The Centre recently amended the provisions related to Nidhi rules under the Companies Act to make regulatory regime for companies more effective and to accomplish the objectives of transparency and investor friendliness in corporate environment.

The amended provisions of the Companies Act (Section 406) and Nidhi rules ( amended with effect from August 15, 2019 ) require that the Nidhi companies have to apply to the Central government for updation of their status/ declaration as Nidhi Company in Form NDH-4.

Companies incorporated as Nidhi before the Nidhi Amendment Rules, 2019 i.e. August 15, 2019 have to apply within a period of one year from the date of its incorporation or within 9 months of the Nidhi Amendment Rules i.e. August 15, 2019 whichever is later.

Companies incorporated as Nidhi on or after Nidhi Amendment Rules, 2019 have to apply within 60 days of expiry of one year from the date of incorporation or extended period (as granted by concerned Regional Director), an official release said.

In case a company does not comply with the requirements, it shall not be allowed to file Form No. SH–7 (Notice to Registrar for any alteration of share capital) and Form PAS–3 (Return of Allotment).

Further, investors are advised to verify the status of the Nidhi company from the notification issued by the Central Government in the official gazette before making any investment or deposit, the release added.

Under Nidhi Rules, 2014, Nidhi is a company which has been incorporated as a Nidhi with the object of cultivating the habit of thrift and saving amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit.

Related Topics