On 19th April 2022, the Ministry of Corporate Affairs notified amendments to the Rules governing Nidhi Companies in the Official Gazette.
The Amendments mandate Public Companies seeking to function as Nidhi, to obtain a prior declaration from the Central Government before accepting deposits. The same has been enshrined under the newly inserted Rule 3B (1) which states,
“On and after the commencement of Nidhi (Amendment) Rules, 2022, public company
desirous to be declared as a Nidhi shall apply, in Form NDH-4, within a period of one hundred
twenty days of its incorporation for declaration as Nidhi, if it fulfils the following conditions,
(I) it has not less than two hundred members; and
(II) it has Net Owned Funds of twenty lakh rupees or more.”‘
Further, as per Rule 3B (2), the promoters and the directors of the Company also have to attach a declaration with regard to the fulfilment of ‘fit and proper’ person criteria along with Form NDH-4.
The Rules have identified the following factors to be taken into account for the determination of a ‘fit and proper’ person:
(a) integrity, honesty, ethical behaviour, reputation, fairness and character of the person.
(b) the person not incurring any of the following disqualifications, namely:-
- Criminal complaint or information under section 154 of the Code of Criminal Procedure, 1973 (2 of 1974) has been filed by a person authorised by the Central Government against such person and which is pending.
- Charge sheet has been filed against such person by any enforcement agency in
matters concerning economic offences which is pending.
- An order of restraint, prohibition or debarment has been passed against such person by any regulatory authority or enforcement agency in any matter concerning company law, securities laws or financial markets which is in force.
- An order of conviction has been passed against such person by a court for any
offence involving moral turpitude.
- Such person has been declared insolvent and not been discharged.
- Such person has been found to be of unsound mind by a court of competent
jurisdiction and the finding is in force.
- Such person has been categorised as a willful defaulter.
- Such person has been declared a fugitive economic offender.
- Such person is a director in five or more companies incorporated or declared as Nidhi, or is a promoter of three or more companies incorporated or declared as Nidhi.