Nidhi companies are companies incorporated to lend money among members and accept deposit from members on mutual benefit basis. The main aim of the Nidhi companies is not maximization of profit as such but to provide financial assistance to their needy members. So much so that Nidhi companies are not commercial entities.
Nidhi companies are mushrooming over the years as a finical institution alterative to banking vis-a-vis borrowing and despoils. Easy availability of loan and higher interest for deposits are the attractions of the Nidhi companies.
Nidhi companies are regulated by Ministry of Corporate Affairs through Nidhi Rules, 2014.
One of the requirement s for ndihi companies is to file Form NDH-4 with the Ministry of Corporate Affairs within sixty days from the date of expiry of one year from the date of its incorporation. Filing of Form NDH-4 is to ensure that ndhi companies are following the rules and regulations as applicable to nidhi companies.
The information required to be provided in Form NDH-4 are :
- Whether the company has complied with the Nidhi Rules, 2014
- The ratio of net owned funds to deposits accepted
- Is the ratio of loan on immovable property within the prescribed limit
- Whether the company has carried out any financial dealings with any person other than its members etc.
If the information provided in Form NDH-4 are in compliance with the Nidhi Rules, 2014, the Central Government ( Ministry of Corporate Affairs) shall notify the company as a Nidhi in the official Gazette.
If the information provided in Form NDH-4 are not in compliance with the Nidhi Rules, 2014, the company shall lose its ‘Nidhi’ status.
On 30-09-2021 Ministry of Corporate Affairs published a list of 404 incorporated Nidhi companies wherein Nidhi NDH- 4 form for declaration as Company have been rejected due to non compliance with the Nidhi Rules, 2014.
It is pertinent to note that more that 50 % of the Nidhi companies whose NDH- 4 form were rejected are from Kerala. See the notification/list here.
If a company after incorporating it as a Nidhi company is not following the rules and regulation from the very day of incorporation , it may cause to lose its Nidhi Staus. So, the promoters of Nidhi companies shall ensure at all times that the company is observing legal provisions as applicable to it. This can be easy if the company is availing help from a professional like practicing company secretary.