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.
Reasons to Register a Nidhi Company Registration
Separate Legal Entity
A Nidhi company is a legal entity and a juristic person established under the Act. Therefore, a Nidhi company has wide legal capacity and can own property and also incur debts. The members (Directors) of a Nidhi company have no liability to the creditors of a Nidhi company.
The Board of Management of a Nidhi company can be easily changed by filing simple forms with the Registrar of Companies. The Board of Management of a Nidhi company controls the activities of the Nidhi company.
A Nidhi company being a juristic person, can acquire, own, enjoy and alienate, property in its own name. No member can make any claim upon the property of the Nidhi company as long as it is a going concern.
A Nidhi company has 'perpetual succession', that is continued or uninterrupted existence until it is legally dissolved. A Nidhi company, being a separate legal person, is unaffected by the death or other departure of any member but continues to be in existence irrespective of the changes in membership.
A Nidhi company enjoys better credibility when compared to Mutual Benefit Organizations. Nidhi companies are registered and monitored by the Central Government. Mutual Benefits Organization are on the other hand governed and monitored by State Governments.