Nidhi (Amendment) Rules, 2019

Central Government vide its notification through Nidhi (Amendment) Rules, 2019 amended Nidhi Rules, 2014.

Following Rules shall come into force with effect from 15th August, 2019.

Rule Particulars Amendment Amended provision

 

Rule 2 Application

 

Insertion of clause (d) These rules shall apply to,-

 

(a) every company which had been declared as a Nidhi or Mutual Benefit Society under sub-section (1) of section 620A of the Companies Act, 1956;

 

(b) every company functioning on the lines of a Nidhi company or Mutual Benefit Society but has either not applied for or has applied for and is awaiting notification to be a Nidhi or Mutual Benefit Society under sub-section (1) of section 620A of the Companies Act, 1956; and

 

(c) every company incorporated as a Nidhi pursuant to the provisions of section 406 of the Act.

 

(d) every company declared as Nidhi or Mutual Benefit Society under sub-section (1) of section 406 of the Act.

 

Rule 3 Definition

 

Insertion of clause (da) (1) In these rules, unless the context otherwise requires,-

 

(a) “Act” means the Companies Act, 2013 (18 of 2013);

 

(b) “Doubtful Asset” means a borrowal account which has remained a nonperforming asset for more than two years but less than three years;

 

(c) “Loss Asset” means a borrowal account which has remained a nonperforming asset for more than three years or where in the opinion of the Board, a shortfall in the recovery of the loan account is expected because the documents executed may become invalid if subjected to legal process or for any other reason;

 

(d) “Net Owned Funds” means the aggregate of paid up equity share capital and free reserves as reduced by accumulated losses and intangible assets appearing in the last audited balance sheet:

 

(da) "Nidhi" means 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, and which complies with the rules made by the central Government for regulation of such class of companies.

 

Provided that the amount representing the proceeds of issue of preference shares shall not be included for calculating Net Owned Funds.

 

(e) “Non-Performing Asset” means a borrowal account in respect of which interest income or instalment of loan towards repayment of principal amount has remained unrealised for twelve months;

 

(f) “Standard Asset” means the asset in respect of which no default in repayment of principal or payment of interest has occurred or is perceived and which has neither shown signs of any problem relating to repayment of principal sum or interest nor does it carry more than normal risk attached to the business;

 

(g) “Sub-Standard Asset” means a borrowal account which is a non performing asset:

 

Provided that reschedulement or renegotiation or rephasement of the loan instalment or interest payment shall not change the classification of an asset unless the borrowal account has satisfactorily performed for at least twelve months after such reschedulement or renegotiation or rephasement.

 

(2) Words and expressions used herein, but not defined in these rules and defined in the Act or in the Companies (Specification of definitions details) Rules, 2014 shall have the same meaning as assigned to them in the Act or in the said Rules.

 

Rule 3A Declaration of Nidhis

 

Inserted The Central Government, on receipt of application (in Form NDH-4 along with fee thereon) of a public company for declaring it as Nidhi and on being satisfied that the company meets the requirements under these rules, shall notify the company as a Nidhi in the official Gazette:

 

Provided that a Nidhi incorporated under the Act on or after the commencement of the Nidhi (Amendment) Rules, 2019 shall file Form NDH-4 within 60 days from the date of expiry of -

(a) 1 year from the date of its incorporation or

(b) the period up to which extension of time has been granted by the Regional Director under sub-rule (3) of rule 5:

Provided further that nothing in the first provision shall prevent a Nidhi from filing Form NDH-4 before the period referred therein:

 

Provided also that that in case a company does not comply with the requirements of this rule, it shall not be allowed to file Form No. SH-7 (Notice to Registrar of any alteration of share capital) and Form PA-3 (Return of Allotment).

Rule 4 Incorporation & incidental matters

 

Amendment in sub-rule (1) & (5) (1) A Nidhi shall be a public company and shall have a minimum paid up equity share capital of five lakh rupees.

 

(2) On and after the commencement of the Act, no Nidhi shall issue preference shares.

 

(3) If preference shares had been issued by a Nidhi before the commencement of this Act, such preference shares shall be redeemed in accordance with the terms of issue of such shares.

 

(4) Except as provided under the proviso to sub-rule (e) to rule 6, no Nidhi shall have any object in its Memorandum of Association other than 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.

 

(5) Every “Nidhi” shall have the last words ‘Nidhi Limited’ as part of its name.

 

Rule 5 Requirements for Minimum number, Net Owned Fund etc

 

Amendment in sub-rule (1), (3) & (4) (1) Every Nidhi shall, within a period of one year from the date of its incorporation, ensure that it has-

 

(a) not less than two hundred members;

 

(b) Net Owned Funds of ten lakh rupees or more;

 

(c) unencumbered term deposits of not less than ten per cent. of the outstanding deposits as specified in rule 14; and

 

(d) ratio of Net Owned Funds to deposits of not more than 1:20.

 

(2) Within ninety days from the close of the first financial year after its incorporation and where applicable, the second financial year, Nidhi shall file a return of statutory compliances in Form NDH-1 along with such fee as provided in Companies (Registration Offices and Fees) Rules, 2014 with the Registrar duly certified by a company secretary in practice or a chartered accountant in practice or a cost accountant in practice.

 

(3) If a Nidhi is not complying with clauses (a) or (d) of sub-rule (1) above, it shall within thirty days from the close of the first financial year, apply to the Regional Director in Form NDH-2 along with fee specified in Companies (Registration Offices and Fees) Rules, 2014 for extension of time and the Regional Director may consider the application and pass orders within thirty days of receipt of the application.

 

"Provided that the Regional Director may extend the period up to one year from the date of receipt of application."

 

Explanation.- For the purpose of this rule “Regional Director” means the person appointed by the Central Government in the Ministry of Corporate Affairs as a Regional Director;

 

(4) If the failure to comply with sub-rule (1) of this rule extends beyond the second financial year, Nidhi shall not accept any further deposits from the commencement of the second financial year till it complies with the provisions and gets itself declared under sub-section (1) of section 406, besides being liable for penal consequences as provided in the Act.

 

Rule 7 Share capital & Allotment

 

Amendment in sub-rule (1)

 

(1) Every Nidhi with fully paid up equity shares of the nominal value of not less than ten rupees each:

 

Provided that this requirement shall not apply to a company referred to in sub-rules (a) and (b) of rule 2.

 

(2) No service charge shall be levied for issue of shares.

 

(3) Every Nidhi shall allot to each deposit holder at least a minimum of ten equity shares or shares equivalent to one hundred rupees:

 

Provided that a savings account holder and a recurring deposit account holder shall hold at least one equity share of rupees ten.

Rule 12 Application for Deposit

 

Insertion of clause (ba) in sub-rule (1)

 

Amendment in sub-rule (2) in clause (a)

 

(1) Every application form for placing a deposit with a Nidhi shall contain the following particulars, namely:-

 

(a) Name of Nidhi;

 

(b) Date of incorporation of Nidhi;

 

(ba) The date of declaration or notification as Nidhi

 

(c) The business carried on by Nidhi with details of branches, if any;

 

(d) Brief particulars of the management of Nidhi (name, addresses and occupation of the directors, including DIN);

 

(e) Net profits of Nidhi before and after making provision for tax for the preceding three financial years;

 

(f) Dividend declared by Nidhi during the preceding three financial years;

 

(g) Mode of repayment of the deposit;

 

(h) Maturity period of the deposit;

 

(i) Interest payable on the deposit;

 

(j) The rate of interest payable to the depositor in case the depositor withdraws the deposit prematurely;

 

(k) The terms and conditions subject to which the deposit may be accepted or renewed;

 

(l) A summary of the financials of the company as per the latest two audited financial statements as given below:

(i) Net Owned Funds

(ii) Deposits accepted

(iii) Deposits repaid

(iv) Deposits claimed but remaining unpaid

(v) Loans disbursed against-

 

(a) immovable property;

 

(b) deposits; and

 

(c) gold and jewellery

 

(vi) Profit before tax

 

(vii) Provision for tax

 

(viii) Profit after tax

 

(ix) Dividend per share

 

(m) any other special features or terms and conditions subject to which the deposit is accepted or renewed.

 

(2) The application form shall also contain the following statements, namely:-

 

(a) in case of non- payment of the deposit or part thereof as per the terms and conditions of such deposit, the depositor may approach the Bench of the National Company law Tribunal having jurisdiction over Nidhi;

 

(b) in case of any deficiency of Nidhi in servicing its depositors, the depositor may approach the National Consumers Disputes Redressal Forum, the State Consumers Disputes Redressal Forum or District Consumers Disputes Redressal Forum, as the case may be, for redressal of his relief;

 

(c) a declaration by the Board of Directors to the effect that the financial position of Nidhi as disclosed and the representations made in the application form are true and correct and that Nidhi has complied with all the applicable rules;

 

(d) a statement to the effect that the Central Government does not undertake any responsibility for the financial soundness of Nidhi or for the correctness of any of the statement or the representations made or opinions expressed by Nidhi;

 

(e) the deposits accepted by Nidhi are not insured and the repayment of deposits is not guaranteed by either the Central Government or the Reserve Bank of India; and

 

(f) a verification clause by the depositor stating that he had read and understood the financial and other particulars furnished and representations made by Nidhi in his application form and after careful consideration he is making the deposit with Nidhi at his own risk and volition.

 

(3) Every Nidhi shall obtain proper introduction of new depositors before opening their accounts or accepting their deposits and keep on its record the evidence on which it has relied upon for the purpose of such introduction.

 

(4) For the purposes of introduction of depositors, a Nidhi shall obtain documentary evidence of the depositor in the form of proof of identity and address as under:

 

(a) Proof of Identity (any one of the following)

(i) Passport

(ii) Unique Identification Number

(iii) Income-tax PAN card

(iv) Elector Photo Identity Card

(v) Driving licence

(vi) Ration card

 

(b) Proof of address (any one of the following)

(i) Passport

(ii) Unique Identification Number

(iii) Elector Photo Identity Card

(iv) Driving licence

(v) Ration card

(vi) Telephone bill

(vii) Bank account statement

(viii) Electricity bill

 

(documents referred to serial numbers (vi), (vii) and (viii) above shall not be more than two months old)

 

Rule 23 Power to enforce compliance

 

Amendment in sub-rule 2 (1) For the purposes of enforcing compliance with these rules, the Registrar of companies may call for such information or returns from Nidhi as he deems necessary and may engage the services of chartered accountants, company secretaries in practice, cost accountants, or any firm thereof from time to time for assisting him in the discharge of his duties.

 

(2) In respect of any Nidhi which has violated these rules or has failed to function in terms of the Memorandum and Articles of Association, the Central Government may appoint a Special Officer to take over the management of Nidhi and such Special Officer shall function as per the guidelines given by such Central Government:

 

Provided that an opportunity of being heard shall be given to the concerned Nidhi by the Central Governmentbefore appointing any Special Officer.

 

Rule 23A Compliance with Rule 3A by certain Nidhis

 

Inserted Every company referred to in clause (b) of rule 2 and every Nidhi incorporated under the Act, before the commencement of Nidhi (Amendment) Rules, 2019, shall also get itself declared as such in accordance with rule 3,4 within a period of one year from the date of its incorporation or within a period of six months from the date of commencement of Nidhi (Amendment) Rules, 2019, whichever is later:

 

Provided that in case a company does not comply with the requirements of this rule, it shall not be allowed to file Form No. SH-7 (Notice to Registrar of any alteration of share capital) and Form PAS-3 (Return of Allotment).

 

Rule 23B Companies declared as Nidhis under previous company law to file Form NDH-4

 

Inserted Every company referred in clause (a) of rule 2 shall file Form NDH-4 along with fees as per the Companies

(Registration Offices and Fees) Rules, 2014 for updating its status:

 

Provided that no fees shall be charged under this rule for filing Form NDH-4, in case it is filed within six month of the commencement of Nidhi (Amendment) Rules, 2019:

 

Provided further that, in case a company does not comply with the requirements of this rule, it shall not be allowed to file Form No. SH-7 (Notice to Registrar of any alteration of share capital) and Form PA93 (Return of Allotment).

 

Form NDH-4 Form for filing application for declaration as Nidhi company and for updation of status by Nidhis

 

Inserted after Form NDH-3 Form NDH-4 deployed

 

To check the notification on Nidhi rules click here