Nidhi Company

Nidhi Company New Rules as stated in Amendment 2022

calendar09 May, 2022
timeReading Time: 7 Minutes
Nidhi Company New Rules

The Ministry of Corporate Affairs notified Nidhi company New Rules on 19th April 2022 through the amendment. These Nidhi Company New Rules are the amendment to Nidhi Company Rules, 2014. These rules are called Nidhi (Amendment) Rules 2022. As per these Nidhi Company New Rules, the public companies which want to work as Nidhi Company need to obtain a prior declaration by the Government of India before accepting deposits. These changes are done to ensure the protection and safety of the general public. 

The Nidhi Company New Rules

The Government of India[1] formed a committee to look out for the working of Nidhi Companies. The recommendations of such a committee introduced the Nidhi Company New Rules, which were framed in 2019 and enforced in 2022. These rules came as the amendment made in Nidhi company Rules, 2014. 

Before coming of these Nidhi Company New Rules, the declaration by the central government was not needed for the Nidhi company to function. They only needed to fulfil certain criteria given under the Nidhi Company Rules, 2014. 

To safeguard the general public interest, it has been made mandatory that if a person wants to be a part of any Nidhi company, he should first make sure that the company has obtained the declaration from the central government as per the guidelines provided under the Nidhi Company New Rules. 

Under the Nidhi Company New Rules, the public company incorporated as a Nidhi company with a share capital of Rs 10 lacs must obtain a self-declaration from the central government. The company must apply in Form NDH-4 with a minimum of 200 persons as members and Net owned fund of Rs 20 lacs within 120 days from the date of its incorporation. The company shall also attach the declaration of the fulfilment of fit and proper person criteria by all the directors and the promoters of the company. Further, the Nidhi Company New Rules state that if the government did not give any decision within 45 days of such application, then it shall be deemed as approved by the central government. This will only be applicable to companies incorporated after the coming of Nidhi Company New Rules 2022. Provided every Nidhi company incorporated before the enforcement of these Nidhi Company New Rules shall have to comply with the requirements given under these rules within the 18 months from the date of enforcement of these rules. 

Some of the main points related to Nidhi Company New Rules:

  • Minimum paid-up capital of 10 lacs.
  • Filing of application form in NDH-4 within 120 days of incorporation
  • Approval of application in 45 days by the central government
  • Net owned fund to maintain 20 lacs
  • Incorporation of the company after enforcement of Nidhi Company New Rules

List of amendments made under Nidhi Company New Rules of 2022

More than ten amendments have been provided under the Nidhi Company New Rules 2022. The followings are the said amendments:


The definition of the Branch has been inserted. According to this rule, Branch means a place other than the registered office of Nidhi Company.

Deposit raised by the company 

No company shall raise the deposit for any member or gives a loan to any of its members if:

  • It does not comply with the rules or requirements of Nidhi Company New Rules,
  • if the application in Form NDH -4 has been rejected by the central government,

However, not anything written under these rules shall apply to the company incorporated on or after the commencement of these Nidhi Company New Rules. 

Declaration of Nidhi Company

Any public company wanting to be declared as a Nidhi company shall apply in Form NDH-4 within a period of 120 days from the date of its incorporation for declaration as a Nidhi company, after fulfilling the following conditions:

     (i) it has not less than 200 members;

    (ii) it has Net owned Funds of Rs. 20 lacs or more

After examining the application, the central government conveys its decision within 45 days to the company, and if it fails to do so within 45 days, it will be deemed to be approved.

When the central government gets satisfied that the company meets all the requirements, then it will notify it as Nidhi Company or Mutual Benefit Society in the official gazette. However, the company shall commence its business only if the central government approves its application. 

Fit and proper person

The company shall attach a declaration with regard to the fulfilment of fit and proper person by all of its directors and promotors with the Form NDH-4.

To determine that any promoter or director is a fit and proper person, the following criteria should be looked upon:

(a) Integrity, honesty, ethical behaviour, fairness, reputation and character 

(b) Not incurring any of the following disqualifications:

(i) Any complaint or information under section 154 of CrPC has been filed or is pending against him

(ii) Chargesheet filed against him in the matter of economic offences

(iii) Restraining, prohibition or department order has been passed against him in any matter related to company law, securities law or financial market in force

(iv) Conviction order passed against him involving moral turpitude

(v) Declared involvement and not been discharged 

(vi) Unsound mind

(vii) Wilful defaulter

(viii) Fugitive economic offender

(ix) Director of five or more companies  

(x) Such person is the director in five or more than five; or promoter in three or more than three Nidi Companies

Minimum paid-up share capital 

In the amendment, the minimum paid-up share capital has been raised from 5 lakhs to 10 lakhs.

Rules for an existing company

Nidhi company existing on the date of enforcement of Nidhi Company New Rules shall comply with all the requirements within a period of 18 months from the date of such enforcement. 

Rule 5 of Nidhi Rules

Rule 5 talks about the minimum number of members, Net owned fund, etc., and in the amendment, it has been mentioned that it will not be applicable for the companies incorporated as Nidhi Company on or after the enforcement of Nidhi Company New Rules 2022. So, the requirement of filling of application in Form NDH 1 within 90 days from the incorporation of the company shall not be applicable to the companies incorporated on or after the enforcement of Nidhi Company New Rules.

Restrictions on Nidhi Company

In the new rules, it has been stated that the Nidhi Company shall not raise loans from the banks or any financial institutions or any other source to advance the loans of its members. 

Another restriction given to Nidhi Company is on acquiring or purchasing securities or controlling the composition of the Board of Directors of any other company or from entering into an arrangement for the change of its management.

Transfer of the shares

Any member shall not transfer more than 50% of their shares during the subsistence of such loan or deposit. However, members shall retain the minimum number of shares required.

Net owned funds

The requirement of Net owned funds for Nidhi company has been changed from 10 lakhs to 20 lakhs. 

Opening of branches

In case a Nidhi company wants to open more than three branches outside the district or any branch outside the district, then it shall now have to apply in Form NDH 2 along with the fee as required under the Companies (Registration Offices and Fee) Rules, 2014 and intimate about such opening to the Registrar within 30 days from the opening. However, it cannot open branches unless it has filed its financial statement or annual return to the Registrar. And, it shall not open its Branch outside the state where its registered office is situated.

Closing of Branches

A Nidhi company shall not close any branch unless the proposal to close the Branch with the plan of how the existing deposits shall be paid and how the existing loan shall be recovered is approved by the Board of Directors in the meeting and has obtained the prior approval of Regional Director as per the Companies (Registration Offices and Fee) Rules, 2014. The regional director shall pass the order of approval within 30 days of the application. After obtaining approval from Regional Director, the Nidhi Company shall publish in the local newspaper at the place of its business prior to 30 days of such closure, and it shall also fix a copy of the information of closure on the notice board of Nidhi Company for a period of thirty days since the day of such publication and give an intimation to the Registrar within 30 days of such closure. Also, any place which is not a registered office or Branch where a Nidhi Company carries its business shall be closed within a period of 6 months from the date of enforcement of Nidhi Company New Rules 2022 and also intimate this to the Registrar. 


Under Rule 12 and Rule 20, the word silver shall be added next to the word gold where ever it is stated, so from now Nidhi Company will able to grant loans to its members for silver jewellery.

Joint shareholders loan

In the case of joint shareholders loan Nidhi Company will be able to it only to the member whose name appears first in the register of members.  


A Nidhi company shall not declare dividends exceeding 25% in a financial year, and this has been added to Nidhi Company New Rules under Rule 18 by substituting old Rule 18. 

Compliances by certain companies

The Nidhi Company New Rules have added two provisos under the first proviso of Rule 23A. These provisos deal with compliance with the requirements of Rule 3A. These provisos state that if a company does not comply with the requirements or fails to comply with any of the requirements on or after the date of enforcement of Nidhi Company New Rules or if the central government has rejected the application, then it shall not raise the deposit from its members or provide any loan to its member under the provisions of these rules from the date of non-compliance or the date of enforcement of the Nidhi Company New Rules or the rejection of the application, whichever is later. And, also that the deposit raised by a company after the date of non-compliance or date of enforcement of the Nidhi Company New Rules or the date of rejection of the application, whichever is later, shall be deemed to have been raised in pursuance of Chapter V of the Companies Act and shall be subject to all the requirement of that chapter or any other provisions of the said Act. No fee shall be charged for filing an application under this rule if it is filed within nine months from the enforcement of the new rules; however, earlier, it was six months.


In the Annexure, an amendment has been made to Nidhi Company New Rules by making changes to the old rule 2014. The changes have been made in the heading of NDH 2 Form, serial no. 4, serial no. 6, in Form NDH 3 and NDH 4. Also, after NDH 4, another Form of NDH 5 is inserted. 


The Nidhi Company New Rules are the amendment made to old rules, which was known as Nidhi Company Rules, 2014. The Nidhi Company New Rules are enforced for the public interest, and the main focus is on the declaration that has to be obtained by the central government by any entity if they want to start their business as a Nidhi company. Earlier obtaining such declaration was there in the previous rule, but no one ones to comply with such requirement, but now this has been made mandatory. The strict requirements are enforced so that the entity should comply with them as they used to skip the part of taking declaration of the Central Government. 

Read our Article:Know the Legalities to Run a Nidhi Company in India

Shambhavi Suyesha

Shambhavi holds a strong legal background, having completed her BA LLB and LLM. She is particularly interested in legal research and writing, and wishes to utilise her knowledge to create informative legal content. She is an analytical researcher and keeps herself updated about the current legal affairs. She also holds prior experience in publishing articles on assorted legal areas.

Request a Call Back

Are you human? : 2 + 8 =

Easy Payment Options Available No Spam. No Sharing. 100% Confidentiality

Bring back the joy of
reading newsletters & blogs

Subscribe and be ready for an amazing experience

  • Subscribe and be ready for an amazing experience
  • Organize your newsletter feed according to your interests.
  • Forget about newsletters emails and focus only in reading.

Corpbiz – Legal Advisory Services

Corpbiz is a technology driven platform which provides legal & financial services through its team of professionals.

Get the App

Corpbiz App

Corpbiz IOS App
Corpbiz app QR Code
Corpbiz IOS App QR Code
Corpbiz – Legal Advisory Services