How is a private limited company different from a Nidhi Finance company? Continue reading this article to know the difference between both these kinds of companies.
A private limited company is a privately owned and operated company. It is well-suited for small businesses. The sole objective of this kind of company is to make profits.
While on the other hand, Nidhi Finance Company, also known as mutual benefit society, comes under Non-Banking Financial Company (NBFC). The sole objective of this kind of company is to develop the habit of savings among its members.
Definition
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Private Limited Company
As defined in Section 2 (68) of The Companies Act, 2013, a private limited company is a privately held entity that provides limited liability to all its members. In a private limited company, the owner’s liability is limited to their shareholdings, limits the number of shareholders to 50, and restricts the publicly transfer of its shares.
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Nidhi Finance Company
A Nidhi Finance Companyis defined under rule 3 (da) of the Nidhi Rules, 2014 as a company that is established to develop the habit of savings and thrift among its members and to lend and receive the deposits from its members for their mutual benefits.
Features
- The minimum and the maximum number of members required to form a Private Limited Company are 2 to 200.
- The members and shareholders have limited liability.
- A private limited company has a perpetual succession, which means the death of the members or directors doesn’t affect the existence of the company.
- A private limited company restricts the trading of its shares.
- A Nidhi Finance Company doesn’t require obtaining a licence from the Reserve Bank of India.
- The liability of the members is limited to the extent of its shares.
- The minimum number of shareholders required for a Nidhi Company is 200.
- The Nidhi Company allows the transfer of shares, and hence, it can be said that a Nidhi Company provides transferable ownership to its owners.
Requirement of the Number of Shareholders and Directors
The total number of shareholders and directors requirement for both the private limited company and the Nidhi Finance Company is defined in the Companies Act 2013 and hence, is mentioned below:
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Private Limited Company
For incorporating a private limited company, the minimum number of shareholders and directors requirement is 2. A natural person is eligible to be both director and shareholder. However, a corporate legal entity is only eligible to become a shareholder.
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Nidhi Finance Company
In the case of a Nidhi Company, the minimum number of directors required is 3, and the minimum number of shareholders required is 7.
Capital contribution
During the incorporation of the company, the promoters are the ones who take every step for the incorporation, including the capital contribution. However, to ensure that the respective company has enough funds to carry out all the basic business activities, the Government of India has fixed a certain minimum capital contribution amount for each of these companies. It is mentioned below:
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Private Limited company
In the case of a private limited company, the minimum fixed authorised share capital contribution by the government is one lakh rupees.
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Nidhi Finance Company
In the case of a Nidhi Company, the minimum fixed paid-up equity share capital contribution by the government is five lakh rupees.
Documents Required for Registration
Registration is compulsory in the case of both the private limited company and the Nidhi Company. For a successful incorporation of these kinds of companies, the government of India has mentioned specific document requirements. The documents required for registration of a private limited company and a Nidhi Company are mentioned as follows:
- Private limited company
Scanned and attested copies of the following documents of the directors and shareholders:
- PAN card details
- Government ID proof such as Voter ID, Aadhar Card, Passport, Driving licence, etc.
- Copy of bank statement or bank passbook
- Copy of utility bills such as mobile bills, electricity bills, gas bills, etc.
- Passport size photograph
- Specimen signature (The director’s signature on a blank document).
Scanned and attested copies of the following documents of the office:
- A copy of a recent electricity bill or water bill
- A copy of the sale deed or Property deed (only in the case of owned property)
- A copy of NoC from the property owner
- A copy of the notarized Rental Agreement (only in the case of a rental office)
- A copy of the recent rental pay
- Memorandum of Association (MOA)
- Article of Association (AOA)
- Nidhi Company
A well-attested copy of the following documents is required for registering a Nidhi Finance Company in India:
- Directors Identification Number (DIN)
- PAN details of the directors, members, and shareholders
- Residential proof and address of the directors, members, and shareholders
- Passport-sized photographs of the directors, members, and shareholders
- Government ID proof such as Voter ID, Aadhar Card, Passport, Driving licence, etc. of the directors, members, and shareholders
- Copy of lease agreement or Rental agreement
- A copy of the sale deed or property deed
- A copy of NoC from the property owner
Points to Remember
- The information stated in the other proofs of the individuals needs to be the same as that of the PAN card.
- In the case of the copy of utility bills, the bills should not be old for more than three months.
Conclusion:-
A private limited company is a small business entity that is owned privately. It restricts the transfer of shares and limits the number of members to fifty. On the other hand, Nidhi Company is a type of public company having no limit on the total number of members. The shares of Nidhi Company are easily transferable, providing the member’s transferable ownership.
The private limited companies are formed to earn a profit, whereas the Nidhi Companies are formed to cultivate a habit of savings and thrift among their members. The formation and maintenance of a private limited company are comparatively easier than that of the Nidhi Company. However, every kind of company is best and beneficial in its aspects.
If you are incorporating any of these companies, we can help you in completing your overall registration process without any flaws. So what are you waiting for? Visit our website without further ado!
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