MCA tightens compliance rules for Nidhi companies

MCA tightens compliance rules for Nidhi companies

The Ministry of Corporate Affairs (MCA) has tightened the rules for Nidhi Companies. Going forward, any public company incorporated as Nidhi with a share capital of Rs 10 lakh will have submit NDH-4 form and apply with the central government to be notified as a Nidhi company within 120 days of its incorporation. Also, the company needs to have atleast 200 members and should have a net owned fund(NOF) of Rs 20 lakh.

In a press release issued on Tuesday, MCA also said that the promoters and directors of the company will have to satisfy the fit and proper criteria. Under the current rules, a Nidhi company to obtain a consent from the central government to operate within 14 months from their incorporation.

However, MCA has observed that several companies are not complying with the required NDH-4 form submission rule. According to the ministry, in the period between 2014-19 more than 10,000 new companies were incorporated however only 2,300 of them submitted the NDH-4 form.