Nidhi Company is one of the EASIEST WAYS TO JUMP INTO CORPORATE FINANCE WORLD.
Nidhi Company form of business is an easy and simple way to get into the corporate finance world and it is an easy way for a good start-up. As compare to Sole Proprietorship, it is a better option for the start-up as in this form of business liability of members is limited. It is a good platform for incorporating a company form of business having ownership.
BENEFITS OF NIDHI COMPANY:
a. No RBI Regulation
By its nature of the activity, Nidhi Company falls under the NBFC category but does not require approval from RBI. These companies obey Nidhi Laws, released in 2014 with respect to the company’s operation and function. RBI has exempted Nidhi Company from observing strict compliances, so you don’t have to be in a rush-n-hush as RBI won’t bother if you start a Nidhi Company in India.
b.Can easily lend and borrow funds fund from its member
The main objective of Nidhi company is to promote the habit of saving amongst its member which means it is certain and going concern business as the members will not stop savings anytime.
c. Low rate of interest
One can borrow money as a member at a minimum rate, compared to the rate at which banks lend money. This can be a big advantage in times of need, as different individuals in the mutual benefit society would probably need funds at different times.
d. Encourage Saving
It encourages all its members to save money and encourages a sparing lifestyle. After all, a Nidhi Company is a mutual benefit society in which members can lend or borrow money, and accept financial assistance among themselves.
e No external involvement of management
f. Easy transfer of ownership
Essentials for incorporation of Nidhi Company
Pre- incorporation requirement:
➲ At least 7 members at the time of incorporation
➲ Minimum 3 directors should be there
➲ Preference shares are not allowed at the time of incorporation
➲ Objects must specify the receiving and lending of deposits from its member for their mutual benefits.
Post- incorporation requirement:
➲ Within 12 months from the date of registration member size must increase to more than 200 and further member size has to be maintained during the course of time.
➲ There should be minimum net owned fund (Paid-up share + Free reserve) of INR 10 lakh or more
➲ Unencumbered term deposits of not less than 10% of the outstanding deposits
➲ A body corporate or a minor cant act as a member of a Nidhi Company.
➲ Ratio between net owned fund to deposit must be in 1:2
Documents required for Incorporation of Nidhi Company
1. ID proof of proposed Directors and members:
➲ PAN card (Mandatory)
➲ Aadhar card (Mandatory)
➲ Passport or Voter’s ID or Driving License
2. Address proof of proposed members and directors (any one):
➲ Telephone bill
➲ Mobile Bill
➲ Bank statement
➲ Electricity bill
3. Address proof for principal place of business of proposed company (any one)
➲ Utility bill like telephone bill, electricity bill, gas bill, water bill
➲ Rent agreement with rent slip
➲ Proof of ownership
Process of Incorporating a Nidhi Company
STEP 1: APPLY FOR THE DESIRED NAME
The first step in incorporating a company is for reserving the name of the proposed company in part-A of SPICe Plus (SPICe+) form. In this form choose your business activity and file for two proposed names, if CRC will reject the proposed name then file again with two new names within a certain time limit from the date of rejection (15 days).
STEP 2: APPLY FOR A DIGITAL SIGNATURE CERTIFICATE (DSC)
The process of incorporation of a Company is 100 percent online in India. Hence, we need to apply for a DSC (Digital Signature Certificate), which will be used for electronically signing the forms by proposed directors and proposed members respectively. DSC has to be mandatorily applied for each and every single member/shareholder and director of the Company.
STEP 3: FILL THE APPLICATION FOR INCORPORATION (SPICe plus Form – SPICe+)
Once, your name gets reserved under it will be valid for 20 days from the date of approval, within 20 days you have to fill-up the respective application form for incorporation along with all the requisite attachments and documents and upload it online. SPICe+ is an advanced form combination of 8 forms in one. Through this proposed company can apply for at once:
- Name reservation
- Incorporation
- Apply for DIN
- TAN
- PAN
- EPFO
- ESIC
- GSTIN
Next step is to fill the part-B of SPICe + which will contain all the detail related to incorporating company like number total number of directors and members, Authorized share capital, paid-up capital, number of share hold by members, company registered address detail, directors and member detail and will required attachments for proof. Then draft the MOA (memorandum of association) and AOA (Article of Association) of the proposed company, then fill form required for EPFO and ESIC registration with detail, then Fill the AGILE form for procuring GSTIN. After filling all these attach the signature and then upload it on the MCA website.
STEP 1: APPLY FOR THE DESIRED NAME
The first step in incorporating a company is for reserving the name of the proposed company in part-A of SPICe Plus (SPICe+) form. In this form choose your business activity and file for two proposed names, if CRC will reject the proposed name then file again with two new names within a certain time limit from the date of rejection (15 days).
STEP 2: APPLY FOR A DIGITAL SIGNATURE CERTIFICATE (DSC)
The process of incorporation of a Company is 100 percent online in India. Hence, we need to apply for a DSC (Digital Signature Certificate), which will be used for electronically signing the forms by proposed directors and proposed members respectively. DSC has to be mandatorily applied for each and every single member/shareholder and director of the Company.
STEP 3: FILL THE APPLICATION FOR INCORPORATION (SPICe plus Form – SPICe+)
Once, your name gets reserved under it will be valid for 20 days from the date of approval, within 20 days you have to fill-up the respective application form for incorporation along with all the requisite attachments and documents and upload it online. SPICe+ is an advanced form combination of 8 forms in one. Through this proposed company can apply for at once:
- Name reservation
- Incorporation
- Apply for DIN
- TAN
- PAN
- EPFO
- ESIC
- GSTIN
Next step is to fill the part-B of SPICe + which will contain all the detail related to incorporating company like number total number of directors and members, Authorized share capital, paid-up capital, number of share hold by members, company registered address detail, directors and member detail and will required attachments for proof. Then draft the MOA (memorandum of association) and AOA (Article of Association) of the proposed company, then fill form required for EPFO and ESIC registration with detail, then Fill the AGILE form for procuring GSTIN. After filling all these attach the signature and then upload it on the MCA website.
STEP 4: CERTIFICATE OF COMMENCEMENT OF BUSINESS
Once the application of incorporation of the company is approved and the Certificate of Incorporation is issued by the ROC, the Company shall file for seeking approval for commencing the business within 180 from the date of incorporation of the Company.
Once the application of incorporation of the company is approved and the Certificate of Incorporation is issued by the ROC, the Company shall file for seeking approval for commencing the business within 180 from the date of incorporation of the Company.
How does CORPZO help you with incorporation of your Company?
- Call or raise a request with us
- Our expert advisor(s) will understand your request and consult accordingly.
- We will collect your documents and information which will be required for incorporation
- One person from our team of professionals will get in touch with you for getting more information and documentation if required.
- Finally, professionals draft your form and submit it with MCA for getting your proposed company incorporated.
