Introduction
A Nidhi Company is a type of company formed with the objective of encouraging savings and financial discipline among its members. It accepts deposits from its members and provides loans exclusively to them for their mutual benefit.
Membership in a Nidhi Company is restricted to individuals only. Bodies corporate, companies, or limited liability partnerships are not permitted to become members. Therefore, a Nidhi Company cannot accept deposits from or extend loans to any corporate entity.
Such companies generally offer loans to their members at interest rates that are comparatively lower than those charged by banks. However, despite operating independently, a Nidhi Company must strictly comply with the rules and regulations prescribed by the Central Government for its governance and functioning.
Professional assistance can help in completing the registration process smoothly, ensuring compliance with all legal requirements for establishing a Nidhi Finance Company in India.
Basic Conditions for Incorporation of a Nidhi Company
The following essential requirements must be fulfilled while incorporating a Nidhi Company:
Status as a Public Company
A Nidhi Company must be incorporated and function strictly as a Public Limited Company.
Restriction on Preference Shares
It is not permitted to issue preference shares to its members under any circumstances.
Minimum Paid-up Capital
The company must maintain a minimum paid-up equity share capital of ₹10,00,000 (Ten Lakhs).
Objects Clause in MOA
The Memorandum of Association (MOA) should clearly specify that the primary objective of the company is to accept deposits from and provide loans exclusively to its members for their mutual benefit.
Name Requirement
The name of every Nidhi Company must compulsorily end with the words “Nidhi Limited.”
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1. Post-Incorporation Conditions (To Be Fulfilled Within One Year)
After completing one year from the commencement of business, every Nidhi Company must satisfy the following criteria:
Minimum Number of Members
The company must have at least 200 members.
Net Owned Funds (NOF)
The Net Owned Funds should be ₹20 lakhs or more.
Unencumbered Term Deposit
The company must maintain unencumbered term deposits equal to not less than 10% of the total outstanding deposits, as prescribed under the applicable rules.
NOF to Deposit Ratio
The ratio of Net Owned Funds to total deposits should not exceed 1:20.
2. Minimum Members and Directors at the Time of Registration
A member is an individual who subscribes to and holds shares in the company, and whose name is entered in the register of members. A director is responsible for managing and supervising the company’s operations and decision-making processes.
3. Documents Required
(A) Documents of Members and Directors
Identity Proof (Self-attested)
Passport, Voter ID, Aadhaar Card, or Driving License.
Address Proof (Self-attested, not older than 2 months)
Bank Statement, Electricity Bill, Telephone Bill, or Mobile Bill.
PAN Card (Self-attested)
Mandatory for all members and directors.
Photographs
Two passport-size colored photographs of each member and director.
(B) Registered Office Documents
If the office is rented/leased:
If the office is owned:
NOC from the property owner
Ownership documents (property papers)
Latest utility bill (not older than 2 months)
4. Additional Information Required
The following details must also be provided:
Authorized and paid-up share capital of the proposed company along with the number of shares subscribed by members.
Place of birth and duration of stay at the current residential address of members and directors.
Occupation of each member and director.
Main object and proposed business activities of the company.
Educational qualifications of members and directors.
Valid email IDs and contact numbers of all members and directors.
Meeting these requirements ensures proper incorporation and smooth regulatory compliance of a Nidhi Company.
The Ministry of Corporate Affairs, through its notification dated 18th February 2020 (effective from 23rd February 2020), amended the Companies (Incorporation) Rules, 2014. As part of this amendment, the earlier Form INC-32 (SPICe) was replaced with the integrated web-based service SPICe+, along with several procedural changes.
The updated registration process is outlined below:
1. Application for Name Reservation
The first step involves applying for reservation of the proposed company name through the SPICe+ web portal available on the MCA website, along with payment of the prescribed government fee.
Before submitting the name application, it is important to:
SPICe+ is divided into Part A and Part B:
Part A is used for reserving the company name.
If the applicant wishes to apply for name reservation, incorporation, and other registrations simultaneously, both Part A and Part B can be completed together.
2. Filing of Part B, MOA, AOA and AGILE Form
After name approval (or along with it), Part B of SPICe+ must be completed for company incorporation. This section contains various fields where required information can be entered, saved, and edited if necessary.
Along with Part B, the following must also be prepared and filed:
Memorandum of Association (MOA)
Articles of Association (AOA)
AGILE form for additional registrations
3. Conversion of SPICe+ Form into PDF
Once all details are filled in correctly, the SPICe+ form must be converted into PDF format to enable affixing of the Digital Signature Certificate (DSC).
4. Uploading the Form on MCA Portal
After attaching the DSC of the authorized signatories, the completed form is uploaded on the MCA portal as per the prescribed online filing procedure.
5. Declaration by Directors and Subscribers
The declaration of subscribers and first directors, earlier filed separately in Form INC-9, is now auto-generated in PDF format through the system and submitted electronically in most cases.
However, electronic generation is not applicable where:
This streamlined process ensures efficient and compliant registration of the company under the revised incorporation framework.
Following the recent amendments introduced by the Ministry of Corporate Affairs through the implementation of SPICe+, several important procedural changes have come into effect. The key modifications are explained below:
1. No Requirement to Mention SRN
There is no longer a need to manually enter the Service Request Number (SRN) for names approved in Part A of SPICe+. The system automatically reflects the reserved name while proceeding with Part B.
2. Mandatory ESIC and EPFO Registration
All companies incorporated on or after 23rd February 2020 are required to mandatorily obtain registration under ESIC and EPFO at the time of incorporation.
3. Compulsory Professional Tax Registration in Maharashtra
For companies incorporated in the State of Maharashtra on or after 23rd February 2020, obtaining Professional Tax Registration has become mandatory.
4. Mandatory Application for Opening a Bank Account
Every newly incorporated company must apply for opening a bank account through the AGILE-PRO linked web form at the time of incorporation.
5. Electronic Declaration of Subscribers and First Directors
The declaration of subscribers and first directors, previously filed through Form INC-9, is now auto-generated in PDF format and must be submitted electronically in most cases.
However, this auto-generation facility will not apply where:
The number of subscribers and/or directors exceeds 20, or
Any subscriber or director does not possess a valid DIN and PAN.
6. Compulsory Use of e-MoA (INC-33) and e-AoA (INC-34) in Certain Cases
The use of electronic Memorandum of Association (e-MoA) and electronic Articles of Association (e-AoA) is mandatory when the number of subscribers is up to seven and in the following situations:
Individual subscribers who are Indian nationals.
Foreign national subscribers holding valid DIN and DSC along with proof of a valid business visa.
Non-individual subscribers incorporated in India.
7. Requirement of Physical MoA and AoA in Specific Situations
Signed physical copies of the MoA and AoA must be attached where the first subscribers are based outside India or where the required DIN, DSC, or valid business visa is not available.
These amendments aim to simplify the incorporation process while ensuring greater transparency and regulatory compliance.
| S. No. | Situation | Forms and Attachments Required |
|---|
| 1 | Non-individual first subscriber located outside India | SPICe+ (INC-32) to be filed along with apostilled MoA and AoA as attachments. |
| 2 | Non-individual first subscriber situated in India | SPICe+ (INC-32) with linked submission of e-MoA (INC-33) and e-AoA (INC-34). |
| 3 | Indian national subscriber who is not acting as director | SPICe+ (INC-32) along with linked filing of e-MoA (INC-33) and e-AoA (INC-34). |
| 4 | Indian national acting as both subscriber and director | SPICe+ (INC-32) with integrated filing of e-MoA (INC-33) and e-AoA (INC-34). |
| 5 | Foreign national subscriber (not a director) having valid DIN | SPICe+ (INC-32) with e-MoA (INC-33) and e-AoA (INC-34) along with a valid Business Visa. If Business Visa is not available, apostilled MoA and AoA must be attached and e-MoA/e-AoA cannot be used. |
| 6 | Foreign national subscriber-cum-director having valid DIN | SPICe+ (INC-32) with linked e-MoA (INC-33) and e-AoA (INC-34) along with valid Business Visa. If Business Visa is unavailable, apostilled MoA and AoA must be attached and electronic forms will not be accepted. |
| 7 | Foreign national subscriber-cum-director without valid DIN | SPICe+ (INC-32) must be filed with apostilled MoA and apostilled AoA as mandatory attachments. |
Note- In all the situations mentioned above, the maximum number of subscribers permitted is seven while filing the SPICe+ form. If the number of subscribers exceeds seven, the form must be submitted along with the Memorandum of Association (MoA) and Articles of Association (AoA) as separate attachments.
Mandatory Filing of Statutory Return
Companies incorporated through SPICe+ and allotted EPFO and ESI registration numbers are required to file statutory returns only when they cross the prescribed employee threshold limit under the respective laws.
For detailed information regarding post-incorporation requirements and ongoing compliance, you may refer to the provisions applicable to a Nidhi Company.
