Which Law governs Nidhi Company?

The law and procedures of Nidhi Company are governed by Section 406 of Companies Act, 2013 and Companies (Nidhi Companies) Rules, 2014.

Nidhi Company

A Nidhi company belongs to the class of non-banking finance sector firms. The Nidhi Companies is governed/ruled by the Central Government. Reserve Bank of India (RBI) is empowered to give directions regarding the matters related to acceptance of deposits. The rudimentary business of Nidhi Company is to empower lending money between the members of the company. MCA also regulates the same.

Restrictions on Nidhi Company

Nidhi Rules, 2014 does not permit some activities for Nidhi Companies and they are:

  • Nidhi Companies are not allowed to carry on the business of chit fund, hire purchase finance, leasing finance, insurance or acquisition of securities which is issued by any other body corporate.
  • They are not allowed to issue debentures or any debt instruments in any form or issue preference shares.
  • They are not allowed to acquire any other company unless they have obtained the approval of Regional Director.
  • A Nidhi Company cannot carry on any business activity other than borrowing or lending.
  • Nidhi Company is restricted to provide vehicle loan.
  • They cannot accept deposits from any other person except its members.

Checklist for Incorporation of Nidhi Company

Documents required from Clients:

  1. Aadhar Card of proposed directors and promoters.
  2. PAN Card of proposed directors and promoters.
  3. Bank statement/Telephone Bill/ Electricity Bill of proposed directors and promoters.
  4. Voter’s ID Card/ Passport/Driving License of proposed directors and promoters.
  5. Passport size photograph of proposed directors and promoters.
  6. Signature of proposed directors and promoters.
  7. Registered Office Premises address proof.

Documents required while filling INC-1:

  1. Six preferable names.
  2. DIN No. of Directors.
  3. DSC of Directors.
  4. DIN No. /PAN No. of Promoters.
  5. Declaration from all Promoters & Directors.

Documents required while filling Spice 32:

  1. Affidavit of all Promoters & Directors.
  2. Declaration from all Promoters & Directors.
  3. DIR-2 of all Directors.
  4. INC-9 of all Promoters & Directors.
  5. KYC of all promoters & Directors.
  6. Registered Office Address Proof.
  7. NOC of the owner of the premises of registered office.
  8. DSC of all promoters & directors.

 Documents required while filling Spice 33:

 An object of carrying on the business.

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