Table of Contents
FAQs ON NIDHI COMPANY
Q.1: Will the deposits made with the Nidhi Company safe and secured?
Yes, such deposits are safe and secure since the Ministry of Corporate Affairs and Reserve Bank of India has framed certain rules and regulations, to ensure protection and security of Deposits.
Q.2: How does the funds procured by the Nidhi Company utilized?
The Nidhi Company utilize their funds by lending the same to their shareholders as per Nidhi Rules. Such loans are in the form of small loan for business and financing purpose.
Q.3: Who can become the shareholder/member of Nidhi Company?
Any person, above the age of 18 years, as per age proof is eligible to become the member of the Nidhi Companies.
Q.4: Can a Minor be a Member of Nidhi Company?
A minor shall not be admitted as a member of Nidhi, provided the said deposits has been accepted in the name of a minor, and the same is made by the legal heir or the guardian of the said minor.
Q.5: What are the Documents required to create a Nidhi Companies?
The following documents are required for registering a Nidhi Company -
1. Digital Signature Certificate of all the directors.
2. Directors Identification of all the directors.
3. Copy of a PAN Card.
4. Copy of Identity Proof that can be the Voters ID Card, driving licence, Aadhar Card.
5. 2 Passport size photograph.
6. Registered Office Address Proof, that can be the Electricity Bill, Telephone Bill of the said address.
7. If the registered address could be a rented premise, then rent agreement with rent receipt.
Q.6: What conditions are required to be complies with members of the Nidhi Company to obtain loan?
Nidhi can grant loans to its members once its members have given/ provided certain amount of securities in the form of gold, silver jewellery or any style of financial securities against the loan.
Q.7: What are the Restrictions on Nidhi Company?
1. Nidhi Companies aren't allowed to try and do the subsequent business:
Carry on the business of-
• Chit Fund,
• Hire Purchase finance,
• Leasing Finance,
•Insurance Business and acquisition of other companies.
2. Issue preference shares, Debentures or the other debt instrument by any name or in any form whatsoever.
3. Open any current account with its members.
4. Acquire another company by Purchase of securities or control the composition of Board of Directors of any company in any manner whatsoever or enter into any arrangement for the change of its management unless it's approved by a Special Resolution in its general meeting and also obtain the prior approval of Regional Director.
5. Continue any business aside from borrowing/lending in its own name.
6. Accept deposits from or lend to a person, apart from its members.
7. Pledge any of the assets that are lodged by its members as security,
8. Taking up of deposits and lend money to anybody corporate,
9. Enter into sough of Partnership Arrangement in respect of its borrowing or lending activities,
10. Issue or have issued any sought of advertisement, for soliciting their deposit,
11. Pay any sought of brokerage or incentive for mobilization of their deposits from members or granting of loans.
Q.8: Whether Loan will be providing to non-members?
The principle of mutual benefit has been to pool the savings from members and lend only to members and never have managing Non-members.
Q.9: Whether Nidhi Company can issue Preference Share?
Nidhi shall not issue preference shares.
Q.10: What is the requirement in respect of minimum number of Members in Nidhi Company post incorporation?
Every Nidhi is required to have at least 200 members, within a period of 1 year from the date of its incorporation.
Q.12: Whether someone will be director of NIDHI Company without holding any share capital?
Every Director of the Nidhi, shall be the member of the said Nidhi. Therefore, it's mandatory for director of Nidhi Company to carry shares.
Q.13: What shall be maximum tenure of director in Nidhi Company?
A Director of a Nidhi can hold the post of director for a maximum period of 10 consecutive years. After completion of the said period, the said director shall be eligible for re-appointment only on the expiration of two years from the date of cessation as director.
Q.14: What's minimum par value of shares for Nidhi Company?
Every Nidhi shall issue equity shares of the face value of not but ten rupees each.
Q.15: What's requirement of minimum shareholding for deposit holder?
Every Nidhi is required to allot at least 10 equity shares, to each of its deposit holder, or shares of value Rs. 100.
Q.16: Is there any maximum limit on the number of deposits a Nidhi can accept?
A Nidhi is allowed to accept deposits up to a maximum of 20X of its Net Owned Funds (NOF) as per its last audited financial statements.
Q.17: What is the maximum amount of dividend a Nidhi can declare and pay?
A Nidhi is not allowed to declare dividend exceeding 25% or any such higher amount being approved by the Regional Director.
Q.18: Is Nidhi Company allowed to require over Another Company?
Nidhi companies don't seem to be allowed to accumulate the other company through the acquisition of its securities. It doesn’t even have the facility to require control of another company’s management or bring a change within the composition of its management.
For more information, please contact RJA.
