Nidhi Company's Articles of Association
Author : Ebiz Filing | Published On : 07 Mar 2024
Introduction
The process of incorporation of a Nidhi Company in India is known as Nidhi Company Registration. The primary objective of the institution is to encourage the habit of saving among its members. A fund company can be formed with up to seven members and up to 200 members. You must submit an MoA and AoA to register as a Nidhi Company. What is AoA? Why Registration of Nidhi Company is Important? This blog has answers to all your questions. Let's start with an overview of the Nidhi Company and its requirements, followed by an explanation of the AOA (Articles of Association) and its importance in a Nidhi Company.
Overview of Nidhi Company
A finance company is a financial institution which is not a bank. It was established for the purpose of lending and crediting money to its members. It inculcates the habit of saving in its members and works on the basis of mutual benefit. A fund company does not require an RBI (Reserve Bank of India) license, making it easy to set up. It is a public company with the last word "Nidhi Limited" in its name.
Requirements for Formation of Fund Company Registration in India
? A fund company needs a minimum of seven shareholders.
? Three directors are required to incorporate a fund company effectively.
? Preference Shares will not be issued by the Funding Institution.
? A fund company must have at least 200 shareholders or members by the end of the first year.
? The mission of the organization is to inculcate the habit of saving among its members by "accepting deposits" and "lending" them to maximize their personal and communal welfare.
What is AOA (Articles of Association)?
Articles of Association (AoA) is a document that outlines the purpose of a corporation and specifies the rules that govern how it operates on a day-to-day basis. This document outlines the activities that must take place within the corporation, such as the compilation and management of financial records and the procedure for appointing directors.
? Articles of Association (AoA) can be interpreted as the "Constitution of the Corporation". It specifies and explains the rules and regulations governing the internal affairs of the company.
? An organization's articles of association can also be considered its user manual because it outlines the organization's mission and the strategies it will use to achieve both its immediate and long-term goals.
? A corporation's articles of association typically include its legal name, address, purpose, equity capital, organizational structure, financial provisions, and shareholder meeting requirements.
Important Elements of Articles of Association for Nidhi Company
1. Capital Clause: The number and type of shares constituting the capital of the company shall be specified in the Articles of Corporation. Generally, a company's capital always includes at least one type of common stock in some form. Additionally, investors have a wide range of preferred stocks to choose from. It contains information about the total and maximum share capital of the company.
2. Name Clause: It contains the company logo. It must be unique and cannot be similar to another company name. If the company is a private limited company, the name should end with "Private Limited" while the name of a public limited corporation should end with "Limited".
3. Subscription Clause: It contains the names and other information about the subscribers of each company as well as the number of shares allotted to each subscriber.
4. Responsibility Clause: It defines the level of responsibility assigned to each member of the organization. A company's articles of association must state whether it is limited by shares or by guarantee. Additionally, the articles of association must state that members of the organization have limited liability.
5. Object Clause: It defines the level of responsibility assigned to each member of the organization. A company's articles of association must state whether it is limited by shares or by guarantee. Additionally, the articles of association must state that members of the organization have limited liability.
Importance of AOA for Fund Company Registration in India
? This document serves as the organization's constitution. It is a how-to guide for business management.
? If these agreements are violated, the company may file a lawsuit against the offending member.
? Every business activity should fall within the scope of MoA and AoA.
? The AoA establishes the rules that govern the organization's internal interactions with its members.
? It also describes the rights and responsibilities that come with being a member of the company.
Nidhi company is extensively found in India, it is managed by Ministry of Corporate affairs and operations are under control by Nidhi rules,main goal is to assist savings and shares benefits among its members through financial services.
Summary
AoA for Nidhi Company Registration is a document that outlines the objectives and goals of the company. It also includes Articles of Association, which are the rules and regulations governing the company. Before registering a company, the AOA must be approved by the Registrar of Companies.
