takes 2 days in most cases. It is required by all directors, shareholders and the witnesses to MOA and AOA. DIN is issued by the Ministry of Corporate Affairs to the directors of the company. Since the registration process in India is online, all the documents have to be submitted online. It is important to verify the authenticity of the documents.
- Once DIN and DSC are received, one may begin to file an application in INC-1 to the Ministry of Corporate Affairs for reservation of name of the Nidhi company. It is important that the name does not resemble the name of other companies nor should it be undesirable in the opinion of the Central Government.
- Once the name is approved by MOCA, the next step is to prepare for Memorandum of Association (MOA) and Articles of Association (AOA). For this, the objective of the company must be kept in mind.
- Further, apply for incorporation.
- After the issuance of Incorporation Certificate, one may apply for the PAN and TAN of the company. The application for this has to be made separately, other than the SPICe.
- GST registration: The GST Registration is a mandatory process that needs to be followed for all those persons or business entities in India which exceed the threshold limit of profits or turnover. Failure to do so for the purpose of tax evasion is a criminal offense that is subjected to penalties, prosecution and jail term.
- Opening of a current bank account.
The following listed are the steps involved in the process for registration of a nidhi company:
What is the process for Nidhi Company?
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Applying DIN & DSC
DSC and DIN for all directors are required.
Name Approval
4-6 proposed names should be provided that should be unique and suggestive of company business.
MOA,AOA & AFFIDAVIT
Memorandum and Articles of Assocication should be drafted. Affidavit and declaration by first subscribers and Directors should be prepared
Company Registered
Once the application is duly filed and accepted by ROC, certificate of incorporation is issued and the company is all set to start it’s operations.
Apply for PAN, TAN and Bank accounts
Then you need to apply for PAN and TAN. PAN and TAN are received in 7 working days. Post this, you can submit the Incorporation certificate, MOA, AOA and PAN with a bank to open your bank account.
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