A Section 8 company is company which intends to apply its profit or income to its object i.e non profit organisation. Section 8 company refers to a Company which has the object of promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other objects; A Non profit making company (Section 8) is prohibited from paying any Dividend to its members.
A Section 8 company shall register itself under charitable objects, the Central Government shall issue a License in prescribed manner allowing the association of person to register as Private Limited or Public Limited Company. The company registered under section 8 must not alter its Memorandum or Articles without approval of central government. It has the option of converting itself into company of any other type.
DOCUMENTS REQUIRED FOR SECTION 8 COMPANY REGISTRATION
- ID proof for members
- Address Proof
- Passport size Photographs
- Copy of Rent agreement(If rented property)
- Electricity/ Water bill (Business Place)
- Copy of Property papers (If owned property)
- Landlord NOC
- Director’s Directorship details (in other Companies/LLPs, if any)
ELIGIBILITY FOR SECTION 8 COMPANY REGISTRATION
- Object must be Charitable or to promote arts, science, commerce etc.
- Intends to apply all its profit in promoting the objectives.
- Assures the prohibiting of the payment of dividends to any of its members.
“Nidhi” is a Hindi word, which means finance or fund. Nidhi means a company which has been incorporated with the object of developing the habit of thrift and reserve funds amongst its members and also receiving deposits and lending to its members only for their mutual benefit.
Nidhi company requires minimum 3 members. It might not issue preference share. If preference shares have already been issued by a Nidhi Company before initiation of this Act, such preference shares are to be redeemed in accordance with the terms of issue of such shares. All the Nidhi company’s incorporated shall have the last word as “Nidhi Limited” as part of its name.
Required for NIDHI Company Registration
Documents Required
- Copy of Director’s PAN Card
- Passport size photograph of Directors
- Copy of Aadhaar Card/ Voter identity card of directors
- Copy of Rent agreement(If rented property)
- Electricity/ Water bill (Business Place)
- Copy of Property papers (If owned property)
- Landlord NOC (Format will be provided)
Minimum Requirements Before Incorporation
- Minimum 7 shareholders
- Minimum 3 Directors
- Minimum Capital of Rs. 10 lacs
- DIN for all directors
Minimum Requirements After Incorporation
- Minimum number of 200 Shareholders
- Net owned Fund shall not be less than Rs. 10 Lacs
- Unencumbered deposits of not less than 10% of the outstanding deposits
- Net owned funds to deposits ratio should be more than 1:20
Nidhi Companies in India
- Concept of Nidhi Company Nidhi Companies in India were created for cultivating the habit of small savings targeted for the lower and middle class. Its investment structure consists of realigning funds within a growing group of members who benefit from returns at fixed durations.
- Advantages Of Nidhi Company • Promotes savings among middle and lower middle class • Accepts term deposits • Easy source of loan to members • Loans with minimum documentation • Secured means of investment.
- Important Points to Consider while Registering a Nidhi Company • Nidhi company must have unencumbered term deposits of not less than 10% of the outstanding deposits • Nidhi must have net owned funds of Rs.10 lakh or more • Minimum 7 Shareholders and 3 directors are required to incorporate a Nidhi Company • Nidhis can issue only rights shares.
- Important Points to Consider while Registering a Nidhi Company • Nidhi members should not exercise above 10% of the total voting rights • Membership should feature a minimum of 200 shareholders • Investments for minors can be done when the legal guardian is a member of the Nidhi • Nidhi Company shall issue equity shares of a minimum value of Rs10 • Nidhi Company should not be allowed to issue any new preference shares at any time.