Companies Act, 2013--Nidhi Amendment Rules

Understanding the Nidhi (Amendment) Rules, 2022

CA. Poonam Gandhi

Recently the Ministry of Corporate Affairs had notified Nidhi (Amendment) Rules, 2022. A company which is desirous to function as a 'Nidhi' would need to obtain a prior declaration from the Central Government in this regard. The Learned Author in this Article explains the amendments introduced vide the Nidhi (Amendment) Rules, 2022.

'Nidhi', as per section 406(1) of the Companies Act, 2013, means a company declared to be a Nidhi by the Central Government via notification in the official gazette. Nidhi Company is a Non-Banking Financial Company (i.e., NBFC). Nidhi Company carries out the business of lending and borrowing money amongst its members. Basically, it is built on the concept of mutual benefit.

Recently, vide notification dated 19th April 2022, the Ministry of Corporate Affairs notified the Nidhi (Amendment) Rules, 2022. The said amendment rules are introduced with an aim to protect the public interest at large. Importantly, now, the public company desirous to function as 'Nidhi' needs to obtain a prior declaration from the central government.

The present article highlights the amendments as introduced vide the Nidhi (Amendment) Rules, 2022.

The term 'Branch' defined [Insertion of rule 3(1)(aa)]

The term branch is defined for the first time under Nidhi viainsertion of sub-clause (aa) to rule 3(1). Accordingly, Branch means a place other than the registered office of Nidhi.

Declaration of Nidhis [Amendment to rule 3A]

Provisions of rule 3A mandate the Nidhi Company to file Form NDH-4 within 60 days from the expiry of one year from the date of incorporation or such extended time.

The Nidhi (Amendment) Rules, 2022 inserted the fourth, fifth and sixth proviso to rule 3A. The inserted proviso means as under --