if the\n application in Form NDH -4 has been rejected by the central government,<\/li><\/ul>\n\n\n\nHowever,\nnot anything written under these rules shall apply to the company incorporated\non or after the commencement of these Nidhi Company New Rules. <\/p>\n\n\n\n
Declaration of Nidhi Company<\/h3>\n\n\n\n
Any\npublic company wanting to be declared as a Nidhi company shall apply in Form\nNDH-4 within a period of 120 days from the date of its incorporation for\ndeclaration as a Nidhi company, after fulfilling the following conditions:<\/p>\n\n\n\n
\n (i) it has not less than 200 members;<\/p>\n\n\n\n
\n (ii) it has Net owned Funds of Rs. 20 lacs or more<\/p>\n\n\n\n
After\nexamining the application, the central government conveys its decision within\n45 days to the company, and if it fails to do so within 45 days, it will be\ndeemed to be approved.<\/p>\n\n\n\n
When\nthe central government gets satisfied that the company meets all the\nrequirements, then it will notify it as Nidhi Company or Mutual Benefit Society\nin the official gazette. However, the company shall commence its business only\nif the central government approves its application. <\/p>\n\n\n\n
Fit and proper person<\/h3>\n\n\n\n
The\ncompany shall attach a declaration with regard to the fulfilment of fit and\nproper person by all of its directors and promotors with the Form NDH-4.<\/p>\n\n\n\n
To\ndetermine that any promoter or director is a fit and proper person, the\nfollowing criteria should be looked upon:<\/p>\n\n\n\n
(a)\nIntegrity, honesty, ethical behaviour, fairness, reputation and character <\/p>\n\n\n\n
(b)\nNot incurring any of the following disqualifications:<\/p>\n\n\n\n
(i) Any complaint or information\nunder section 154 of CrPC has been filed or is pending against him<\/p>\n\n\n\n
(ii) Chargesheet filed against him in\nthe matter of economic offences<\/p>\n\n\n\n
(iii) Restraining, prohibition or\ndepartment order has been passed against him in any matter related to company\nlaw, securities law or financial market in force<\/p>\n\n\n\n
(iv) Conviction order passed against\nhim involving moral turpitude<\/p>\n\n\n\n
(v) Declared involvement and not been\ndischarged <\/p>\n\n\n\n
(vi) Unsound mind<\/p>\n\n\n\n
(vii) Wilful defaulter<\/p>\n\n\n\n
(viii) Fugitive economic offender<\/p>\n\n\n\n
(ix) Director of five or more\ncompanies <\/p>\n\n\n\n
(x) Such person is the director in\nfive or more than five; or promoter in three or more than three Nidi Companies<\/p>\n\n\n\n
Minimum paid-up share capital\u00a0<\/h3>\n\n\n\n
In\nthe amendment, the minimum paid-up share capital has been raised from 5 lakhs\nto 10 lakhs.<\/p>\n\n\n\n
Rules for an existing company<\/h3>\n\n\n\n
Nidhi\ncompany existing on the date of enforcement of Nidhi Company New Rules shall\ncomply with all the requirements within a period of 18 months from the date of\nsuch enforcement. <\/p>\n\n\n\n
Rule 5 of Nidhi Rules<\/h3>\n\n\n\n
Rule\n5 talks about the minimum number of members, Net owned fund, etc., and in the\namendment, it has been mentioned that it will not be applicable for the\ncompanies incorporated as Nidhi Company on or after the enforcement of Nidhi Company\nNew Rules 2022. So, the requirement of filling of application in Form NDH 1\nwithin 90 days from the incorporation of the company shall not be applicable to\nthe companies incorporated on or after the enforcement of Nidhi Company New\nRules. <\/p>\n\n\n\n
Restrictions on Nidhi Company<\/h3>\n\n\n\n
In\nthe new rules, it has been stated that the Nidhi Company shall not raise loans\nfrom the banks or any financial institutions or any other source to advance the\nloans of its members. <\/p>\n\n\n\n
Another\nrestriction given to Nidhi Company is on acquiring or purchasing securities or\ncontrolling the composition of the Board of Directors of any other company or\nfrom entering into an arrangement for the change of its management.<\/p>\n\n\n\n
Transfer of the shares<\/h3>\n\n\n\n
Any\nmember shall not transfer more than 50% of their shares during the subsistence\nof such loan or deposit. However, members shall retain the minimum number of\nshares required.<\/p>\n\n\n\n
Net owned funds<\/h3>\n\n\n\n
The\nrequirement of Net owned funds for Nidhi company has been changed from 10 lakhs\nto 20 lakhs. <\/p>\n\n\n\n
Opening of branches<\/h3>\n\n\n\n
In\ncase a Nidhi company wants to open more than three branches outside the\ndistrict or any branch outside the district, then it shall now have to apply in\nForm NDH 2 along with the fee as required under the Companies (Registration\nOffices and Fee) Rules, 2014 and intimate about such opening to the Registrar\nwithin 30 days from the opening. However, it cannot open branches unless it has\nfiled its financial statement or annual return to the Registrar. And, it shall\nnot open its Branch outside the state where its registered office is situated.<\/p>\n\n\n\n
Closing of Branches<\/h3>\n\n\n\n
A\nNidhi company shall not close any branch unless the proposal to close the\nBranch with the plan of how the existing deposits shall be paid and how the\nexisting loan shall be recovered is approved by the Board of Directors in the\nmeeting and has obtained the prior approval of Regional Director as per the\nCompanies (Registration Offices and Fee) Rules, 2014. The regional director\nshall pass the order of approval within 30 days of the application. After\nobtaining approval from Regional Director, the Nidhi Company shall publish in\nthe local newspaper at the place of its business prior to 30 days of such\nclosure, and it shall also fix a copy of the information of closure on the\nnotice board of Nidhi Company for a period of thirty days since the day of such\npublication and give an intimation to the Registrar within 30 days of such\nclosure. Also, any place which is not a registered office or Branch where a\nNidhi Company carries its business shall be closed within a period of 6 months\nfrom the date of enforcement of Nidhi Company New Rules 2022 and also intimate\nthis to the Registrar. <\/p>\n\n\n\n
Silver<\/h3>\n\n\n\n
Under\nRule 12 and Rule 20, the word silver shall be added next to the word gold where\never it is stated, so from now Nidhi Company will able to grant loans to its\nmembers for silver jewellery. <\/p>\n\n\n\n
Joint shareholders loan<\/h3>\n\n\n\n
In\nthe case of joint shareholders loan Nidhi Company will be able to it only to\nthe member whose name appears first in the register of members. <\/p>\n\n\n\n
Dividends<\/h3>\n\n\n\n
A\nNidhi company shall not declare dividends exceeding 25% in a financial year,\nand this has been added to Nidhi Company New Rules under Rule 18 by\nsubstituting old Rule 18. <\/p>\n\n\n\n
Compliances by certain companies<\/h3>\n\n\n\n
The\nNidhi Company New Rules have added two provisos under the first proviso of Rule\n23A. These provisos deal with compliance with the requirements of Rule 3A.\nThese provisos state that if a company does not comply with the requirements or\nfails to comply with any of the requirements on or after the date of\nenforcement of Nidhi Company New Rules or if the central government has\nrejected the application, then it shall not raise the deposit from its members\nor provide any loan to its member under the provisions of these rules from the\ndate of non-compliance or the date of enforcement of the Nidhi Company New Rules\nor the rejection of the application, whichever is later. And, also that the\ndeposit raised by a company after the date of non-compliance or date of\nenforcement of the Nidhi Company New Rules or the date of rejection of the\napplication, whichever is later, shall be deemed to have been raised in\npursuance of Chapter V of the Companies Act and shall be subject to all the\nrequirement of that chapter or any other provisions of the said Act. No fee\nshall be charged for filing an application under this rule if it is filed\nwithin nine months from the enforcement of the new rules; however, earlier, it\nwas six months.<\/p>\n\n\n\n
Forms<\/h3>\n\n\n\n
In\nthe Annexure, an amendment has been made to Nidhi Company New Rules by making\nchanges to the old rule 2014. The changes have been made in the heading of NDH\n2 Form, serial no. 4, serial no. 6, in Form NDH 3 and NDH 4. Also, after NDH 4,\nanother Form of NDH 5 is inserted. <\/p>\n\n\n\n
Conclusion\u00a0<\/h2>\n\n\n\n
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.\u00a0<\/p>\n\n\n\n
Read our Article<\/b>:Know the Legalities to Run a Nidhi Company in India\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"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 […]<\/p>\n","protected":false},"author":36,"featured_media":43104,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[31],"tags":[2328],"acf":{"service_id":"9"},"authorName":"Shambhavi Suyesha","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/03\/IMG-20220324-WA0005.jpg","authorDescription":"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.","postViews":18397,"readingTime":7,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/43101"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/36"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=43101"}],"version-history":[{"count":13,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/43101\/revisions"}],"predecessor-version":[{"id":43115,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/43101\/revisions\/43115"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/43104"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=43101"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=43101"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=43101"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}