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Who can be the directors of a Nidhi Company?

1. Basic Eligibility Criteria

  • The individual must be a natural person, not a company or other legal entity.
  • The person must be a resident of India as defined under the Companies Act, 2013.
  • The minimum age requirement is 18 years.
  • The individual must possess a valid Director Identification Number (DIN).
  • The director must hold a Digital Signature Certificate (DSC) for e-filing purposes.

2. Legal and Financial Clean Record

  • The person must not have been declared insolvent or convicted of any financial offence.
  • He or she should not be disqualified under Section 164 of the Companies Act, 2013.
  • Directors must not be associated with companies that failed to file annual returns for 3 consecutive years.
  • A declaration confirming legal compliance must be submitted in Form INC-9.
  • Directors must have a clean record to be entrusted with financial responsibility.

3. Shareholding and Membership Conditions

  • Directors must also be members (shareholders) of the Nidhi Company.
  • They must subscribe to the Memorandum of Association (MOA) during incorporation.
  • Only shareholders are allowed to become directors under the Nidhi operational rules.
  • Membership ensures alignment with the mutual benefit purpose of the company.
  • Directors have voting rights and can participate in financial decisions.

4. Number and Composition Requirements

  • A minimum of 3 directors is required at the time of incorporation.
  • The company must always have at least 3 and not more than 15 directors unless approved otherwise.
  • At least 2/3 of the directors must have held office as members for not less than 10 consecutive months.
  • The Board must follow governance practices as laid out in the Articles of Association.
  • One of the directors may be appointed as Managing Director for day-to-day operations.

5. Roles, Responsibilities, and Limitations

  • Directors are responsible for managing deposits, loans, compliance filings, and governance.
  • They must ensure adherence to the Nidhi Rules, 2014, and the Companies Act, 2013.
  • Directors must approve financial policies, monitor performance, and attend board meetings.
  • They must not misuse funds, act against member interest, or violate company rules.
  • Misconduct or non-compliance may lead to penalties, disqualification, or removal from office.

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