About:
Nidhi means a company which has been incorporated as a Nidhi with the object of cultivating the habit of thrift and saving amongst its members receiving a deposit from and lending to its members only for their mutual benefit and which complies with the rules made by the central government for regulation of such class of companies.
Formation of a Nidhi company
Requirement with respect to minimum numbers of members
Every Nidhi company shall within a period of 1 year from the date of incorporation ensure that it has:
- Not less than 200 members.
- Net owned fund of Rs.10 Lakh or more.
- Unencumbered term deposit of not less than 10% of the outstanding deposits.
- The ratio of Net Owned Funds to deposits of not more than 1:20.
A Nidhi company shall be a public company having a minimum paid-up equity share capital of Rs.5 lakhs. Nidhi companies are not allowed to issue any preference shares, any preference shares issued by a Nidhi company before the commencement of the companies Act,2013. No Nidhi company shall have any object in its Memorandum of Association(MOA) other than the object of cultivating the habit of thrift and savings amongst its members, receiving deposits only from its members, and lending only to its members for their mutual benefit. Every Nidhi shall have the last words “Nidhi Limited” as part of its name.
Every company which had been declared as a Nidhi shall file Form NDH-4 along with fees for updating its status. However, no fees shall be charged under filing Form NDH-4 in case it is filed within 6 months of the commencement of Nidhi (Amendment) Rules, 2019. If a company does not comply with the requirements of the said rule it shall not be allowed to file Form SH-7 (Notice to registrar of alteration of share capital) and Form PAS-3 (Return of allotment).
The central government on receipt of an application (Form NDH-04) of a public company for declaring it as a Nidhi and on being satisfied that the company meets the requirement under Nidhi rules,2014 shall notify such company as a Nidhi company in the official gazette.
Statutory compliance
A Nidhi company within 90 days from the close of the first financial year after its incorporation and where applicable the second financial year shall file with the registrar a return of statutory compliances in Form NDH-1 along with fees and such return shall be certified by a company secretary in practice or a chartered accountant in practice or a cost accountant in practice.
Restrictions on Nidhi companies
- Nidhi companies are not allowed to carry on the business of chit fund, hire purchase finance, leasing finance, insurance, or acquisition of securities issued by any body corporate.
- Nidhi companies are not allowed to issue any preference share, debentures, or any other debt instrument by any name or in any form whatsoever.
- Nidhi Companies cannot open current accounts with their members.
- Nidhi companies are not allowed to carry on any business other than the business of borrowing or lending in their name.
- Nidhi Companies cannot accept deposits from or lend to any person other than its members
- Nidhi Companies cannot enter into any partnership arrangement in its borrowing or lending activities.
