Restrictions on Nidhi Company Limited/ Commitments to Nidhi Company as Per the Nidhi Rules.

Nidhi Companies Are Not Permitted to Work with the Following Companies:

Business of Chit Fund, lease finance, hire purchase finance, and purchase of security issued by any corporation.

The issuance of preference shares, debt instruments, or debentures under any name or form Opening Current account.

Acquisitions of another entity through purchasing securities or the control of the BODs of another company in any manner whatsoever.

Incorporating a legal agreement to alter its management structure without a board's approval of a special resolution and consent from the Regional Director in the relevant jurisdiction.

Engaging in activities that are not related to the purpose or the goal of the Company.

Accepting or lending deposits to non-members.

The pledge of assets as members as security.

Making deposits or granting funds to any person from corporate.

Incorporating any partnership agreement to lend or borrow funds.

Making use of any form of advertisement to solicit deposits.

Incentives to pay or for mobilizing deposits from current members or for fund deployment or issuance of loans.

The new rules state that Nidhi Company shall not raise credit from banks, financial institutions, or other sources to finance the members' loans.

Another constraint on buying or acquiring securities, governing any other aspect of the board of Directors of any other company, or signing an agreement to change the management of that Company.

Changes Introduced Through Nidhi Company (Amendment) Rules Of 2022

The following are the changes to registration for Nidhi Company made under the Nidhi Company (Amendment) Rules 2022:

A company cannot increase the amount of deposit required for any member or give loans to any member if:

(i) It is not in compliance with the rules or specifications in Nidhi Company New Rules, (ii) The central government riles are against the application in the form NDH 4.

However, nothing stipulated in these rules will apply to a company formed after or on the enactment of the Nidhi Company New Rules.

Any public company that wishes to be registered as a Nidhi company should apply for the form NDH-4 within 120 days beginning from the date of incorporation for the declaration of a Nidhi company once it has met the following requirements:

(i) It has more than 200 members;

(ii) Net-owned funds of at least Rs. 20 lacs and more

After reviewing the application, the central government will communicate its final decision to the Company. If the Company does not do so within 45 days, the application is deemed to have been accepted.

However, the Company can begin business only after the central government accepts its application.

The Company will attach a written statement regarding the status of the requirements for a proper and fit person to all its directors and supervisors with the form NDH-4.

The following criteria must be considered in determining whether a Director or promoter is a qualified and correct person:

(a) Integrity, honesty, ethical behavior, integrity, fairness, reputation, and character.

(b) Not committing any of the listed disqualifications as follows:

(i) Any complaints or information relating to the section 154 CrPC is filed or is in the process of being filed against him

(ii) Charge sheet that was filed against him about economic crimes.

(iii) Restrictions, prohibitions, or departmental order was given to him in connection to the Company's law, securities legislation, or financial market force

(iv) Conviction order issued against him that entails moral turpitude

(v) Involvement declared and has not been dismissed

(vi) Unsound mind

(vii) Wilful defaulter

(viii) Economic offender who is fugitive

(ix) Directors of 5 or more companies.

(x) This person should be the Director of at least five Nidhi Companies or promoter in over three Nidhi Companies

The minimum capital for shares that must be paid up has been increased between 5 and 10 lakhs.

Nidhi Company is in existence at the date of the enforcement of Nidhi Company's New Rules and shall comply with the rules within 18 months from the date of enforcement. The requirement to submit the application using Form NDH 1 in the first 90 days after the date of incorporation will not apply to companies that were incorporated before or following the implementation of Nidhi Company New Rules.

The requirement of Net-owned money in the Nidhi business has been modified between 10 and 20 lakhs.

Suppose a Nidhi company plans to open at least three branches in the district or any branch outside the district. In that case, it must fill out Form NDH 2 with the fee required by the Companies (Registration Offices and Fee) Rules, 2014, and inform them about this branch opening with the Registrar within 30 calendar days of the time of opening. But, it can only open branches if it's submitted its financial statements or annual return before the Registrar. Also, it can only establish its branch within the state where its office is registered.

In the Annexure, a modification has been made to the Forms (NDH 2 Form Heading, Serial No. 4 serial number. 6 In NDH 5 (in NDH 3. NDH Also, after NDH 4, a new form of NDH 5 is added.)

Appointment of Auditor

Just within 1 month of registration, an Auditor must be appointed. Post-appointment, an extraordinary general meeting of shareholders is called to declare the appointment of the auditor.

Convening of 1st board meeting

The board meeting is conducted every 120 days or less. The 1st meeting is major to post-incorporation for discussing the various provisions of Company Act, 2013 after Online Private Limited Company Registration.

Disclosure of interest by directors

Every director has to reveal his concerns and interests directly or indirectly by a contract or agreement. The proposed contract is determined in the first meeting of the board of directors. Any change in the concern of the director must be inferred to the board of directors within 30 days after the Private Limited Company Registration Process.

Developing of Accounting System for the company

Books of accounts are mandatory along with financial statements at the registered office. The double-entry bookkeeping is followed and records of the same are preserved for at least 8 years. After Pvt. Ltd Company Registration in India our Income Tax Consultants will consult you regarding all other post compliance aspects.

 

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