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Amendment to the Nidhi Rules, 2014: Key changes
A number of amendments has been made by the Government to the Nidhi Rules, 2014. The amendments include mandatory declaration by Nidhi Companies whether being a new or an existing Company in form NDH-4 for declaring itself as Nidhi. The amendments will be effective from August 15, 2019. The key takeaway from the amendment to Nidhi Rules, 2014 have been summarised hereunder:
Definition of Nidhi Company:
New clause (da) has been inserted in clause (d) of Rule 3 of the Nidhi rules wherein definition of Nidhi company has been provided as under
“Nidhi company means a company which has been incorporated as Nidhi company with the object of cultivating habit of thrift and savings amongst its members, receiving deposits from and lending to its members only, or their mutual benefit, and which complies with the rules made by the central Government or regulation of such class of companies”
Mandatory declaration by Nidhi-Companies:
A new rule 3A has been inserted in the Nidhi Rule, 2014 which requires Nidhi Company incorporated under the Act or on after the commencement of the Nidhi (Amendment) Rules, 2019, i.e. after 15.08.2019 to file Form NDH-4 within 60 days from the expiry of one year from the date of its incorporation or the period up to which extension of time has been granted by the Regional Director under sub rule (3) of Rule 5 of the Nidhi Rules, 2014. Since this being the maximum limit, the Nidhi Companies are permitted to file the form NDH-4 prior to timelines as prescribed above.
On receipt of application from public company in Form NDH-4 for declaring it as Nidhi company, the Central Government, shall notify that company as Nidhi company in official gazette after being satisfied that such company meets the requirements under the Nidhi Rules, 2014.
Consequences of non-filing of Form NDH-4:
If Nidhi Company fails to file the form NDH-4 or doesn’t’ comply with the requirements of Rule 3A, then it would not be allowed to file form SH-7, i.e., Notice to Registrar for any alteration of share capital and PAS-3 return of allotment. In simple words, such company will not be able to issue, raise further capital before complying with the requirements of Rule 3A.