Latest Changes in Nidhi Companies

On 01st July 2019, Ministry of corporate affairs has issued Nidhi (Amendment) Rules 2019 through the notification which would be applicable from 15th August 2019. In this article we will discuss all the relevant amendments made in this notification:

Definition of the term ‘Nidhi’

By this notification, there is addition has been made in the definition in the meaning of Nidhi. Under rule 3 sub-rule (da), ‘Nidhi’ means a company which fulfills the rules made by the Central Government and which would be incorporated as Nidhi with the following objects:

• Developing the habit in the lower section of the society to save funds for the future; and
• Accepting the deposit from its members and lend the same amount to other members of the company for mutual benefit…

Rule 3A – Declaration of Nidhi Company

The general meaning of Nidhi is Treasure. In the definition, there is a new rule has been added as “Rule 3A” which states that if any public company wants to declare it as Nidhi company then they have to make an application in Form NDH-4. When the Central Government has satisfied that the company has met all the requirements, then the government would notify such company as Nidhi in the official Gazette.

All the Nidhi companies which has been registered as per the provision of section 406 of companies act, 2013 or after the commencement of Nidhi Amendment Rules 2019, would have to file an application in Form NDH-4 within a period of 60 days from the date of 1 year from the date of incorporation or within such extended time as granted to the Regional directors.

However, if the company has not complied with the requirement of filing of Form NDH-4, then, the company would not be allowed to file the following forms:

Form No. SH-7 – Notice of any alteration of the share capital to the Registrar 

Form No. PAS-3 – Return of allotment

Rule 23A

Rule 23A stipulates the following types of the company would be required to file the declaration in Form NDH-4:

The company as referred in rule 2(b) i.e., the company which are functioning as per the  Nidhi company but such companies are either not applied for registration as Nidhi or has applied and is awaiting for the Nidhi status; and

Every Nidhi company which has been incorporated under the Companies Act 2013 before the commencement of the Nidhi Amendment Rules 2019.

The time period within which the declaration need to be filed:

The above-referred companies would be required to file a declaration in Form NDH-4 within the later of the following dates:

• 1 year from the date of incorporation of the Nidhi company; or
• 6 months from the date of commencement of the Nidhi Amendment Rules 2019.

If in case, the above-specified companies fail to file the declaration within due time, then such defaulting company would not be allowed to file the following forms:

• Form No. SH-7 – Notice to the Registrar of any alteration of the share capital
• Form No. PAS-3 – Return of allotment.

Rule 23B

In case the company wants to update their status which has been registered as Nidhi under the companies act, 1956, is also required to file the declaration in Form NDH-4. 

The time period within which the declaration need to be filed:

These companies would be required to file the declaration within a period of 6 months from the date of commencement of Nidhi Amendment Rules 2019.

If the company files the declaration after the time as specified above referred period, then, the company shall be required to pay late fees as per the Companies (Registration Offices and Fees) Rules 2014.

If the company has not filed the declaration, then, the company would not be allowed to file the following forms:

Form No. SH-7 – Notice to the Registrar of any alteration of the share capital

Form No. PAS-3 – Return of allotment.

It is to be noted that Form NDH-4 should be duly certified by practicing Chartered Accountant or Company Secretary or Cost Accountant.