1. Restriction on Public Fundraising

• Nidhi Companies cannot raise capital from the public in the form of public deposits, debentures, or securities.
  
• They are strictly permitted to deal only with their registered members.
  
• Public solicitation for funds, investment, or share capital is not allowed under the Nidhi Rules, 2014.
  
• The entire financial structure is based on mutual benefit among members only.
  
• Any attempt to raise public funds violates the Companies Act and regulatory norms.
  

2. Limited Capital Sources

• Nidhi Companies can raise funds only through equity shares purchased by members.
  
• Members must subscribe to a minimum number of shares to participate in deposits and loans.
  
• Additional capital can be raised by issuing more shares to existing or new members.
  
• Preference shares, debentures, or public offers are strictly prohibited.
  
• The capital base is maintained through internal membership-based equity only.
  

3. Prohibition on Public Advertisement

• Nidhi Companies are not allowed to advertise for deposit collection or capital subscription to the general public.
  
• Rule 7 of the Nidhi Rules prohibits promotion, marketing, or solicitation outside the member base.
  
• They also cannot engage brokers or agents for capital mobilization.
  
• All communications about deposits or investments must be limited to internal members.
  
• Public announcements or promotions for capital raising can attract legal penalties.
  

4. Compliance and Legal Enforcement

• Violation of fundraising restrictions may lead to regulatory action by the Ministry of Corporate Affairs.
  
• The company may face penalties, suspension of operations, or cancellation of Nidhi status.
  
• Directors involved in unauthorized capital raising may be held personally liable.
  
• All capital-raising activities must be documented and audited.
  
• Regulatory filings such as Form PAS-3 must be used for share allotments to members.
  

5. Alternative Capital Growth Options

• The company may increase its authorized share capital through a board and member resolution.
  
• It may encourage existing members to subscribe to additional shares.
  
• Profits retained in reserves can also strengthen the financial base.
  
• It must maintain a minimum Net Owned Funds (₹10 lakhs) as per Nidhi Rules.
  
• Capital growth must be member-driven and legally compliant.