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Nidhi Companies are registered in India are created to cultivate the habit of thrift and savings among its members. The funds that are contributed to a Nidhi Company are only from its members.
Nidhi Company is a type of Non-Banking Financial Company (NBFC). However, Nidhi Company is based on the principle of mutual benefits and inculcates the habit of saving among all of its members.
Key Attributes
Limited Liability:-Personal liability of the members is limited
Separate Legal Entity:-A private company is a separate legal entity from its shareholders and directors.
Duration/ Uninterrupted existence:-A company has ‘perpetual succession’, that is continued or uninterrupted existence until it is legally dissolved
Capital Raising:-Borrow and lend money from and to its members only
Purpose:-To enable, encourage members to save money, by cultivating the habit of thrift and provide facilities for this purpose.
Prohibitions:-The company shall also not do banking business, open any current account chit fund business, insurance business, hire purchase finance business and business of trading in share & securities.
Advantages of nidhi company:
- Its simple form a Nidhi company with 7 members & three directors
- Registration of nidhi is cost effective
- Nidhi Company does not require to obtain a licence from RBI
- No limit on number of members
- Nidhi also comes with features like limited liability, separate legal and perpetual succession
Disadvantages of nidhi company:
- Borrow and lend money from and to its members only
- cannot do banking business or open a current account
- Nidhi Company does not require to obtain a licence from RBI. However, its depsoits are governed by RBI.
Procedural Aspects :
- Choose and apply name of the company
- Draft MOA AOA & other documents taking care of special laws & prohibition for Nidhi
- Submit requisite forms & documents (including MOA AOA)with ROC and obtain Certificate of Incorporation
- Open a bank account
India can be said to be a land of agriculture of world. Majority of its population is dependant upon and earns income from agriculture. However, agriculture is one of the most unorganised sectors in India.
To aid farmers in solving their problems concept of producer company was introduced.
A producer company is a committee of 10 or more people and 2 institutions with a joint objective of dealing with production, harvesting, pooling and export of goods or services for their benefit.
Key Attributes
Purpose:-Procurement, Harvesting, Grading, Production, Pooling, Marketing, Handling, Selling, or Export
Tax Benefits & Exemptions:-Producer Company gets tax advantages under Income Tax Act and exemptions under Companies Act 2013
Aid and Support:-Agriculture departments like NABARD etc aid and supports producer companies
Separate Legal Entity:-A private company is a separate legal entity from its shareholders and directors.
Duration/ Uninterrupted existence:-A company has ‘perpetual succession’, that is continued or uninterrupted existence until it is legally dissolved
Advantages of producer company:
- separate legal entity from its shareholders and directors.
- continued or uninterrupted existence until it is legally dissolved
- Agriculture departments like NABARD etc aid and supports producer companies
- Producer Company gets tax advantages under Income Tax Act and exemptions under Companies Act 2013
Disadvantages of producer company:
- Fund raising remains an issue
- Individual farmers are incapable of manging the company and running it competitively
Procedural Aspects :
- Choose and apply name of the company
- Draft MOA AOA & other documents taking care of special laws & prohibition for Nidhi
- Submit requisite forms & documents (including MOA AOA)with ROC and obtain Certificate of Incorporation
- Open a bank account Apply for registrations like trademark etc
