Category Archives: CHAPTER XXVI – CA2013

NIDHIS – Nidhi Company

NIDHI COMPANIES UNDER COMPANIES LAW


Nidhi is a special class of companies under the Companies Act 2013. Sub – Section (1) of Section 406 define Nidhi. “Nidhi” means a company which 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, and which complies with such rules as are prescribed by the Central Government for regulation of such class of companies.

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EXEMPTION TO NIDHI COMPANIES


On 5th June 2015, Ministry of Corporate Affairs posted here a draft notification to be published in Official Gazette announcing some exemption to Nidhi Companies.

As there is no effective date is announced in the Notification, this notification shall come into effect on the date of its publication in the Official Gazette.

[UPDATE 19th June 2015: MCA uploaded copy of Official Gazette dated 5th June 2015, in which this Notification is published. Meaning that; These exemption came into force from that date.]

The Notification is issued in exercise of power conferred by Clauses (a) and (b) of Sub – section 462 read with Section 406 of the Companies Act, 2013. A copy of this notification has been laid in draft before both Houses of Parliament as required by sub-section (2) of section 462 of the Companies Act, 2013.

Paragraph 2 of the Notification cast a condition on the Nidhi Companies:

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Part of Companies Amendment Act became Effective


A draft notification posted here on website of Ministry of Corporate Affairs says that Section 1 to 12 and Section 15 to 23 of the Companies (Amendment) Act, 2015 came into force with effect from 29th May 2015. The official language of notification read, “the Central Government hereby appoints the 296 May, 2015 as the date on which the provisions of sections 1 to 12 and 15 to 23 of the said Act shall come into force.” The Amendment Act was got presidential assent and notified by Ministry of Law and Justice as such on 26th May 2015 in official gazette.

Two sections not notified yet deals with Fraud Reporting Procedure [Section 13 amending Section 143 of Principal Act] and Related Party Transactions [Section 14 amending Section 177 of Principal Act]. This is understood that Rules related to these sections are in drafting process.

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GOVERNANCE PROVISIONS FOR NIDHI COMPANIES


Rules relating to Directors [Rule 17]

The Director shall be a member of Nidhi.

The Director of a Nidhi shall hold office for a term up to ten consecutive years on the Board of Nidhi.

The Director shall be eligible for re-appointment only after the expiration of two years of ceasing to be a Director.

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LOAN BY NIDHI COMPANIES


Today, we will discuss loan given by Nidhi Companies.

Loans [Rule 15]

A Nidhi shall provide loans only to its members.

The loans given by a Nidhi to a member shall be subject to the following limits, namely:.

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DEPOSITS BY NIDHI COMPANIES


In this post we will discuss deposits accepted Nidhi companies.

Branches [Rule 10]

A Nidhi may open branches, only if it has earned net profits after tax continuously during the preceding three financial years.

A Nidhi may open up to three branches within the district.

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NIDHI COMPANIES


Nidhi Companies, as defined in Section 406 of the companies Act 2013 was discussed earlier here.

“Nidhi” means a company which 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, and which complies with such rules as are prescribed by the Central Government for regulation of such class of companies. [Section 406 of the Companies Act 2013]

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