Nidhi Company

Nidhi Company is just like a Public Limited Company and is incorporated under Companies Act for building habit of savings amongst its members and to lend them at a specified rate of interest. It needs a minimum of seven members and three directors to get registered as a Nidhi company. It can also be known as ‘Mutual benefit Companies. Two main features of this type of Companies are borrowing money from their members and paying interest on such borrowing and lending to its members on specified interest rates. It functions as a community among a group of people, takes money from one person and gives it to another member. In this way, it circulates the money among the other members of the company. They are incorporated to build a money reserve, receive deposits and lend money to its members.

Any person who is a member of Nidhi company can make deposits or borrow loans whenever the need arises. Any person can become part of the company and take the benefit of its activity only by taking part in the shares of the company. Anyone can start this business for the mutual interests of the members of the company.

Required to incorporate Nidhi Company

Up to 5 Lakhs Authorized Capital

• Applicability
  
  'Nidhi Rules, 2014' framed by Central Government applies to thefollowing Companies :
  
  Every company which had been declared as a Nidhi or Mutual Benefits under Section 620A(1)of Companies Act, 1956.
  
  Every company functioning like a Nidhi company or as Mutual benefit society but has either not applied for or has applied for and is awaiting notification to be a Nidhi or Mutual Benefit Society under Section 620A(1)of Companies Act, 1956.
  
  Every company incorporated as a Nidhi according to the provisions of Section 406 of the Companies Act, 2013.
  
  Penalty
  
  If a company contravenes any of the provisions of the rules the company and every officer of the company who is in default shall be punishable with fine which may extend to Rs.5,000/- and where the contravention is a continuing one, with a further fine which may extend to Rs.500/- for every day after the first contravention till the contravention continues.