The Centre has cautioned people regarding 348 companies that failed to meet the requisite criteria for declaration as a Nidhi company, under Companies Act 2013 and Nidhi Rules 2014.

‘Nidhi’ means a company that 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. These need to comply with norms prescribed by the Centre.

MCA advises investors to verify status of Nidhi companies before investment

Under section 406 of the Companies Act, 2013, and amended Nidhi Rules of 2014, companies incorporated as ‘Nidhi’ need to apply to the Central government in form NDH-4. As on August 24, forms filed by 348 companies were scrutinised but “not a single company could satisfy the requisite criteria for it to be declared as a Nidhi company by the Central government,” a statement issued by the Finance Ministry said.

Yet to apply

It also said that that there are large numbers of companies which, though functioning as Nidhi company, have not yet applied. This is in violation of the Companies Act and Nidhi Rules.

Centre amends Nidhi rules, prescribes new form for status updation

“Stakeholders are advised to verify the antecedents of a company functioning as a Nidhi and ensure that it has been declared as a Nidhi company by the Central government before becoming its member and depositing/investing their hard-earned money in such companies,” the statement said.

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