● What is a Private Limited Company?

A private limited company, or LTD, is a type of privately held small business entity. This type of business entity limits owner liability to their shares, limits the number of shareholders to 200, and restricts shareholders from publicly trading shares.

● Advantages-

     -Limited Liability.

     -Restricted Trade of Shares.

     -Continued Existence.

     -Scope of expansion.

     -Less Compliance Requirements than Public Limited Company.

     -Minimum 2 Members requires.

     -Minimum 2 Directors requires.

● Documents Requires -

     - Pan Card of Subscribers to MOA.

     - ADDRESS PROOF (ELECTRICITY BILL/BANK STATEMENT /TEL BILL) of Subscribers to MOA.

     - ID PROOF of Subscribers to MOA -ADDHAR/VOTER ID/DRIVING LICENCE/PASSPORT).

     - REG.OFFICE ADDRESS PROOF -ELECTRICITY BILL/TEL BILL

PROCEDURE FOR INCORPORATE PRIVATE COMPANY

A.  ACQUIRING DIGITAL SIGNATURE

Acquire DSC - A licensed Certifying Authority (CA) issues the digital signature. Certifying Authority (CA) means a person who has been granted a license to issue a digital signature certificate under Section 24 of the Indian Information Technology Act, 2000.

Register DSC - Role check for Indian companies is to be implemented in the MCA application. Role check can be performed only after the signatories have registered their Digital signature certificates (DSC) with MCA.

B.  OBTAIN DIRECTOR IDENTIFICATION NUMBER

It is important to note that every person who is to be appointed as a director must have “Director’s Identification Number (DIN)” [Section 152(3)]. If the proposed director does not already have a DIN, he/she must obtain the same before incorporation of the company. This can be obtained by making an application on the MCA portal in Form DIR - 3.

C.  NAME SELECTION

Promoters may to propose up to six names in order of procedure for the proposed company and secure the name availability by making an application to the Registrar of Companies of the State in which they want to have the proposed company incorporated. The application is required to be made in Form INC -1.

The name, if made available to the applicant, shall be reserved for sixty days from the date of approval. If, the proposed company has not been incorporated within such period, the name shall be lapsed and will be available for other applicants.

The Name of company must contain word Private Limited

D.  Drafting and Printing of Memorandum and Articles of Association

After ascertaining name availability from the Registrar of Companies steps should be taken to get the memorandum and articles of association for the proposed company drafted and printed. The MOA & AOA of a company shall be As per Schedule – I of the Companies Act, 2013.

E.  Stamping and Signing of Memorandum and Articles

The memorandum and articles should be printed and signed by two subscribers. Thereafter, the memorandum and the articles should be stamped by the appropriate State Authority (Collector of Stamps) under the Indian Stamp Act, 1899. However, presently there is a facility for online payment of stamp duty along with filing fees. It is pertinent to note the Stamping is a subject matter of “State Revenue” and not a matter of the Central Government. Hence the Stamp Duty payable on the Memorandum and/or the Articles of Association shall be determined according to the place of incorporation of the company.

F.  Filing of Documents and Forms for Registration

According to Section 7 of the Companies Act, 2013 all document related to incorporation shall be filed be filed before the registrar, in whose jurisdiction registered office of a company is proposed to be situated. A Registrar may have jurisdiction over several states or only a part of a state.

G.  Registration and Filing Fee

Promoters must make sure to remit to the Registrar, along with the above forms/ documents, the prescribed registration fee and fee for filing of forms as per the rates contained in the Rules.

The fee payable for the purpose can be remitted either electronically (by using a Credit Card or by electronic Bank transfer) or by cash/draft through challan generated electronically on submission of the e-form.

Ensure that for a Private limited company, the minimum paid-up capital is 1 lakh rupees or such higher paid-up capital as may be prescribed.

H.  Certificate Of Incorporation

After the registration of the company, the Registrar will issue under his hand and seal of his office, the Certificate of Incorporation in the name of the company and send it electronically. One may also take printout of the Certificate of Incorporation generated online. The date mentioned by the Registrar in the Certificate of Incorporation shall be the date of incorporation of the company, on which date the company will be considered to have come into existence as a legal entity separate from its subscribers.

I.  Verification of Registered office

The company has filed with the Registrar a verification of its registered office within a period of 30 days of its incorporation in Form INC 22.

● Public Limited Company – PLC –

A public limited company is a company that has permission to offer its registered securities for sale to the general public, typically through a stock exchange, or occasionally a company whose stock is traded over the counter (OTC) via market makers who use non-exchange quotation services.

A public company is defined as a company which is not a private company. The following conditions apply only to a public company:

    • It must have at least seven shareholders.

    • A public company is needed to have at least three directors.

    • Number of Members is Unlimited.

● Advantages -

    - Continuity of existence.

    - Larger amount of capital.

    - Unity of direction.

     - Efficient management.

     - Limited liability.

     - Can List There Share on Recognized Stock Exchange.

     - Number of Members unlimited.

    - Shares can be advertised.

    - Brand Value.

    -Goodwill.

● Documents Requires -

    - Pan Card of Subscribers of MOA.

    - ADDRESS PROOF (ELECTRICITY BILL/BANK STATEMENT /TEL BILL) of Subscribers of MOA.

    - ID PROOF of Subscribers to MOA -ADDHAR/VOTER ID/DRIVING LICENCE/PASSPORT).

    - REG.OFFICE ADDRESS PROOF -ELECTRICITY BILL/TEL BILL

PROCEDURE FOR INCORPORATE PUBLIC COMPANY

A.  ACQUIRING DIGITAL SIGNATURE

Acquire DSC - A licensed Certifying Authority (CA) issues the digital signature. Certifying Authority (CA) means a person who has been granted a license to issue a digital signature certificate under Section 24 of the Indian Information Technology Act, 2000.

Register DSC - Role check for Indian companies is to be implemented in the MCA application. Role check can be performed only after the signatories have registered their Digital signature certificates (DSC) with MCA.

B.  OBTAIN DIRECTOR IDENTIFICATION NUMBER

It is important to note that every person who is to be appointed as a director must have “Director’s Identification Number (DIN)” [Section 152(3)]. If the proposed director does not already have a DIN, he/she must obtain the same before incorporation of the company. This can be obtained by making an application on the MCA portal in Form DIR - 3.

C.  NAME SELECTION

Promoters may to propose up to six names in order of procedure for the proposed company and secure the name availability by making an application to the Registrar of Companies of the State in which they want to have the proposed company incorporated. The application is required to be made in Form INC -1.

The name, if made available to the applicant, shall be reserved for sixty days from the date of approval. If, the proposed company has not been incorporated within such period, the name shall be lapsed and will be available for other applicants.

The Name of company must contain word Limited.

D.  Drafting and Printing of Memorandum and Articles of Association

After ascertaining name availability from the Registrar of Companies steps should be taken to get the memorandum and articles of association for the proposed company drafted and printed. The MOA & AOA of a company shall be As per Schedule – I of the Companies Act, 2013.

E.  Stamping and Signing of Memorandum and Articles

The memorandum and articles should be printed and signed by Seven subscribers. Thereafter, the memorandum and the articles should be stamped by the appropriate State Authority (Collector of Stamps) under the Indian Stamp Act, 1899. However, presently there is a facility for online payment of stamp duty along with filing fees. It is pertinent to note the Stamping is a subject matter of “State Revenue” and not a matter of the Central Government. Hence the Stamp Duty payable on the Memorandum and/or the Articles of Association shall be determined according to the place of incorporation of the company.

F.  Filing of Documents and Forms for Registration

According to Section 7 of the Companies Act, 2013 all document related to incorporation shall be filed be filed before the registrar, in whose jurisdiction registered office of a company is proposed to be situated. A Registrar may have jurisdiction over several states or only a part of a state.

G.  Registration and Filing Fee

Promoters must make sure to remit to the Registrar, along with the above forms/ documents, the prescribed registration fee and fee for filing of forms as per the rates contained in the Rules.

The fee payable for the purpose can be remitted either electronically (by using a Credit Card or by electronic Bank transfer) or by cash/draft through challan generated electronically on submission of the e-form. Ensure that for a Private limited company, the minimum paid-up capital is 5 lakh rupees or such higher paid-up capital as may be prescribed.

H.  CERTIFICATE OF INCORPORATION

After the registration of the company, the Registrar will issue under his hand and seal of his office, the Certificate of Incorporation in the name of the company and send it electronically. One may also take printout of the Certificate of Incorporation generated online. The date mentioned by the Registrar in the Certificate of Incorporation shall be the date of incorporation of the company, on which date the company will be considered to have come into existence as a legal entity separate from its subscribers.

I.  Verification of Registered office

The company has filed with the Registrar a verification of its registered office within a period of 30 days of its incorporation in Form INC 22.

● What is One Person Company (OPC)?

The concept of One Person Company [OPC] is a new vehicle/form of business, introduced by The Companies Act, 2013 [No.18 of 2013], thereby enabling Entrepreneur(s) carrying on the business in the Sole-Proprietor form of business to enter into a Corporate Framework. One Person Company is a hybrid of Sole-Proprietor and Company form of business, and has been provided with concessional/relaxed requirements under the Act.

● Advantages :

1. Only One Shareholder:
Only a natural person, who is an Indian citizen and resident in India shall be eligible to incorporate a One Person Company.Explanation: The term "Resident in India" means a person who has stayed in India for a period of not less than 182 days during the immediately preceding one calendar year.

2. Nominee for the Shareholder:
The Shareholder shall nominate another person who shall become the shareholders in case of death/incapacity of the original shareholder. Such nominee shall give his/her consent and such consent for being appointed as the Nominee for the sole Shareholder. Only a natural person, who is an Indian citizen and resident in India, shall be a nominee for the sole member of a One Person Company.

3. Director:
Must have a minimum of One Director, the Sole Shareholder can himself be the Sole Director. The Company may have a maximum number of 15 directors.

● Terms and Restrictions of OPC

      1. A person shall not be eligible to incorporate more than a One Person Company or become nominee in more than one such company.
      2. Minor cannot shall become member or nominee of the One Person Company or can hold share with beneficial interest.
      3. An OPC cannot be incorporated or converted into a company under Section 8 of the Act. [Company not for Profit].
      4. An OPC cannot carry out Non-Banking Financial Investment activities including investment in securities of anybody corporate.
      5. An OPC cannot convert voluntarily into any kind of company unless two years have expired from the date of incorporation of One Person Company, except threshold limit (paid up share capital) is increased beyond Rs.50 Lakhs or its average annual turnover during the relevant period exceeds Rs.2 Crores i.e., if the Paid-up capital of the Company crosses Rs.50 Lakhs or the average annual turnover during the relevant period exceeds Rs.2 Crores, then the OPC has to invariably file forms with the ROC for conversion in to a Private or Public Company, with in a period of Six Months on breaching the above threshold limits.

●Steps to Incorporate One Person Company (OPC)

      1. Obtain Digital Signature Certificate [DSC] for the proposed Director(s).
      2. Obtain Director Identification Number [DIN] for the proposed director(s).
      3. Select suitable Company Name, and make an application to the Ministry of Corporate Office for availability of name.
      4. Draft Memorandum of Association and Articles of Association [MOA & AOA].
      5. Sign and file various documents including MOA & AOA with the Registrar of Companies electronically.
      6. Payment of Requisite fee to Ministry of Corporate Affairs and also Stamp Duty.
      7. Scrutiny of documents at Registrar of Companies [ROC].
      8. Receipt of Certificate of Registration/Incorporation from ROC.

● Section 8 Company Registration :

Section 8 Company is named Section 8 of the Companies Act, 2013, which pertains to a established 'for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object', provided the profits, if any, or other income is applied for promoting only the objects of the company and no dividend is paid to its members. Therefore, Section 8 Company or Section 25 Company is a company registered under the Companies Act, 2013 for charitable or not-for-profit purposes.

A Section 8 Company is similar to a Trust or Society; expect, a section 8 Company is registered under the Central Government's Ministry of Corporate Affairs. Trusts and Societies are registered under State Government regulations. A section 8 company has various advantages when compared to Trust or Society like improved recognition and better legal standing. Section 8 company also has higher credibility amongst donors, Government departments and other stakeholders.

● Procedure For Registration –

1.  To select not more than six names in the order of their preference, for obtaining availability of one of names for adoption by the proposed company.

2.  To make an application to the Registrar of Companies of the State in which the registered office proposed company is to be situated for seeking name availability. The application for reservation of shall be in Form INC – 1 of the Companies (Incorporation) Rules, 2014. The procedure of making application is same mentioned as discussed earlier.

3.  The Registrar of Companies to furnish the required information to the applicants, ordinarily within days of the receipt of the application.

4.  A person or an association of persons (hereinafter referred to in this rule as “the proposed company”), desirous of incorporating a company with limited liability under sub-section (1) of section 8 without addition to its name of the word “Limited”, or as the case may be, the words “Private Limited”, shall an application in Form INC – 12 along with the fee as provided in the Companies (Registration offices fees) Rules, 2014 to the Registrar for a license under sub-section (1) of section 8. [Rule 19 of the Companies (Incorporation) Rules, 2014].

5.  The memorandum of association of the proposed company shall be in Form INC – 13.

6.  The application for grant of license in form INC – 12 shall be accompanied by the following documents, namely: – (a) The draft memorandum and articles of association of the proposed company; (b) the declaration in Form INC – 14, by Company Secretary in practice, that the draft memorandum and articles of association have been drawn conformity with the provisions of section 8 and rules made there under and that all the requirements the Act and the rules made there under relating to registration of the company under section matters incidental or supplemental thereto have been complied with; (c) An estimate of the future annual income and expenditure of the company for next three years, specifying the sources of the income and the objects of the expenditure; (d) The declaration by each of the persons making the application in Form INC - 15.

7.  The license shall be in Form INC – 16 and the Registrar shall have power to include in the license other conditions as may be deemed necessary by him. The Registrar may direct the company to insert its memorandum, or in its articles, or partly in one and partly in the other, such conditions of the license may be specified by the Registrar in this behalf.

8.  After obtaining the license, to get the memorandum and articles, as approved by the Registrar of Companies, printed and to ensure that the conditions of the license as directed by the Registrar of Companies incorporated therein.

9.  Filing of Forms and Documents with Registrar.

10.  Registration and Filing Fee.

Procedure For Foreign Company:

As per Section 2 (42) “foreign company” means any company or body corporate incorporated outside India which

     (a) has a place of business in India whether by itself or through an agent, physically or through electronic mode; and

      (b) Conducts any business activity in India in any other manner.

Every foreign company shall, within thirty days of the establishment of its place of business in India, deliver to the Registrar for registration –

      (a) a certified copy of the charter, statute or memorandum and articles of the company or other instrument constituting or defining the constitution of the company and if the instrument is not in English language, certified translation thereof in the English language;

      (b) the full address of the registered or principal office of the company;

      (c) a list of the directors and secretary of the company with particulars;

      (d) the names and addresses of one or more persons resident in India authorised to accept on behalf of the company service of process and any notices or other documents required to be served on the company;

      (e) the full address of the office of the company in India which is deemed to be its principal place of business in India;

      (f) particulars of opening and closing of a place of business in Indian on earlier occasions;

      (g) declaration that none of the directors of the company or authorised representative in India has ever been convicted or debarred from formation of companies and management in India or abroad; or

      (h) other prescribed particulars.

The Foreign Company shall, within a period of thirty day of establishment of its place of business in India, file Form FC – 1 of the Companies (Registration of Foreign Companies) Rules 2014. Along with the Companies Act, 2013 provision of Foreign Exchange Management Act 1999 and regulations made thereunder shall also be applicable.

Regulatory provisions under Foreign Exchange Management (Establishment in India of Branch or Office or other place of business) Regulations, 2000 A foreign company or individual planning to set up business operations in India can do so through a Liaison Office Representative Office, Project Office or a Branch Office. The FEM (Establishment in India of Branch or Office or other place of business) Regulations, 2000 govern the opening and operation of such offices.

Accordingly, Companies incorporated outside India, desirous of opening a Liaison/Branch office in India have to make an application in form FNC-1. It may be noted that RBI has authorized AD Category I bank to forward FNC-1 along with the necessary enclosures along with the comments and recommendations to— The Chief Manager-in-charge, Reserve Bank of India Foreign Exchange Department Foreign Investment Division Central Office, Mumbai - 400 001 The applications will be considered by Reserve Bank of India under Reserve Bank route or Government route.

For full details, please refer to the Master Circular No. RBI/2012-13/7 dated July 2, 2012 as amended from time to time.

● Nidhi Companies●

● Nidhi Company Registration :

Nidhi Company is a company registered under the Companies Act, 2013, which has a sole objective of cultivating the habit of thrift and savings amongst its members. Nidhi companies are allowed to take deposit from its members and lend to its members only. Therefore, the funds contributed for a Nidhi company are only from its members (shareholders) and used only by the shareholders of the Nidhi Company. Nidhi Company is a class of NBFCs and RBI is empowered to issue directions to them in matters relating to their deposit acceptance activities. However, in recognition of the fact that these Nidhis deal with their shareholder-members only, RBI has exempted the notified Nidhis from the core provisions of the RBI Act and other directions applicable to NBFCs. Therefore, Nidhi Company is an ideal entity to take deposit from and lend to a specific group of people.

What is Nidhi Company-

-  Nidhi” means a company which has been incorporated as a Nidhi 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, and which complies with rules of Chapter XXVI of Companies Rules, 2014.

-  Nidhi in the Indian context / language means “TREASURE”. However, in the Indian financial sector it refers to anymutual benefit society notified by the Central / Union Government as a Nidhi Company. They are created mainly for cultivating the habit of thrift and savings amongst its members.

-  The companies doing Nidhi business, viz. borrowing from members and lending to members only, are known under different names such as Nidhi, Permanent Fund, Benefit Funds, Mutual Benefit Funds and Mutual Benefit Company.

● Applicability

The Central Government made ‘Nidhi Rules, 2014’ for the purpose of carrying out the objectives of ‘Nidhi’ companies. These rules shall be applicable to-

-Every company which had been declared as a Nidhi or Mutual Benefits under Section 620A(1)of Companies Act, 1956;

-Every company functioning on the lines of a Nidhi company or 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 pursuant to the provisions of Section 406of the Companies Act, 2013.

● Requirements for Nidhi Company

-A Nidhi company to be incorporated under this Act shall be a Public Company;

-It shall have a minimum paid up equity share capital of Rs.5,00,000/-;

-No preference shares shall be issued.

-If preference shares had already been issued by a Nidhi Company before commencement of this Act, such preference shares are to be redeemed in accordance with the terms of issue of such shares;

-The object of the company shall be cultivating the habit of thrift and savings amongst its members, receiving deposits from and lending to its members only for their mutual benefits;

-It shall have the words ‘Nidhi Limited’ as part of its name;

● Requirement after Incorporation:

Every Nidhi shall, within a period of one year from the commencement of these rules, ensure that it has—

-Minimum number of members should be 200;

-Net owned funds shall be Rs.10,00,000/- or more (‘Net owned funds’ means the aggregate of paid up equity share capital and free reserved as reduced by the accumulated and intangible assets appearing in the last audited balance sheet);

-Ratio of net owned funds to deposit shall be not more than 1:20;

-Unencumbered term deposits of not less than 10% of the outstanding deposits as specified in Rule 14;

●General restrictions

-Rule 6 provides general restrictions. According to this Rule no Nidhi shall-

  ● Carry on the business of

     -Chit Fund,

     -Hire Purchase Finance,

     -Leasing Finance,

     -Insurance or Acquisition of Securities issued by anybody corporate;

  * Issue

     -Preference Shares,

     -Debentures or

     - Any Other Debt Instrument by any name or in any form whatsoever;

  ●Open any Current Account with its members;

  ● Acquire another company by;

     • Purchase of securities or

     • Control the composition of the Board of Directors of any other company in any manner whatsoever or

  ● Enter into any arrangement for the change of its management, unless it has passed a special resolution in its general meeting and also obtained the previous approval of the Regional Director having jurisdiction over Nidhi;

  ●Carry on any business other than the business of borrowing or lending in its own name;

  ●Accept Deposits from or lend to any person, other than its members;

  ●Pledge any of the assets lodged by its members as security;

  ●Take Deposits from or lend money to anybody corporate;

  ●Enter into any Partnership Arrangement in its borrowing or lending activities;

  ●Issue or cause to be issued any advertisement in any form for soliciting deposit;

  ●Pay any brokerage or incentive for mobilizing deposits from members or for deployment of funds or the granting loans.

  ●NOTE:

     • Nidhi’s which have adhered to all the provisions of these rules may provide locker facilities on rent to its members subject to the rental income from such facilities not exceeding 20% twenty per cent of the gross income of the Nidhi at any point of time during a financial year.

  ●Membership

     • A Nidhi shall not submit a body corporate or trust as a member.

     • Except as otherwise permitted under these rules, every Nidhi shall ensure that its membership is not reduced to less than 200 members at any time.

     • A minor shall not be admitted as a member of Nidhi.

     • But deposits may be accepted in the name of a minor, if they are made by the natural or legal guardian who is a member of Nidhi.

●Share capital and allotment

Rule 7 provides that every Nidhi shall issue equity shares of the nominal value of not less than Rs.10/- each. This requirement shall not apply to a company which has been declared as a Nidhi company.

Provided that this requirement shall not apply to a company referred below:

     • Every company which had been declared as a Nidhi or Mutual Benefits under Section 620A(1)of Companies Act, 1956;
     • Every company functioning on the lines of a Nidhi company or 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;

NOTE:

     • No service charge shall be levied for issue of shares.

     • Every Nidhi shall allot to each deposit holder at least a minimum of 10 equity shares or shares equivalent to Rs.100/-.

     • A savings account holder and a recurring deposit account holder shall at least 10 equity shares of Rs.10/-.

● Acceptance of deposits:

     • A Nidhi shall not accept deposits exceeding 20 times of its Net Owned Assets as per last audited financial statements.

     • The fixed deposits shall be accepted for a minimum period of 6 months and a maximum period of 60 months.

     • Recurring deposits shall be accepted for a minimum period of 12 months and a maximum period of 60 months.

     • In case of recurring deposits relating to mortgage loans, the maximum period of recurring deposits shall correspond to the repayment period of such loans granted by Nidhi.

     • The maximum balance in a savings deposit account at any given time qualifying for interest shall not exceed Rs.1,00,000/- and the interest shall not exceed 2% above the rate of interest payable to savings bank account by nationalized banks.

     • Interest for fixed and recurring deposits shall be at a rate not exceeding the maximum rate of interest prescribed by RBI which the NBFC can pay on their public deposits.

Every Nidhi shall invest and continue to keep invested, in unencumbered term deposits with a scheduled commercial bank or post office deposits in its own name an amount which shall not be less than 10% of the deposits outstanding at the close of the business on the last working day of the second preceding month.

In case of unforeseen commitments, temporary withdrawal may be permitted with the prior approval of the Regional Director for the purpose of repayment to depositors, subject to such conditions and time limit which may be specified by the Regional Director to ensure restoration of the prescribed limit of 10%

  ● Loan

A Nidhi shall provide loans only to its members. The loans given to a member shall be subject to the following limits:

     • Rs.2,00,000/- where the total amount of deposits from members is less than Rs.2 crores;

     • Rs.7,50,000/- where the total amount of deposits from its members more than Rs.2 crores but less than Rs.20 crores;

     • Rs.12,00,000/- where the total amount of deposits from its members is more than Rs.25 crores but less than Rs.50 crores;

     • Rs.15,00,000/- where the total amount of deposits from its members is more than Rs.50 crores.

NOTE: A Nidhi shall give loans to its members only against the following securities, namely:—

     • Loans to the members shall be given against the securities of gold, silver and jewellery and immovable property.

     • Repayment period of such loan shall not exceed one year in case of gold, silver and jewellery.

     • In case of immovable property the loan shall not exceed 50% of the value of the property offered as security and the period of repayment of such loan shall not exceed 7 years.

     • Loan may be given against the fixed deposit receipts, National Savings Certificates and other Government securities and insurance policies.

The rate of interest to be charged on any loan shall not exceed 7.5% above the highest rate of interest offered on deposits by Nidhi and shall be calculated on reducing balance method.

(3) For the purposes of sub-rule (2), the amount of deposits shall be calculated on the basis of the last audited annual financial statements

● Dividend:

     • A Nidhi shall not declare dividend exceeding 25% or

     • Such higher amount as may be specifically approved by the Regional Director for reasons to be recorded in writing and further subject to the following conditions-

       o An equal amount is transferred to General Reserve;

       o There has been no default in repayment of matured deposits and interest; and

       o It has completed with all the rules as applicable to Nidhis.

● Director:

     • The director shall be a MEMBER of Nidhi.

     • He shall hold office for a term up to 10 consecutive years on the Board.

     • He shall be eligible for re-appointment only after the expiration of 2 years ceasing to be a director.

     • Where the tenure of any director in any case had already been extended by the Central Government it shall terminate on expiry of such extended tenure.

     • The person to be appointed as a Director shall comply with the requirements ofSection 152(4) of the Act and shall not have been disqualified as provided in Section 164 of the Act.

● Auditor:

     • The tenure of Auditor is five consecutive years.

     • No auditor or audit firm as auditor shall be appointed for more than two terms of five consecutive years.

     • The auditor shall be eligible for subsequent appointment after the expiration of two years from the completion of his term.

     • The Auditor of the company shall furnish a Certificate every year to the effect that the company has complied with all the provision contained in the rules and such certificates shall be annexed to the audit report and in case of non compliance he shall specifically state the rules which have not been complied with.

● Branches:

     • A Nidhi may open branches only if it has earned net profits after tax continuously during the preceding three financial years.

     • The company may open up to 3 branches only within the district.

     • If it proposes to open more than 3 branches within the district or any branch outside the district, it shall obtain prior permission of the Regional Director and intimation is to be given to the Registrar about opening of every branch within 30 days of such opening.

     • No Nidhi shall open branches or collection centers or offices or deposit centers, or by whatever name called outside the State where its registered office is situated.

     • Further branches or collection centers or offices or deposit centers shall be opened unless financial statement and annual return are filed with the Registrar.

● Closure of Branch:

A Nidhi shall not close any branch unless:

     • It publishes an advertisement in a newspaper in vernacular language in the place where it carries on business at least 30 days prior to such closure.

     • Informing the public about such closure; fixes a copy of such advertisement or a notice informing such closure of the branch on the notice board of Nidhi for a period of at least 30 days from the date on which advertisement was published and

     • Gives intimation to the Registrar within 30 days of such closure.

●Returns:

     • Within 90 days from the closure of the first financial year after its incorporation and where applicable, the second financial year, Nidhi shall file a return of statutory compliances in Form NDH – 1 along with such fee as prescribed with the Registrar duly certified by a Company Secretary in practice or a Chartered Accountant in practice or a Cost Accountant in practice.

     • If the company is not complying with the above it shall within90 days from the close of the first financial year, apply to the Regional Director in Form NDH -2 along with fee for extension of time and

     • The Regional Director may consider the application and pass orders within 30 days of the receipt of the application.

If there is failure the Nidhi shall not accept any further deposits from the commencement of the second financial year till it complies with the provisions besides being liable for penal consequences provided in the Act.

EVERY COMPANY COVERED UNDER RULE 2 SHALL FILE HALF YEARLY RETURN WITH THE REGISTRAR:

In Form NDH-3 along with such fee as provided in Companies (Registration Offices and Fees) Rules, 2014 within thirty days from the conclusion of each half year duly certified by a company secretary in practice or chartered accountant in practice or cost accountant in practice.

●Companies Covered under Rule -2 are following:

     • Every company which had been declared as a Nidhi or Mutual Benefits under Section 620A(1)of Companies Act, 1956;

     • Every company functioning on the lines of a Nidhi company or 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 pursuant to the provisions of Section 406of the Companies Act, 2013.

● Power to enforce compliance

     • The REGISTRAR OF COMPANIES may call for such information or returns from Nidhi as he deems necessary and may engage in the services of Chartered Accountants, Company Secretaries in practice, Cost Accountants or any firm thereof from time to time for assisting him in the discharge of his duties.

     • The REGIONAL DIRECTOR may appoint a Special Officer to take over the management of Nidhi in case the Nidhi has violated these rules or has failed to function in terms of the Memorandum and Articles of Association.

     • The SPECIAL OFFICER shall function as per the guidelines given by such Regional Director. An opportunity of being heard shall be given to the concerned Nidhi by the Regional Director before appointing any Special Officer.

Procedure To Incorporate Nidhi Company

      ● Obtain DIN & DSC.

     ● Reservation of Name & Approval.

     ● Filling Formation Documents with ROC

     ● Get Certificate of Incorporation.

● Documents Required -

Nidhi Company is incorporated in the nature of Public Limited Company. Hence, all requirements for the Public limited company will be applicable. There is also a myth in the industry that a Nidhi Limited Company is first incorporated as a Public Limited company, and then registration of Nidhi is initiated.

However, the above statement does not hold true. Nidhi Company is registered from the beginning as a Nidhi limited. There is no separate approval process.

Here is the list of requirements for a Nidhi limited company:

     a.Minimum Seven Members: Nidhi Company can be started with seven members. Out of which 3 are also to be appointed as directors. These members can be your relatives.

Also, there is no educational qualification required for any of any member.

     b.Documents Required: Documents required can be further classified into two subheads: Documents of Members and Registered Office.

● Documents required for Members are as under:

• PAN Card

• Identity Proof - (Voter ID, Passport, Aadhaar Card, DL - Anyone)

• Address Proof - (Bank Statement/Passbook, Electricity Bill, Telephone Bill, Mobile Bill – Any One (Should not be older than two months)

• Passport Size Photograph

Note: Voter Id/Passport/Aadhaar Card/ DL are not accepted as valid address Proof.

Documents required for Registered Office are as under:

• If premises are on rent: Rent Agreement + Utility bill + Signed NOC

• If Premises are owned: Ownership Proof + Utility Bill + Signed NOC

Note: NOC stands for No Objection Certificate: We will provide the format, you just need to sign on plain paper.

Electricity bill, Gas bill, Telephone Bill, Water Bill are served as utility bill for registered office.

●Producer Company:

Producer Company is a company registered under the Companies Act, 2013, which has the objective of production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of primary produce of the Members or import of goods or services for their benefit. Produce are things that have been produced or grown, especially by farming. Therefore, a Producer Company deals primarily with agriculture and post harvest processing activities.

Over 85% of the Farmers in India are small and marginal farmers with land holdings of less than 2 hectares. This fragmentation in farmers and farm lands, leads to disorganization and it is not viable for Indian farmers to adopt the latest technologies. By organization of these farmers into producer companies, economies of scale can be unlocked and the livelihood of farmers can be improved. Thus the concept of Producer Company is aimed at empowering farmers by creating clusters of farmers organized as a Producer Company.

● Objectives of Producer Companies :

(a) Production, harvesting, procurement, grading, pooling, handling, marketing, selling, export of primary produce of the Members or import of goods or services for their benefit:

(b) Processing including preserving, drying, distilling, brewing, venting, canning and packaging of produce of its Members;

(c) Manufacture, sale or supply of machinery, equipment or consumables mainly to its Members;

(d) Providing education on the mutual assistance principles to its Members and others;

(e) Rendering technical services, consultancy services, training, research and development and all other activities for the promotion of the interests of its Members;

(f) Generation, transmission and distribution of power, revitalisation of land and water resources, their use, conservation and communications relatable to primary produce;

(g) Insurance of producers or their primary produce;

(h) Promoting techniques of mutuality and mutual assistance;

(i) Welfare measures or facilities for the benefit of Members as may be decided by the Board;

(j) any other activity, ancillary or incidental to any of the activities referred to in Clauses (a) to (i) or other activities which may promote the principles of mutuality and mutual assistance amongst the Members in any other manner;

(k) Financing of procurement, processing, marketing or other activities specified in Clauses (a) to (j) which include extending of credit facilities or any other financial services to its Members.

● Procedure To Incorporate Producer Company

     ● Obtain DIN & DSC.

     ● Reservation of Name & Approval.

     ● Filling Formation Documents with ROC

     ● Get Certificate of Incorporation

●To Start a Company Contact us at

[email protected] .●