'Nidhi' means a company which has been incorporated as a Nidhi with the object of cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit, and which complies with such rules as are prescribed by the Central Government for regulation of such class of companies.
Important Provisions for incorporating Nidhi
a) A Nidhi to be incorporated under the Act shall be a public company and shall have a minimum paid up equity share capital of five lakh rupees.
b) Every Company incorporated as a 'Nidhi' shall have the last words ‘Nidhi Limited' as part of its name.
c) In e-form respective point should be filled as yes for obtaining sectoral regulator approval and in case of Nidhi it is MCA
d) A Nidhi shall not admit a body corporate or trust as a member.
e) A minor shall not be admitted as a member of Nidhi:
f) The Director shall be a member of Nidhi.
Mandatory Documents required for incorporating Nidhi company
a) INC 9 of all the Subscribers
b) DIR 2 of all the directors
c) Declaration as per rule 5 & 6 of Nidhi rules 2014 signed by all the subscribers
Note: No Nidhi shall have any object in its Memorandum of Association other than the object of cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit.
Returns to be filed
a) Form NDH-1 -Within ninety days from the close of the first financial year after its incorporation and where applicable, the second financial year with the Registrar duly certified by a company secretary in practice or a Chartered Accountant in practice or a cost accountant in practice.
b) Form NDH-3 - Every Nidhi company shall file half yearly return with the Registrar within thirty days from the conclusion of each half year duly certified by a company secretary in practice or chartered accountant in practice or cost accountant in practice.
Share Capital
a) No Nidhi shall issue preference shares. If preference shares had been issued by a Nidhi before the commencement of Companies Act 2013, such preference shares shall be redeemed in accordance with the terms of issue of such shares.
b) Every Nidhi shall issue equity shares of the nominal value of not less than ten rupees each: but it does not apply to companies formed as Nidhi under sub-section (1) of Section 620Aof the Companies Act, 1956
c) Every Nidhi shall ensure that it has not less than two hundred members;
d) A savings account holder and a recurring deposit accountholder shall hold at least one equity share of rupees ten.
Important provisions relating to deposits
a) The fixed deposits shall be accepted for a minimum period of six months and a maximum period of sixty months and Recurring deposits shall be accepted for a minimum period of twelvemonths and a maximum period of sixty months.
b) A Nidhi may offer interest on fixed and recurring deposits at a rate not exceeding the maximum rate of interest prescribed by the Reserve Bank of India which the Non-Banking Financial Companies can pay on their public deposits.
c) A Nidhi shall not accept deposits exceeding twenty times of its Net Owned Funds (NOF) as per its last audited financial statements
Net Owned Funds means the aggregate of paid up equity share capital and free reserves as reduced by accumulated losses and intangible assets appearing in the last audited balance sheet:
d) If a fixed deposit account or a recurring deposit account is foreclosed by the depositor then-
(i) a Nidhi shall not repay any deposit within a period of three months from the date of its acceptance
(ii) where at the request of the depositor, a Nidhi repays any deposit after a period of three months, the depositor shall not be entitled to any interest up to six months from the date of deposit;
(iii) where at the request of the depositor, a Nidhi makes repayment of a deposit before the expiry of the period for which such deposit was accepted by Nidhi, the rate of interest payable by Nidhi on such deposit shall be reduced by two per cent. from the rate which Nidhi would have ordinarily paid, had the deposit been accepted for the period for which such deposit had run:
Provided that in the event of death of a depositor, the deposit maybe repaid prematurely to the surviving depositor or depositors in the case of joint holding with survivor clause, or to the nominee or to legal heir with interest up to the date of repayment at the rate which the company would have ordinarily paid, had such deposit been accepted for the period for which such deposit had run.
(e) Deposits may be accepted in the name of a minor, if they are made by the natural or legal guardian who is a member of Nidhi.
Some additional points
Branches
(i) A Nidhi may open branches, only if it has earned net profits after tax continuously during the preceding three financial years and a Nidhi may open upto three branches within the district.
(ii) A Nidhi shall not close any branch unless it-
(a) Publishes an advertisement in a newspaper in vernacular language in the place where it carries on business at least thirty days prior to such closure, informing the public about such closure;
(b)Fixes a copy of such advertisement or a notice informing such closure of the branch on the notice board of Nidhi for a period of at least thirty days from the date on which advertisement was published under clause (a) ; and
(c) Gives an intimation to the Registrar within thirty days of such closure.
Auditor's Certificate
The Auditor of the company shall furnish a certificate every year to the effect that the company has complied with all the provisions contained in the rules and such certificate shall be annexed to the audit report and in case of non-compliance, he shall specifically state the rules which have not been complied with.
Net Owned funds
(i) Every Nidhi shall maintain Net Owned Funds (excluding the proceeds of any preference share capital) of not less than ten lakh rupees or such higher amount as the Central Government may specify from time to time
(ii) ratio of Net Owned Funds to deposits of not more than 1:20.
Dividends
A Nidhi shall not declare dividend exceeding twenty five percent. or such higher amount as may be specifically approved by the Regional Director for reasons to be recorded in writing and further subject to the following conditions, namely:-
(a) an equal amount is transferred to General Reserve;
(b) there has been no default in repayment of matured deposits and interest; and
(c) it has complied with all the rules as applicable to Nidhis.
Compliance
(a) In respect of any Nidhi which has violated these rules or has failed to function in terms of the Memorandum and Articles of Association, the concerned Regional Director may appoint a Special Officer to take over the management of Nidhi and such Special Officer shall function as per the guidelines given by such Regional Director:
Provided that an opportunity of being heard shall be given to the concerned Nidhi by the Regional Director before appointing any Special Officer.
(b) If Nidhi company contravenes any of the provisions of the rules prescribed herein, the company and every officer of the company who is in default shall be punishable with fine which may extend to five thousand rupees, and where the contravention is a continuing one, with a further fine which may extend to five hundred rupees for every day after the first during which the contravention continues.
If a Nidhi is not complying with clauses of having not less than two hundred members; or ratio of Net Owned Funds to deposits of not more than 1:20it shall within thirty days from the close of the first financial year, apply to the Regional Director in NDH-2 along with fee specified in Companies(Registration Offices and Fees) Rules, 2014 for extension of time and the Regional Director may consider the application and pass orders within thirty days of receipt of the application.
Explanation.- For the purpose of this rule 'Regional Director' means the person appointed by the Central Government in the Ministry of Corporate Affairs as a Regional Director;
Note:
(i) All provisions of Nidhi are covered in section 406 of companies act 2013 and Nidhi rules 2014
(ii) Every Nidhi company should take care of the restrictions prescribed in rule 6 of Nidhi rules 2014
The author can also be reached at gargpreeya@gmail.com
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