Recently, the Registrar of Companies (RoC) under the corporate affairs ministry has penalised over two dozen Nidhi companies in about a fortnight for alleged violations of Companies Act provisions.
About Nidhi Companies:
A NIDHI Company is recognised under Section 406 of the Companies Act 2013 and typically operates in the Non-Banking Financing Sector of India.
It is formed to borrow and lend money to its members. It inculcates the habit of saving among its members and works on the principle of mutual benefit.
It is not required to receive the license from the Reserve Bank of India (RBI), as these are registered with the Companies Act.
Members: A minimum of seven members is required to start a Nidhi Company out of which three members must be the directors of the company.
Activities Prohibited in a Nidhi Company
It can’t deal with chit funds, hire-purchase finance, leasing finance, insurance or securities business.
It is strictly prohibited from accepting deposits from or lending funds to, any other person except members.
Nidhi companies should not issue preference shares, debentures or any other debt instrument in any manner, name or form.
Nidhi companies should not open current accounts with their members.
Dear Student,
You have still not entered your mailing address. Please enter the address where all the study materials will be sent to you. (If applicable).
