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Mutual benefit & Nidhi Company in Kochi & Calicut

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Nidhi Company

Nidhi Company is a type of Non Banking Financial Company, which operates, mainly in the unorganized money market. Money shall be borrowed and lend to its members only, for their mutual benefit .The main objective is to cultivate the habit of saving amongst its members.

This type of company is more popular in South India and is highly localized single office institutions. The principal source of funds are the contribution from the members .The members can avail to loans at relatively reasonable rates for purposes such as house construction or repairs and are generally secured .As Nidhi Company deals with only the shareholders members only, the RBI has exempted the notified companies from the core provisions of the RBI Act , and do not require to receive the license from Reserve Bank Of India ,and thereby easy to constitute .

Features of a Nidhi Company 

  • Minimum of seven members is required to start a Nidhi Company out of which three members must be the directors of the company.
  • A minimum of 5 lakh rupees, is required as the equity share capital to start a Nidhi Company. Nidhi Company can’t issue preference shares.
  • Nidhi Company can’t deal with chit funds, hire-purchase finance, leasing finance, insurance or securities business. 
  • Such business structures cant advertise itself to demand for any deposits 

Documents required for registration

  • Proof of the registered place of business (Ownership documents/ rent or lease agreement)
  • No Objection Certificate (signed by the owner/ landlord)
  • Identity proofs
  • Address proofs of the members
  • Photos of the members
  • PAN card copies of the members
  • Digital Signature (DSC)
  • Director Identification Number (DIN) of the directors
  • Memorandum of Association of the company (MoA)
  • Articles of Association of the company (AoA)