Nidhi Company Registration
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Only businesses incorporated as public limited companies are permitted to obtain the NIDHI company license after a year from the date of its incorporation, provided it fulfills the following conditions:

• Has at least 200 members within one year from the date of incorporation
• Has a minimum Net Owned Funds of Rs.20 lakhs
• Has unencumbered term deposits of at least 10% of the outstanding deposits as specified in Rule 14 of NIDHI Rules, 2014
• Net owned funds to deposit ratio is not more than 1:20

After a NIDHI limited company has filed the NDH-4 application to obtain the NIDHI Company license, the Central Government must either approve or reject it within 45 days from the date of filing of application. If it fails to do so, the pending application shall be considered as approved after the expiry of 45 days.

No, a NIDHI Company cannot issue preference shares according to NIDHI Rules, 2014. If a NIDHI Company has issued preference shares before the introduction of the NIDHI Rules, 2014 or the Companies Act, 2013, such shares shall be redeemed in accordance with the terms of issue of such shares.

A NIDHI Company shall not carry on business of chit funds, hire purchase finance, leasing finance, insurance, any other business except that of borrowing and lending in its own name.

No, a NIDHI Company cannot acquire another company by purchase of securities, unless a special resolution to the effect has been passed in the General Meeting of its shareholders of the NIDHI company, and a prior approval regarding the same has been granted by the Regional Director which has jurisdiction over the NIDHI Company.

No, a NIDHI Company cannot accept deposits or lend money to any individual other than its members.

The following entities cannot become a member of a NIDHI Company:

• A body corporate
• A trust
• A minor

A NIDHI Company may accept deposits in the name of a minor, only if the deposits are made by the natural or legal guardian of the minor.

A NIDHI Company may open branch offices, only if it has earned net profits after tax, continuously during the preceding financial years. A NIDHI Company can open a maximum of three branches within the district it is located in. If it proposes to open more than three branches within the district, or a branch outside the district, it must seek a prior approval from the regional director who has jurisdiction over the company. Note that no NIDHI Company can open branches outside the state where its registered address is located.

A NIDHI Company can grant loans against the following securities:

• Gold, Silver, Jewelleries, where the repayment period does not exceed 1 year
• Immovable property, where the repayment period does not exceed 7 years
• Fixed Deposit receipts, National Savings Certificates, other Government securities
• Insurance Policies

Under Rule 18 of the NIDHI Rules, 2014, a NIDHI Company shall not declare dividend exceeding 25% or such higher amount of the total income as prescribed by the Regional Director. Further the declaration of dividend must be made subject to the fulfillment of the following conditions:

• An equal amount is transferred to the General Reserve of the company
• there has been no default in repayment of matured deposits and interests
• It has complied with all the rules as applicable to NIDHI companies

Yes, it is mandatory for NIDHI companies to appoint an auditor under the Companies Act, 2013. However, it must be noted that a NIDHI company shall not appoint or re-appoint an individual as auditor for more than one term of 5 consecutive years, and shall not appoint or reappoint an audit firm as an auditor for more than two terms of five consecutive years each.

A NIDHI Company can open the following types of accounts:

• Fixed Deposit accounts
• Recurring deposit accounts,
• Savings Account
• Note that a NIDHI Company cannot open a current account in the name of its members.

Yes, a director can be a member of a NIDHI company unconditionally..

The auditor of a NIDHI Company shall furnish a Certificate every financial year to the effect that the company has complied with all the provisions contained in the NIDHI Rules, 2014.