Introduction

A Nidhi Company is a type of non-banking financial institution registered under Section 406 of the Companies Act, 2013, and governed by the Nidhi Rules, 2014. While many Nidhi Companies operate successfully by promoting thrift and offering secured credit to members, some may choose to discontinue operations due to financial inactivity, regulatory non-compliance, or a strategic business decision. Voluntary closure is a structured legal process that allows a Nidhi Company to wind up its affairs, settle liabilities, and dissolve its legal existence. This explanation details the procedure for voluntarily closing a Nidhi Company in India.

Preliminary Assessment and Board Resolution

The process of voluntary closure begins with a thorough assessment of the company’s financial status and operational activities. The Board of Directors must evaluate whether the company has any outstanding liabilities, active deposits, or pending legal disputes. If the directors determine that the company can be closed voluntarily, they must pass a formal board resolution to initiate the closure process. This resolution must authorize the filing of relevant documents with the Registrar of Companies (ROC).

Member Approval in General Meeting

Following the board resolution, a special resolution must be passed at a general meeting of the company’s shareholders. This resolution must be approved by at least 75 percent of the voting members. The special resolution authorizes the company to proceed with voluntary closure under Section 248 of the Companies Act, 2013, and grants consent for filing the necessary applications.

Filing of Form STK-2 for Strike Off

To formally apply for voluntary closure, the company must file Form STK-2 with the Registrar of Companies. This form is used to request the striking off of the company’s name from the official register. The application must be accompanied by a copy of the board resolution, special resolution, indemnity bond, statement of accounts (not older than 30 days), and an affidavit from directors declaring that the company has no liabilities.

Clearance of Liabilities and Settlement of Deposits

Before closure, the company must repay all outstanding loans and return deposits accepted from members. It must also clear all statutory dues such as taxes, professional fees, and salaries. Failure to settle these obligations may result in rejection of the closure application. The financial statement submitted must show that the company has no remaining liabilities and has ceased business activities.

Publication and Notice to Authorities

After submitting the closure application, the company is required to publish a public notice in a newspaper and inform relevant authorities, including the income tax and GST departments. This gives an opportunity for objections to be raised by stakeholders, if any, within 30 days of publication.

Registrar’s Approval and Striking Off

If the Registrar finds the documents in order and receives no objections, the company’s name is struck off from the register, and it ceases to exist as a legal entity. A notice is published in the Official Gazette, confirming the closure of the company. From this date, the Nidhi Company is considered dissolved.

Post-Closure Record Maintenance

Even after closure, the directors and promoters must maintain records of the company, including financial statements, statutory registers, and closure documents, for a period of eight years. These records may be required for future reference or if any disputes arise.

Conclusion

Voluntary closure of a Nidhi Company is a systematic process designed to ensure that the company ceases operations lawfully and responsibly. By settling liabilities, filing statutory documents, and obtaining regulatory approvals, the company can dissolve its existence without legal complications. This process ensures that the interests of members, depositors, and regulatory bodies are protected. Proper closure reinforces the principles of accountability and compliance that govern the Nidhi structure.

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