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About Section 8 Company
Private Limited Company registration is the most popular legal structure option for businesses in India. A private limited company can have a minimum of two members and a maximum of fifty members. The directors of a private limited company have limited liability to creditors. In a case of default, banks/creditors can only sell company’s assets but not personal assets of directors. If you want to start a company in India then make sure your company is registered as Company Registration should be your first priority. It is very important to register your company as a registered company have multiple advantages from easy to register to easy to dissolve.
Nidhi Companies in India are formed, governed, and regulated by Section 406 of the new Indian Companies Act of 2013, the Companies (Nidhi Companies) Rules of 2014, and the Chapter XXVI of the Companies Rules, 2014.
The objective of incorporating a Nidhi Company is to encourage savings as well as frugality amongst its members. To fulfill this objective of cultivating the habit of saving and thrift amongst its members. Nidhi companies are allowed to take a deposit from and lend to the members only. In other words, the funds contributed to a Nidhi company come only from its members (shareholders) and are to be used only by the shareholders of the Nidhi Company. The name “Nidhi” in Nidhi Company means “treasure” and it originates from the Hindi vocabulary.
Nidhi Company is a certain category of NBFC. Though not directly regulated by the RBI, still RBI has powers to issue directives for them related to their deposit acceptance activities. Moreover, because these Nidhis deal with their shareholder-members only, they have been exempted from the core provisions of the RBI Act and other directions applicable to NBFCs. Therefore, Nidhi Company is an ideal legal entity to take a deposit from and lend to a specific group of people.
Nidhi Company Registration
- Section 406 of the Companies Act of 2013 and the Companies (Nidhi Companies) Rules of 2014 provide all the provisions concerning the incorporation and governance of the Nidhi Companies in India.
- The guidelines and directives for the Nidhi Companies are also issued by the RBI. These are mainly related to financial activities and investments by companies including the NBFCs.
- Because of the reason that the Nidhi Companies are engaged in the business of deposits and loans by its members only, certain exemptions have been provided to these companies, by the RBI.
- The interest charged at the loans under a Nidhi Company is quite reasonable. The purposes these are sought are, generally, manufacturing/renovation of houses or child’s education, etc. The loans are provided against security only.
- The deposits under Nidhis do not earn much interest as compared to deposits in the organized banking sector.
Documents Required
- Passport Sized photographs of all the directors.
- PID proof of all the designated directors and shareholders. (PAN card and Passport are valid).
- Address proof of all the directors and members (Ration Card, Aadhaar Card, Passport, Voter ID, and Utility Bill – electricity/water/mobile).
- Address Proof of the Company. Make sure that the address proof is not older than 2 months.
- Copy of the Property papers (if the property is owned).
- NOC (No-Objection-Certificate) from the owner (if the property is rented).