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Nidhi Company Closure

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  • Overview
  • Benefits
  • Closure
  • Methods
  • Eligibility
  • Process
  • Documents
  • Closure Fees
  • FAQs

What is Closure of Nidhi Company?

A Nidhi company is a special type of company that is made for non-banking financial companies to provide advantages to its members. The main objective of Nidhi company is to lend and borrow money from its members. A nidhi company is also known as a Mutual fund and Benefit funds. However if a nidhi company fails to meet compliance of Companies Act, 2013 or any other law then it’s ideal to close your Nidhi company.

 

What is Nidhi Company Closure Benefits?

These are the benefits of Nidhi Company:-

  • Compliance Free: If Nidhi Company is applied for its closure then there's no need to follow the compliance of the company. However the company is going to close anyhow. 
  • No need to worry about Penalty: After getting your company closure process is completed. You don’t need to worry about the penalty as you get free from all the rules and regulations of the government. 
  • No need of keeping Records: Once you submit all the documents for company closure then there is no need of keeping the record anymore.
  • Save money for compliances: By closing a nidhi company then there is no need of pay the money for the compliance filling. 
  • No director default: In case a company is unable to fill the annual document to the ROC, the company and it’s are responsible for non-compliance. However once the company get closed the annual filing is not necessary until.

 

What is Closure of Nidhi Company?

Following are the reasons for Nidhi Company closure:

  • Non-Compliance: If a Nidhi company is continuously unable to match the regulatory requirement of the government. As the Ministry of Corporate Affairs can lead to legal issues and penalties if a company does not follow the compliances of the company within the time. 
  • Dissolution by Members: If the members of the company collectively decide to close the company as they believe it is no longer part of its purpose or if they wish to exit the company.
  • Changing Business Environment: If the company faces changes in the economic or business environment like transformation of the customer choices or advanced technology, it can render the business model of Nidhi Company less relevant or viable.
  • Legal or Regulatory Issues: If the company faces any Legal disputes, litigations, or adverse regulatory issues can make a big challenge for a Nidhi company. In many situations, these problems result in the company’s closure. 
  • Lack of Profitability: A nidhi company can be closed if it is continuously facing the loss and not able to generate  revenue to manage the company expenses. In this situation the company may decide to shut down the business voluntarily.

 

What is Nidhi Company Closure Methods?

There are three ways to close a Nidhi Company:

  • Defunct Company: If a company is not able to fulfil the compliance within the deadline and where a company is not filing the annual return or other in order to fulfil the legal needs of a company known as a defunct company. 
  • Voluntary Closure: Closing a company voluntarily means that an entity closed the company's external and internal operation along with the closing a external legal partnership of a company. In this process you need to pass a special resolution in the board meeting among the company’s members.
  • Nidhi Company sold: Another way of closing a company is selling a company. In this the responsibility, control and ownership of all the members are taken and transferred to the new members of the company. All the legal documents and properties are transferred to the buyers of the company.

 

What is Nidhi Company Closure Eligibility?

  • If the Company is under FTE (Fast Track Exit) Should not possess any asset and liability.
  • The company cannot establish a new business operation since incorporation or at least 1 year is needed to be passed since the previous business operation or action.
  • should not have started any business operation since incorporation or minimum 1 year is required to be passed since the last business operation or action.
  • The company has appropriately filled all the financials to the Registrar of Companies, till the time of its closure.

 

What is Nidhi Company Closure Process?

If you are closing your Nidhi company then you must follow these process:

  • Step-1: As a first step you need to draft an application and further proceed to make a DSC
  • Step-2: After the nidhi company closure application then ROC will verify your application and send you the notification about the status of application. 
  • Step-3: During the closing process of Nidhi company, if there is no objection in your application then your company name will strike-off and get closed.
  • Step-4:The Digital Signature Certificate process should proceed further.
  • Step-5:The Drafting and submission of the application should be done carefully by the experienced and qualified  person.
  • Step-6: You need to carefully submit all required documents according to the government instruction as any illegal document  may result in a penalty.
  • Step-7: To close a Nidhi company it requires at least 20-25 working days and rest depends on the processing of the government time.

 

What is Nidhi Company Closure Documents?

Following are the necessary documents required for closing a Nidhi Company

  • Directors (STK 3) Indemnity bond notarized
  • Current Bank statement;
  • Statement of Accounts information the company’s liabilities and assests audited from Chartered Accountant;
  • Submit the STK 4 form to the affidavit statement of every company.
  • Special resolution or consent of 75% of company members;
  • PAN card of the company (if any);
  • Attach a certificate of bank account closure (if any).

 

What is the Nidhi Company Closure fees?

FAQs

A Nidhi company is basically made for non-banking financial companies to give the advantages to its members. The key factor of a Nidhi company is to lend and borrow money from its members. A nidhi company is also known as a Mutual fund and Benefit funds.

These are the benefits of closing a Nidhi Company: If Nidhi company is applied for its closure then there's no need to follow the compliance of the company. However the company is going to close anyhow. In case a company is unable to fill the annual document to the ROC, the company and it’s are responsible for non-compliance. However once the company gets closed the annual filing is not necessary until. Once you submit all the documents for company closure then there is no need of keeping the record anymore. After getting your company's closure process is completed. You don’t need to worry about the penalty as you get free from all the rules and regulations of the government

Following documents are required for closing a Nidhi Company- Directors (STK 3) Indemnity bond notarized Latest detail of Bank statement; The company’s assets and liabilities audited from a Chartered Account statement of Account information Submit the STK 4 form to the affidavit statement of every company. Special resolution or consent of 75% of company members; PAN card of the company (if any); Attach a certificate of bank account closure (if any).

Following are the procedure of closing a Nidhi Company: you need to draft an application and further proceed to make a DSC. After filling the nidhi company closure application then ROC will verify your application and send you the notification about the status of application. During the closing process of Nidhi company, if there is no objection in your application then your company name will strike-off and get closed. The Digital Signature Certificate process should proceed further. The Drafting and submission of the application should be done carefully by the experienced and qualified person. You need to carefully submit all required documents according to the government instruction as any illegal document may result in a penalty. To close a Nidhi company it requires at least 20-25 working days and rest depends on the processing of the government time.

You need to meet these eligibility criteria to close a Nidhi company: If the Company is under FTE (Fast Track Exit) Should not possess any asset and liability. The company should not have started any business operation since incorporation or minimum 1 year is required to be passed since the last business operation or action. The company has appropriately filled all the financials to the Registrar of Companies, till the time of its closure.

FTE stands for Fast Track Exist.

There are three methods of Nidhi company closure: Defunct closure Voluntary closure Sell of Nidhi Company

Defunct Company means a company unable to follow the compliance within the deadline and where a company not filing the annual return or other in order to fulfil the legal needs of a company that company called as a defunct company.

Voluntary Closure means that an entity voluntarily closes the company's external and internal operation along with the closing a external legal partnership of a company. For that you need to pass a special resolution in the board meeting between the company’s members.

Yes, the Nidhi company can be sold. Overall responsibility and control transfer to the new members of the company.

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