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Firstly you have to understand what is Nidhi Company

A Nidhi company, is one that belongs to the non-banking Indian Finance sector and is recognized under section 406 of the Companies Act, 2013. Their core business is borrowing and lending money only between their members. They are also known as Permanent Fund, Benefit Funds, Mutual Benefit Funds and Mutual Benefit Company. It is regulated by Ministry of Corporate Affairs. Reserve Bank of India is empowered to issue directions to them in matters relating to their deposit acceptance activities. However, in recognition of the fact that these Nidhis deal with their shareholder-members only.

A company incorporated as a "Nidhi" under section 406 of company act 2013 shall a public company and having minimum 5,00,000 paid up equity share capital.

Every company incorporated as "Nidhi" shall have the last words "Nidhi Limited" as a part of its name.

A Nidhi company can issue it's equity share only to their members:

1) Every Nidhi shall issue equity shares of the nominal value of not less the 10 rupees each.

2) Every Nidhi shall allot to each deposit holder at least 10 equity shares or shares equivalent to 100 rupees.

3) No preference shares shall be issued. If preference shares had already been issued by a Nidhi Company before commencement of this Act, such preference shares are to be redeemed in accordance with the terms of issue of such shares

4) A savings account holder and a recurring deposit account holder shall at least 10 equity shares of Rs.10/-.

Membership in a Nidhi:

1. A Nidhi shall not admit a body corporate as a member.
2. Except as otherwise permitted under these rules, every Nidhi shall ensure that its membership is not reduced to less than 200 members at any time.
3. A minor shall not be admitted as a member in a Nidhi company.
4. But deposits may be accepted in the name of minor , if they are made by natural or legal guardian who is a member of the respective Nidhi.

Dividend to shareholders:

A Nidhi shall not declare dividend exceeding 25% or higher amount to specially approved by regional director for reasons to be recorded in writing and further subject to the following:

1) An equal amount to be transferred to general reserves.
2) Their is no default in repayment of matured deposits and interest.

Important points:

1. No service charges shall be levied for issue of equity shares.

2. Every Nidhi shall ensure that it's membership is not reduced to less then two hundred members at any time.

3. A saving account holder and a recurring account holder shall have at least one equity share or rupees ten.

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Category Corporate Law, Other Articles by - Kaushal Gupta 



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