1. Restriction on Dealing with Non-Members Nidhi Companies can conduct financial transactions only with their registered members. They are not allowed to accept deposits or give loans to non-members. All services, including deposits and loans, must be confined to the...
1. Restriction to Member-Only Deposits A Nidhi Company is not allowed to accept deposits from the general public. It can accept deposits only from its registered members. This restriction ensures a closed-loop financial system among members. Accepting public deposits...
1. Prohibition under Nidhi Rules, 2014 Nidhi Companies are strictly prohibited from issuing debentures. Rule 6 of the Nidhi Rules, 2014, outlines specific financial restrictions. The company cannot raise funds from the public through debentures or preference shares....
1. Statutory Capital Requirement at Incorporation A Nidhi Company must be incorporated as a public company. The minimum paid-up equity share capital required is ₹5,00,000. This capital must be in the form of equity shares only. Preference shares are not...
1. Minimum Members at Incorporation A Nidhi Company must be registered as a public limited company under the Companies Act, 2013. At the time of incorporation, the company must have at least 7 members. Out of the 7 members, a minimum of 3 must be appointed as...
1. Governing Law under the Companies Act, 2013 Nidhi Companies are governed primarily by Section 406 of the Companies Act, 2013. This section defines Nidhi Companies and provides the basis for their legal structure. It mandates registration as a public company with...
1. Regulatory Exemption from RBI Nidhi Companies are exempt from obtaining approval from the Reserve Bank of India. This exemption is due to their limited scope of business among registered members. Nidhi Companies do not perform full-scale banking or public financial...
1. Nature of Business A Nidhi Company is a mutual benefit organization focusing only on its members. It accepts deposits and provides loans only to and from its members. A Non-Banking Financial Company (NBFC) offers financial services to the general public. NBFCs...
1. Member-Centric Operations Nidhi Companies operate solely for the benefit of their members. Both depositors and borrowers must be registered members of the company. No transactions are allowed with non-members. Membership is granted through the purchase of equity...
1. Ministry of Corporate Affairs (MCA) Oversight The primary regulator of Nidhi Companies is the Ministry of Corporate Affairs (MCA). MCA issues rules, guidelines, and notifications applicable to all Nidhi Companies. It monitors the registration, functioning, and...