Nidhi Company

Net owned Funds?

The aggregate of paid-up equity capital and free reserves is reduced by the accumulated losses and intangible assets appearing in the last audited balance sheets.

Suppose at the end of one year from commencing, the Nidhi Company cannot meet the above requirement. In that case, the Company may apply to the Regional Director in Form NDH-2 for an extension of time within thirty days close from the first financial year.

Even after the second Financial year the Nidhi Company is unable to meet the requirements for a Nidhi Company. The Nidhi Company should not accept any further deposits from the commencement of the second financial year until it complies with the Provisions for operating as Nidhi Company

What are the documents required to register a Nidhi Company?

The following documents are required to incorporate a Nidhi Company.

• Directors Identification Number
• PAN number of the shareholders as well the Directors
• Residential Proof of the shareholders and directors
• Photographs
• Identification Documents such as the Aadhar card
• Rent agreement or lease agreement of the Registered office
• If the office is owned, then ownership information or the registered office address must be provided
• NOC if required
• MOA
• AOA
• MCA form

Restrictions on Nidhi Company

Here are some limitations for Nidhi Companies. As per rule 6 of the Nidhi Rules, 2014, a Nidhi Company shall not :

Carry a business of Chit fund, hire purchase finance, lease finance, or acquisition of securities issued by anybody Corporate.

issue preference shares, debentures, or any other debt instrument by any name or form whatsoever.

Open Current account with its members.

Acquire another Company by the purchase of securities or control the composition of the Board of Directors of any other Company in any manner whatsoever or enter into any arrangement for the change of its management, unless it has passed a special resolution in the general meeting and also obtain the previous approval of the Regional Director having jurisdiction over such Nidhi Company.

• Carry on any business other than the business of borrowing or lending in its name: Provided that Nidhis, which have adhered to all the provisions of these rules, may provide locker facilities on rent to its members subject to the rental income from such facilities not exceeding twenty percent of the gross income of the Nidhi at any point of time during a financial year.
• Accept deposits or lend to anyone other than its members;
• Pledge away any of the assets lodged by its members as security;
• Take deposits or lend money to anybody from corporate;
• Enter into any partnership arrangement in borrowing or lending activities;
• Issue or cause to be issued any advertisement in any form for soliciting deposit
• Pay any brokerage or incentive for mobilizing deposits from members or for the deployment of funds or granting loans.

LEGALRAASTA ASSOCIATES has a team of professionals Comprising Chartered accountants, Company Secretaries, lawyers, and finance professionals.

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