According to **Section 406 of the Companies Act 2013**, a **Nidhi company** signifies a **non-banking micro-finance entity**. This type of company exclusively engages with its **shareholders** (members).
Nidhi companies, also known as **permanent funds, benefit funds, or Mutual Fund Companies**, operate to promote **financial prudence** and provide members with a reliable source of funds. They function by:
Investment in Un-encumbered Deposits:
Every Nidhi shall invest and continue to keep invested, in **un-encumbered term deposits** with a Scheduled commercial bank (or post office deposits) in its own name an amount which shall not be less than **ten percent (10%) of the deposits outstanding** at the close of business on the last working day of the second preceding month.
**Penal Provision:** Failure to comply with these rules means the Nidhi **shall not accept any further deposits** from the commencement of the second financial year till it complies, besides being liable for penal consequences.
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As a leading legal consultant, Sujata Associates excels in facilitating Nidhi company establishment.
Our skilled professionals will adeptly guide and support you through the registration process, ensuring efficient management of all necessary documentation and a straightforward procedure.
Documentation is needed from all Directors/Shareholders and for the Registered Office address.
We ensure your company complies with all necessary licenses and certifications for smooth operation.
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