Nidhi Company (Amendment) Rules, 2022

Branch

Non-Compliance with Rule 3A/ Rejection of NDH-4

If still deposits are accepted, they are deemed to be accepted as deposits under Chapter V of the Companies Act, 2013 (Acceptance of Deposits by Companies). 

Declaration as Nidhi Company

1. Minimum 200 members; and 
2. Net Owned Funds of Rs. 20 lakhs or more

it can make an application in Form NDH-4 to the Central Government to be declared as a Nidhi Company. 

Such application shall be made within 120 days of incorporation of the public company. In addition, all the promoters and directors of the company shall furnish a declaration that they fulfill the ‘Fit and Proper Person’ criteria. 

The Central Government shall convey its decision within 45 days failing which the application of a company is deemed to be approved. 

If a company fails to comply with this rule, it is not allowed to file form SH-7 (Notice for Alteration of Share Capital) and PAS-3(Return of Allotment). 

Definition of Fit and Proper Person

(a) he possesses integrity, honesty, ethical behavior, reputation, fairness, and good character; and 

(b) he does not incur the following disqualifications – 

i. Criminal complaint as per Section 154 of CrPC is filed and pending against him; 

ii. A charge sheet is filed by any enforcement agency against him and is still pending;

iii. Restraint, prohibition, or debarment order has been passed against him in any company law/ security law/ financial market-related matter;

iv. Conviction order has been passed against him for any offence that involves moral turpitude;

v. he is an undischarged insolvent;

vi. the person is of unsound mind;

vii. he is a wilful defaulter or fugitive economic offender;

viii. the person is a director in 5 Nidhi companies or more;

ix. he is a promoter in 3 Nidhi companies or more. 

Paid-Up Share Capital

However, Nidhi companies incorporated before 19 April 2022 can fulfill this requirement within 18 months from the commencement of these rules. 

Non-Applicability of Rule 5

Restrictions

1. A Nidhi Company can neither purchase securities of any other company nor control the composition of the Board of Directors of such company or enter into any arrangement for the change of its management. 
2. A Nidhi company cannot take loans from banks or other financial institutions for the purpose of advancing the same to its members.

Share Transfer

Further, saving deposits and recurring deposit holders shall hold a minimum of 1 equity share of Rs. 10.   

Shareholding shall be checked as on the date of availing of the loan or making of deposit. 

Net Owned Funds

However, Nidhi companies incorporated before 19 April 2022 can fulfill this requirement within 18 months from the commencement of these rules. 

Branch Opening

Branch Closing

1. the Board of Directors approves the proposal, which must include a detailed plan for paying existing deposits and recovering outstanding loans; and 
2. it submits an application in Form NDH 2, to the Regional Director, along with the required fee as per the Companies (Registration Offices and Fee) Rules, 2014. 

Approval from Regional Director shall be obtained minimum 60 days before the closure and the Regional Director shall pass the order within 30 days of receipt of the application. 

In addition, after receiving approval from the Regional Director, the Nidhi company must:

(i) Publish an advertisement in the local vernacular newspaper at least 30 days before the branch closure, following format NDH-5, to inform the public about the closure.

(ii) Display a copy of the advertisement or a notice about the branch closure on both, the Nidhi’s notice board and the relevant branch for a minimum of thirty days from the date of publishing the advertisement. 

(iii) Inform the Registrar within thirty days of the closure using Form NDH-2 and paying the specified fee as per the Companies (Registration Offices and Fees) Rules, 2014.

Moreover, any place, except for the registered office or a branch, where a Nidhi company conducts its operations must be closed within six months from the commencement date of the Nidhi (Amendment) Rules, 2022 i.e. 19th April 2022. The Registrar should be informed about this closure using Form NDH-2.

Now, it is mandatory for a Nidhi Company to take the approval of the Board of Directors and Regional Director for branch closing within the specified time limit.  

Security against Loan

Withdrawal from Unencumbered Term Deposits

Loan to Joint Shareholders

Dividend

Now, dividend higher than 25% cannot be declared by a Nidhi Company. 

Introduction of New Form – NDH-5