Nidhi Company Incorporation And Other Compliances

‘Nidhi’ is a financial institution incorporated into its members to develop austerity and savings habits, receive deposits and loans from its members, lend only to mutual benefit, and as a compliant entity. The rules created by the central government to regulate such type of institutions. ‘

Basic Conditions For Incorporation As Nidhi Company

1. The Nidhi Co. incorporated shall act as a “Public Company” only.

2. It shall have a minimum paid-up equity share capital of five lakh rupees.

3. No Nidhi Co. can issue preference shares to its members.

4. Objects in MOA other than the objects of cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefits, are void.

5. Every Nidhi shall have the last words as “Nidhi Limited.”

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Requirements For Minimum Number of Members, Net Owned Fund Etc:

Every Nidhi shall, within a period of one year from the commencement of these rules, ensure that it has-

(a) not less than two hundred members;

(b) Net Owned Funds of ten lakh rupees or more;

(c) unencumbered term deposits of not less than ten per cent of the outstanding deposits as specified in rule 14; and

(d) The ratio of Net Owned Funds to deposits of not more than 1:20


It will refund legal compliance with Form NDH-1 with fees paid by companies (Registration Offices and Fees) in the second fiscal year, where applicable, within ninety days from the end of the first fiscal year. Rules, 2014 are certified by the Registrar of Practices as a Company Secretary or by a Chartered Accountant or Practice Expenditure Accountant.

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If a Nidhi does not comply with subsection (a) or (d) of subsection (1) above, it shall apply to the Regional Director in Form NDH-2 within thirty days from the end of the first financial year. Companies (Registration Offices and Fees) Rules, 2014, the fee, time extension and Regional Director may consider the application and issue orders within thirty days of receipt of the application.

General Restrictions on Nidhi Companies

No Nidhi shall carry on the business of :

  • chit fund, hire purchase
  • finance, leasing finance,
  • insurance or
  • acquisition of securities issued by any body corporate;

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