Nidhi Company

Concept of Nidhi Company:

Nidhi Company is registered as the public company with the object of cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit. Nidhi companies are also called as the mutual benefit societies, because they accept deposits and give loans to their own members. Every Company incorporated as a “Nidhi” shall have the last words ‘Nidhi Limited’ as part of its name.

For their registration of Nidhi Company, atleast 7 subscribers and 3 directors are required with the specified objects of working and the minimum paid up capital is also required. Under this roof, only the individual can be the member of the company and body corporate or trust cannot be the member of this company. It also has specified conditions which are required to be complying within the first financial year. The specified conditions are as follows:

  1. 200 members at the end of financial year.
  2. Net owned funds of Rs. 10 Lacs or more.
  3. Unencumbered Term Deposits of not less than ten per cent of the outstanding deposits.
  4. Ratio of Net Owned Funds to deposits of not more than 1:20.

SUITABILITY:

To any type of business who wants:-

  1. to carry out its business operations through separate legal entity;
  2. involving large investment;
  3. having only one object of cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit;
  4. with involvement of large number persons in the company; and also
  5. can appoint working management on their behalf;

Distinctive Features:-

  • Limited Liability of its Members
  • Easy to accept Deposits from Public to meet the fund requirements in the company.
  • Involves Public holding in the company
  • Increases the Borrowing Capacity
  • Can list their securities on the Stock Exchange to trade in Public
  • Can own the Property and contracts in its name
  • Continuity in Business Existence
  • Distinctive Ownership and Management
  • Can sue and be sued in its own name

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