Nidhi Company

Nidhi Company is a company registered under Companies Act and notified as a Nidhi company by Central Government under Section 620A of Companies Act, 1956. It is a non-banking finance company doing the business of lending and borrowing with its members or shareholders It inculcates the habit of saving among its members and works on the principle of mutual benefit. These companies typically operate in the southern part of the country. Nidhi Company isn’t required to receive the license from Reserve Bank of India (RBI), hence it is easy to form. It is registered as a public company and should have “Nidhi Limited” as the last words of its name.

Check list

 Directors

• ID and Address Proof {Bank Statement/Electricity Bill/Telephone bill/ Mobile Bill (not later than 2 months) of Directors & Shareholders
• ID proof and Address Proof of the Promoters/Subscribers/Shareholders (PAN, Aadhar Card, Passport) 
• Passport size pictures of Directors
• DSC of Directors and Shareholders
• Mobile No. and Email id of Directors
• Provide DIN if already have of Directors

 Company

•  Authorized Capital and the proportion of contribution by the Shareholders –
•  Detailed Objects of the Company –
•  Utility bill for registered office of the Company(Not older than 2 months) –
•  Proof of ownership along with NOC of the owner –

Requirements for Nidhi Company

• A Nidhi company to be incorporated under this Act shall be a Public Company;
• It shall have a minimum paid up equity share capital of 5,00,000/-;
• No preference shares shall be issued.
• If preference shares had already been issued by a Nidhi Company before commencement of this Act, such preference shares are to be redeemed in accordance with the terms of issue of such shares;
• The object of the company shall be cultivating the habit of thrift and savings amongst its members, receiving deposits from and lending to its members only for their mutual benefits; It shall have the words ‘Nidhi Limited’ as part of its name;

Requirement after Incorporation:

• Every Nidhi shall, within a period of one year from Incorporation, ensure that it has—
• Minimum number of members should be 200;
• Net owned funds shall be Rs.10,00,000/- or more (‘Net owned funds’ means the aggregate of paid up equity share capital and free reserved as reduced by the accumulated and intangible assets appearing in the last audited balance sheet);
• Ratio of net owned funds to deposit shall be not more than 1:20;
• Unencumbered term deposits of not less than 10% of the outstanding deposits  as specified in Rule 14;

Membership

• A Nidhi shall not submit a body corporate or trust as a member.
• Except as otherwise permitted under these rules, every Nidhi shall ensure that its membership is not reduced to less than 200 members at any time.
• A minor shall not be admitted as a member of Nidhi.
• But deposits may be accepted in the name of a minor, if they are made by the natural or legal guardian who is a member of Nidhi.

Acceptance of deposits:

• A Nidhi shall not accept deposits exceeding 20 times of its Net Owned Assets as per last audited financial statements.
• The fixed deposits shall be accepted for a minimum period of 6 months and a maximum period of 60 months.
• Recurring deposits shall be accepted for a minimum period of 12 months and a maximum period of 60 months.
• In case of recurring deposits relating to mortgage loans, the maximum period of recurring deposits shall correspond to the repayment period of such loans granted by Nidhi.
• The maximum balance in a savings deposit account at any given time qualifying for interest shall not exceed Rs.1,00,000/- and the interest shall not exceed 2% above the rate of interest payable to savings bank account by nationalized banks.
• Interest for fixed and recurring deposits shall be at a rate not exceeding the maximum rate of interest prescribed by RBI which the NBFC can pay on their public deposits.

Every Nidhi shall invest and continue to keep invested, in unencumbered term deposits with a scheduled commercial bank or post office deposits in its own name an amount which shall not be less than 10% of the deposits outstanding at the close of the business on the last working day of the second preceding month.

In case of unforeseen commitments, temporary withdrawal may be permitted with the prior approval of the Regional Director for the purpose of repayment to depositors, subject to such conditions and time limit which may be specified by the Regional Director to ensure restoration of the prescribed limit of 10%

Loan

A Nidhi shall provide loans only to its members.  The loans given to a member shall be subject to the following limits:

• 2,00,000/- where the total amount of deposits from members is less than Rs.2 crores;
• 7,50,000/- where the total amount of deposits from its members more than Rs.2 crores but less than Rs.20 crores;
• 12,00,000/- where the total amount of deposits from its members is more than Rs.25 crores but less than Rs.50 crores;
• 15,00,000/- where the total amount of deposits from its members is more than Rs.50 crores.

Branches:

• A Nidhi may open branches only if it has earned net profits after tax continuously during the preceding three financial years.
• The company may open up to 3 branches only within the district.
• If it proposes to open more than 3 branches within the district or any branch outside the district, it shall obtain prior permission of the Regional Director and intimation is to be given to the Registrar about opening of every branch within 30 days of such opening.
• No Nidhi shall open branches or collection centers or offices or deposit centers, or by whatever name called outside the State where its registered office is situated.
• Further branches or collection centers or offices or deposit centers shall be opened unless financial statement and annual return are filed with the Registrar.

Certificate of Incorporation

• When the eForm is processed and DIN is generated, an acknowledgement email of Certificate of Incorporation (CoI) is sent on email. 
• Further, on approval of SPICe+ forms, the Certificate of Incorporation (CoI) is issued with PAN and TAN as allotted by the Income Tax Department.
• An electronic mail with Certificate of Incorporation (CoI) as an attachment along with PAN and TAN is also sent to the user.

Limited Liability Partnership:

Meaning:

LLP is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership. The LLP can continue its existence irrespective of changes in partners. It is capable of entering into contracts and holding property in its own name. The LLP is a separate legal entity, is liable to the full extent of its assets but liability of the partners is limited to their agreed contribution in the LLP. Further, no partner is liable on account of the independent or unauthorized actions of other partners, thus individual partners are shielded from joint liability created by another partner’s wrongful business decisions or misconduct.

Limited Liability Partnership or LLP is a form of partnership wherein the partner’s liability is limited up to the capital contribution made by them.

Minimum Required Partners:

Minimum 2 PArtners are required for LLP Formation.

Checklist for Partners:

• PAN Card or Passport(foreign Nationals or NRI)(Self Attested)
• Aadhar Card/Voters ID/PassPort/ driving license(self attested)
• Passport size Photograph
• Blank document with specimen signature.

Note: In the case of Foreign nationals or NRIs, all the documents must be notarized(if currently in India or a non-commonwealth country) or apostilled (if from a commonwealth country).

Checklist for LLP:

• Electricitybill(not older than 2 Months)
• Notarized rental agreement in English and No-Ojection certificate from the Property Owner(in case of rented property)
• Sale deed/property deed in English(in case of owned property).

Special Note: – The address proof of the applicant or registered office need not be older than two – All documents annexed should be clear and legible.

Compliances:

• Filing of form 11 – Annual Return of Company.
• Filing of Form 8 – Statement of Accounts and Solvency
• Designated Partner’s KYC
• Filing of Income Tax Return of LLP

Benefits of registration of LLP:

• Less Compliances
• Lesser cost of Compliances
• Allowance of deduction in  Income Tax within the limits prescribed in Income Tax Act 1961.