Nidhi Company



Nidhi Companies are like a Company which provide credit facility to its members only. It is type of Public Company in which minimum seven members and minimum three directors are required for the purpose of Incorporation/Registration. The minimum paid up capital of such company shall be Rs. 5,00,000/- at the time of incorporation and it’s also increasing time to time as per conditions prescribed under the Act.

 Section 406 of the Companies Act, 2013 relating to Nidhis and its application, etc.-

(1)  In this section, “Nidhi” or “Mutual Benefit Society” means a company which the Central Government may, by notification in the Official Gazette, declare to be a Nidhi or Mutual Benefit Society, as the case may be. 

(2)  The Central Government may, by notification in the Official Gazette, direct that any of the provisions of this Act specified in the notification- 

(a) shall not apply to any Nidhi or Mutual Benefit Society; or 

(b) shall apply to any Nidhi or Mutual Benefit Society with such exceptions, modifications and adaptations as may be specified in the notification. 

(3) A copy of every notification proposed to be issued under sub-section (2), shall be laid in draft before each House of Parliament, while it is in session, for a total period of thirty days, and if, both Houses agree in disapproving the issue of notification or both Houses agree in making any modification in the notification, the notification shall not be issued or, as the case may be, shall be issued only in such modified form as may be agreed upon by both the Houses. 

(4) In reckoning any such period of thirty days as is referred to in sub-section (3), no account shall be taken of any period during which the House referred to in sub-section (3) is prorogued or adjourned for more than four consecutive days. 

(5) The copies of every notification issued under this section shall, as soon as may be after it has been issued, be laid before each House of Parliament.

Documents/Checklist For A Nidhi Company Incorporation

Copy of Aadhar

Copy of PAN

Driving License OR Voter ID card OR Passport

Bank Account Statement Updates

Mobile Number

Email ID of all promoters and directors

Passport Size Photograph of all promoters and directors

Address Proof for Registered Office (Electricity Bill not more than 1 month)

Name of Company

Qualification of Promoter

Paid-up Capital of Company

Specimen Signature of One Director


Credit Facility

Nidhi company provides the credit facility to its members only and by which the fund of members mobilized among the other members. As per Nidhi Rules, the company can provide loan against the mortgage of Immovable Property and pledge of Goods.

Limited Liability

A company limited by shares is a registered company having the liability of its members limited to the amount, if any, unpaid on the shares respectively held by them. If his shares are fully paid-up, he has nothing more to pay.

Perpetual Succession

An incorporated company never dies. Perpetual succession, therefore, means that the membership of a company may keep changing from time to time but does not affect its continuity. Members may come and members may go out but the company can go forever.

Separate Property

The capital of accompany is divided into parts called shares. The shares are said to be moveable property and subject to certain conditions, freely transferable for that. No shareholder is permanently or necessarily wedded to a company. It may be noted that this right of shareholder is restricted in the case of a private company.

Capacity To Sue And Be Sued

A company, being a body corporate, can sue and be sued in its own name.

Contractual Rights

A company, being a legal entity different from its members, can enter into contract for the conduct of the business in its own name. A member of a company cannot sue in respect of torts committed against it, nor can be sued for torts committed by the company.

Separate Property

No member can claim himself to be the owner of the company’s properties either during its existence or in its winding up. A member does not even have an insurable interest in the property of the company.

Termination Of Existence

It has the existence only in contemplation of law. It is created by law, carries on its affairs according to law throughout its life and ultimately is affected by law. Generally, existence of a company is terminated by means of winding up.