On 19th April 2022, the ministry of corporate notified Nidhi Company of new rules through the amendment. It's come up with Nidhi (Amendment) Rules 2022.
This is a prior declaration for certain entities before they start accepting deposits. Now, those public companies who want to function as Nidhis must obtain a declaration from the central government before accepting deposits.
To prevent illegal fundraising activities and ensure the safety and protection of the general public, the government has amended the rules for Nidhi companies.
In this guide, we've discussed everything about Nidhi Company's new rules 2022, a list of amendments, and all the necessary things you need to know about Nidhi company's new rules.
Without any further delay, Let's begin!
The Nidhi Company New Rules
The Government of India formed a committee to analyze the working of Nidhi companies and later come up with new rules that were framed in 2019 and updated in 2022.
Under the Nidhi Company New Rules, the public company incorporated as the Nidhi company with a share capital of Rs 10 lacs must obtain a self-declaration from the central government. For this, the company must apply in form NDH-4 with 200-person minimum members and their fund of Rs 20 lacs within 120 days from the incorporation date. Further, the Nidhi company's new rules state that if the government is not taking any decisions within 45 days of application, it is considered approved by the central government.
Some main points related to Nidhi Company New Rules:
Minimum paid-up capital of Rs 10 lacs
Filling the application form in NDH-4 within 120 days of incorporation
Get approval of the application within 45 days from the central government.
Net owned fund to maintain 20 lacs
Incorporation of the company after enforcement of Nidhi company's new rules
List of amendments made under Nidhi Company New Rules 2022
These are some following said amendments under the Nidhi company rules 2022:
A branch is a place that is different from the registered office of Nidhi Company.
Deposit raised by the company
There's no company raising the deposit for any member or giving a loan if:
It doesn't comply with the rules or requirements of Nidhi company's new rules
If the central government has refuse the application form NDH-4 based on Nidhi company's new rules
Declaration of Nidhi Company
If any public company wants to be declared as Nidhi Company, that can apply in form NDH-4 within 120 days from the incorporation date for a declaration by filling the following conditions:
There must be 200 members minimum
Its Net owned fund of Rs. 20 lacs
Once the condition is met, the central government makes decisions within 45 days, or if it fails to make decisions within 45 days, it is considered approved.
Fit and Proper person
The company shall attach a declaration to fulfil fit and proper person by all of its directors and promoters with the form NDH-4. But it is based on the following criteria:
Integrity, honesty, ethical behaviour, fairness, reputation, and character
Not incurring any of the following disqualifications:
- Any complaint or queries under section 154 of CrPC files or pending against him
- Chargesheet filed against him in a matter of economic offences
- Restraining, prohibition, or department order has been passed related to the financial market's company law and security law.
- A conviction order passed against him involving moral turpitude.
- Declaration of involvement and not being discharged
- Unsound mind
- Wilful defaulter
- Fugitive economic offender
- Director of five or more companies
- Such a person is the director of five or more than five or promoter of three or more in Nidhi Company.
Minimum paid-up share capital
The minimum paid-up share capital has been raised from 5lakh to 10 lakhs.
Rules for an existing company
Nidhi company's new rules comply with all the requirements of Nidhi company existing within 18 months from the date of enforcement.
Rule 5 of Nidhi Rules
Rule 5 is all about the no. of members, net-owned fund, etc., and it's applicable for companies incorporated after the Nidhi company rules 2022. The requirements for filling in form NDH-1 within 90 days are not applicable after the Nidhi company's new rules.
Restrictions on Nidhi Company
The Nidhi Company is not able to raise loans from banks or any financial institutions, or other sources. Another restriction on Nidhi company is acquiring securities or controlling the composition of the board of directors.
Transfer of the shares
Any member shall not transfer more than 50% of their shares during such loan or deposit.
Net Owned funds
The net-owned funds changed from 10 lakhs to 20 lakhs.
Opening of branches
If a Nidhi company wants to open more than three branches outside the district, it's necessary to apply in form NDH-2 with a fee required to register within 30 days of opening.
Silver
Under Rules 12 and 20, silver was added next to the word gold. The Nidhi company will grant loans to its members for silver jewellery from now on.
Joint shareholder's loan
In this case, the Nidhi company can only access members whose name appears first in the register of members.
Dividends
A Nidhi company is not declared as exceeding 25% in a financial year, and it's added to the Nidhi company's new rules under rule 18.
Forms
In the annexure, an amendment has changed the old rules in the heading of NDH 2, serial no. 4, serial no. 6, in the form of NDH 3 and NDH 4. Another form of NDH 5 is inserted.
Final Verdict
These are some of Nidhi company's new rules in 2022. And it's necessary to know all the updated rules if you want to start your business as a Nidhi company. We hope this article helps you know all the updated Nidhi company rules 2022 and the requirements to comply with the declaration of the central government. If you're also planning to do Nidhi company registration, then you can hire a professional business consulting firm like Lawgical India. We at Lawgical India have a team of professionals who can help you to do Nidhi company registration in the easiest manner. Contact us today to do your Nidhi company registration at affordable prices.
