1. Identity and Address Proof of Directors and Members PAN Card of all directors and subscribers is mandatory. Aadhaar Card, Voter ID, Passport, or Driving License can be used as proof of identity. Recent utility bills or bank statements are required as proof of...
1. General Prohibition on Public Advertisement Nidhi Companies are not allowed to advertise their deposit schemes to the general public. Rule 7 of the Nidhi Rules, 2014, strictly prohibits such advertisements in any form. This restriction ensures that Nidhi Companies...
1. Definition of Net Owned Fund (NOF) Net Owned Fund refers to the core capital that a Nidhi Company must maintain. It is calculated as the aggregate of paid-up equity share capital and free reserves. From this total, accumulated losses and intangible assets are...
1. General Restriction on Inter-State Operations As per the Nidhi Rules, 2014, Nidhi Companies are generally not allowed to operate in multiple states. Their operations are intended to be localized and member-centric within a specific district or state. The company’s...
1. General Limit on Branches A Nidhi Company can open up to three branches within the same district without needing prior approval. This is permitted only if the company has complied with all applicable Nidhi Rules. All branches must operate under the same name and...
1. Permission to Open Branches Yes, a Nidhi Company can open branches, but only under certain conditions. The permission to open branches is governed by Rule 10 of the Nidhi Rules, 2014. The company must fulfill specific financial and operational criteria before...
1. Statutory Audit under the Companies Act, 2013 Every Nidhi Company is required to conduct a statutory audit annually. The audit must be carried out by a qualified Chartered Accountant appointed by the members. The auditor examines the financial statements, books of...
1. Nature of Profit Distribution A Nidhi Company is incorporated as a mutual benefit society, not a profit-maximizing entity. Profits earned are primarily used to strengthen the company’s reserves and promote member welfare. Any distribution of profits is done only...
1. Maximum Interest Rate Permitted Nidhi Companies are not free to charge any rate of interest on loans. As per Rule 7 of the Nidhi Rules, 2014, the maximum interest rate must not exceed 7.5% above the highest rate offered on deposits. This cap applies uniformly to...
1. Prohibition under Nidhi Rules, 2014 Nidhi Companies are strictly prohibited from providing unsecured loans. Rule 6 of the Nidhi Rules, 2014 mandates that all loans must be backed by security. The objective is to ensure financial discipline and protect members’...