Chit Fund Company
A Chit fund is a kind of savings scheme practiced in India. A Chit fund company means a company managing, conducting or supervising, as foremen, agent or in any other capacity, chits According to Section 2(b) of the Chit Fund Act, 1982, 'Chit means a transaction whether called chit, chit fund, chitty, kuri or by any other name by or under which a person enters into an agreement with a specified of persons that every one of them shall subscribe a certain sum of money by way of periodical installments over a definite period and that each such subscriber shall, in his turn, as determined by lot or by auction or by tender or in such other manner as may be specified in the chit agreement, be entitled to the prize amount'.
Such chit fund schemes may be conducted by organised financial institutions or may be unorganised schemes conducted between friends or relatives.
Registration of a chit fund company1) First obtain a certificate of incorporation from the Registrar of Companies of respective region.
(A) Requirements for registration of New Co. with Registrar of Chit Fund
After getting this certificate, you can apply for registration of first Bye-laws of the company with Chit Fund Department. Documents required are:
- Memorandum and Articles of Association.
- Incorporation Certificate.
- Form No. 2 regarding shares allotment.
- Form No. 18 regarding registered office.
- Form No. 32 regarding appointment of Directors.
- R.O.C. Receipt for filing of form No. 2, 18, 32.
- Bank certificate for deposit of Rs. 1,00,000/- as paid-up capital.
- Resolution for appointment of foreman of the company.
Affidavits of the Directors regarding:-
- Age, good health and sound mind.
- Membership/Directorship in other chit fund company.
- Proof of ownership of the office premises.
- No objection certificate from the landlord.
- Rent Receipt of premises.
- Lay out plan of premises.
- Photo-copies of Ration Cards of the Directors.
- Photographs of all the Directors duly attested.
Papers regarding financial soundness of the Directors.
- Proof of property, if any.
- Assessment order, if any.
- Balance sheet(s) of the company whether partnership or proprietorship.
- Other financial documents.
- Form CF-1 in duplicate (application for registration).
- Bye-laws in duplicate.
- Cash Voucher for Rs.50/- (Bye-laws fee).
(B) Basic requirements for approval of First Bye-laws
- All Directors/Partners should be adults, possess good health and sound mind, should not have been convicted in any case and should be financially sound. Preferably, the Directors should not be related to each other.
- ii The Company should have at least an amount of Rs.1,00,000/- in the bank as paid-up capital.
Documents to be submitted at the time of approval of Bye-laws
- Form CF-1.
- Bye-laws (in duplicate).
- Form regarding details of company's business and deposit of fee.
- Certificate of Registration in Form CF-II (in duplicate).
- Bye-laws fee amounting to Rs. 50/- for each Bye-law to be deposited in cash with the Cashier.
- Residential proof of Directors/Foreman in the shape of ration card, election I-Card, or passport.
(C) Inspection of the Registered Office
After all the prescribed requirements are fulfilled, spot inspection of the proposed registered office of the company will be made by the Chit Fund Department through an Inspecting Officer.
For this purpose, the registered office should be:-
- Having atleast 150 square feet of office area.
- Well furnished to conduct chit fund business.
- Having an Auction Hall.
- A sign board displayed on the front side of the premises.
- Preferably, the company should also display the registered groups with it showing tickets and monthly subscription and the chit value. In case any vacancy is likely to come up in a group, this may also be displayed.
(D) Framing of Bye-Laws
The Bye-Laws submitted for registration shall contain the following particulars:
- The full name of foreman conducting chit business.
- The complete address of the foreman, registered address, in the case of a company being a foreman.
- The name under which chit business is done or is proposed to be done.
- The full details of the working of the chit.
- The area of operation of the chit.
- The circumstances under which withdrawals of subscriber shall be permitted.
- The procedure to be followed for returning the money of the subscribers in case withdrawal, ineligibility or death of the subscriber.
- The condition under which the transfer of a chit or the interest of a subscriber shall be permitted.
- The full name and designation of the officer entitled to sign documents on behalf of the foreman.
- The rate of commission to which the foreman is entitled.
- The language in which the accounts shall be kept.
- The mode of custody and investment of money.
- The settlement of disputes touching or concerning the chit.
On receipt of application, the Registrar shall examine the application and Bye-laws in order to satisfy himself that the bye-laws are:.
- in conformity with the Act and Rules.
- suitable for carrying out the object of the chit.
- suitable for carrying safe and fair conduct of the business.
- And shall grant a certificate of registration in Form CF-II.
Amendment of Bye-laws:
After the Bye-laws have been registered, the chit fund company can apply for the amendment of these bye-laws, if necessary.
Documents required for amendment of Bye-laws:
- Application alongwith a Court fee stamp of Rs.5/-.
- Approved Bye-laws (in original).
- Proposed Bye-laws (in duplicate).
When the proposed amendments in Bye-laws are approved, one copy of Bye-Laws duly endorsed for registration of amendment will be issued to the company.
No application for amendment of Bye-laws will be entertained, if the chit group of such Bye-laws has commenced. Under prevailing practice of the department amendment of bye-laws is allowed only once.
After the Registrar, Chit Funds Delhi is satisfied that all the requirements are fulfilled, a certificate for registration of first Bye-laws will be issued to the company.
The Certificate of registration or the attested copy thereof shall be displayed prominently at every place of chit business.