Nidhi Company Vs Microfinance Section 8 Company – ONICK EXPERTS

Nidhi Company Vs Microfinance Section 8 Company


A company is referred to as a “Section 8” company if it is registered as a Non-Profit Organization (NPO) and intends to use its revenues (if any) or other income to further the arts, commerce, education, charity, environmental protection, sports, science, research, social welfare, or religion.

Instead of paying dividends to the organization’s shareholders, NPO’s money must be put to use to advance philanthropic objectives. These companies must comply with government regulations and get a certificate of formation from the federal government.

If the requirements outlined therein are not fulfilled, the corporation may be shut down in compliance with the regulations on the Central Government’s directives. In addition, if the company’s objectives are found to be untrue, severe legal action will be taken against all of the members.

Eligibility to Apply for a Section 8 Company

A person or group of people may register as a Section 8 company if they have any of the following objectives. If the goals have been reached, the Central Government must be satisfied.

  • When a company seeks to enhance trade, industry, science, research, education, the arts, sports, charity, social welfare, environmental protection, or comparable objectives
  • when the company’s intention is to employ all (if any) profits or any money it earns after incorporation only for the advancement of such causes.
  • when a company doesn’t intend to distribute any dividends to its shareholders,

Incorporation of a Section 8 Company

Form No. INC – 12 –The Registrar of Companies must receive an application on Form No. INC.12 and the listed supporting papers in order to establish a Section 8 company, per Section 8 of the Companies Act of 2013.

Form No. INC – 13 – Company’s Draft Memorandum of Association (MOA) and Articles of Association (AOA) on Form No. INC – 13 (as Permitted By Act) with Affixion of Subscribers’ Photographs

Form No. INC-14 – It must be accompanied by a statement that the draught MOA and AOA are in accordance with Section 8’s rules and regulations and that the appropriate preparations have been made to meet Section 8 requirements.

Note: The declaration must be signed by a notary public who is a practicing attorney, company secretary, chartered accountant, or cost accountant, and it must be written on stamp paper.

Form No. INC-15 – A declaration on Form No. INC-15 on stamp paper, notarized by each applicant firm member.

Form No. INC-9 which must be properly notarized and stamped with the necessary state’s stamp must be filled out by the first directors and each subscriber. a forecast of the company’s expected annual revenue and costs for the next three years, as well as details on the sources of funding and their intended usage.

Documents Required for the Registration of Section 8 Companies

  • Digital Signature Certificate
  • Memorandum of Association
  • Articles of Association
  • Passport Size Photographs
  • Id proof for members, such as Aadhar cards, passports, and voter identification cards
  • Details of the Director (When the Members Are Other Companies/LLPs)
  • Address Evidence
  • Director Identification Number


1A Section 8 company, according to the Companies Act, is one that seeks to advance the arts, commerce, science, research, education, sports, charity, social welfare, religion, environmental protection, or other goals of a like nature.The primary activity of a Nidhi company is borrowing and lending among its members. This type of company is recognised in the Indian non-banking financial sector under Section 406 of the Companies Act, 2013.

In the case of a private company, 2 directors and 2 members

In the case of a public company, 3 directors and 7 members. 

There should be a minimum of seven members, including three directors.
3There is no minimum requirement of funds in section 8 companies.The paid-up capital should be at least a minimum of 10 lacs.
4Companies under Section 8 do not pursue financial success. Their goals are only selfless in character.Nidhi works only for the benefit of its members.
5Small enterprises, household women, etc. may be eligible for an unsecured loan from it.Nidhi Company can’t give an unsecured loan.
6These companies are also exempt from the requirement that all other businesses’ names contain the words “Limited” or “Private Limited.”The firm’s name must include “Nidhi Limited.”

Leave a Comment

Your email address will not be published. Required fields are marked *