If you’re considering starting a business in India, you’ve likely come across the term “Nidhi Company.” A Nidhi Company is a type of non-banking financial company (NBFC) that is popular among small businesses and entrepreneurs. However, many people are unaware of the unique aspects of Nidhi Company registration compared to other types of business registrations. In this blog post, we’ll explore the differences between Nidhi Company registration and other types of registrations, including the legal requirements and benefits.
What is Nidhi Company Registration?
Before we dive into the differences between Nidhi Company registration and other types of registrations, let’s first define what a Nidhi Company is. A Nidhi Company is a type of NBFC that is primarily formed for the purpose of promoting savings and investments among its members. These companies are regulated by the Ministry of Corporate Affairs and are required to follow certain legal requirements.
Now, let’s take a look at how Nidhi Company registration differs from other types of registrations.
Legal Requirements
One of the most significant differences between Nidhi Company registration and other types of registrations is the legal requirements. Here are some of the legal requirements for Nidhi Company registration:
- The company must have a minimum of 200 members within one year of incorporation.
- The company must have a minimum net owned funds of Rs. 10 lakhs.
- The company must have unencumbered term deposits of at least 10% of the outstanding deposits.
- The company cannot offer any other financial products or services besides savings and fixed deposits.
On the other hand, other types of business registrations, such as private limited companies, have different legal requirements. For example, private limited companies must have a minimum of two shareholders and two directors, and must file annual returns and income tax returns with the government.
Benefits
Nidhi Company registration also offers some unique benefits compared to other types of registrations. Here are some of the benefits of Nidhi Company registration:
- Nidhi Companies are exempt from certain provisions of the Companies Act, 2013, such as the requirement to hold annual general meetings.
- Nidhi Companies can accept deposits from members and pay them interest, which can be a valuable source of funding for small businesses.
- Nidhi Companies have a separate legal identity from their members, which can provide protection for members’ personal assets.
While other types of registrations may offer different benefits, Nidhi Company registration is a unique option that can be beneficial for small businesses and entrepreneurs.
Process
The process of Nidhi Company registration also differs from other types of registrations. Here are the steps involved in Nidhi Company registration:
- Obtain Digital Signature Certificates (DSC) for the directors of the company.
- Obtain Director Identification Number (DIN) for the directors of the company.
- Register the company name and obtain a Certificate of Incorporation from the Registrar of Companies.
- File the Application for Nidhi Company Registration with the Ministry of Corporate Affairs.
- Obtain a Certificate of Commencement of Business from the Registrar of Companies.
The process of Nidhi Company registration can take several weeks or months, depending on various factors such as the availability of documents and the time taken by the government officials to process the application.
Conclusion
In conclusion, Nidhi Company registration differs from other types of registrations in several ways, including the legal requirements, benefits, and process. While Nidhi Companies may not be suitable for every business, they can provide a unique and valuable option for those looking to promote savings and investments among their members.