FILING OF NDH - 4 FORM

[Mr. M. GOVINDARAJAN]

Nidhi

Rule 3(da) of Nidhi Rules, 2014 defines the term ‘Nidhi’ as a company which has been incorporated as a Nidhi with the object of cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit, and which complies with the rules made by the Central Government for regulation of such class of companies.  This definition was inserted vide Notification No. F.No. 1/24/2013-CL-V (Part), dated 01.07.2019] which came into effect from 15.08.2019.

Rules

The procedure to be followed by Nidhi Companies is incorporated in Nidhi Rules, 2014.  The Nidhi Rules were published on the Official Gazette vide No. GSR 258(E), dated 31.03.2014 which came into effect from 01.04.2014. Rules were amended during 2017, 2019 and 2022.   The amendment made in 2019 inserted the new form NDH - 4 to be filed by the Nidhi Company with the Central Government.  The Central Government shall declare the said company as Nidhi Company in the Official Gazette.  The amendment made in 2022 brings further changes in the procedure of filing NDH - 4 form.

Declaration as Nidhi

Rule 3A was inserted vide amendment of Nidhi Rules, dated 15.08.2019 which provides that the Central Government may declare a company as a Nidhi in the Official Gazette.  For this purpose the Nidhi shall filed NDH - 4 form.  All the Nidhis registered under the provisions of Companies Act, 1956 the companies declared as Nidhis are also to file NDH - 4.

Limitation

A Nidhi incorporated under the Act on or after the commencement of the Nidhi (Amendment) Rules, 2019 shall file Form NDH-4 within 60 days from the date of expiry of-

• one year from the date of its incorporation; or
• the period up to which extension of time has been granted by the Regional Director.

Nothing in this section shall prevent a Nidhi from filing Form NDH-4 before the period referred therein.

Every company referred to in clause (b) of rule 2 [every company functioning on the lines of a Nidhi company or Mutual Benefit Society but has either not applied for or has  applied for and is awaiting notification to be a Nidhi or Mutual Benefit Society under sub-section (1) of section 620A of the Companies Act, 1956] and every Nidhi incorporated under the Act, before the commencement of Nidhi (Amendment) Rules, 2019, shall also get itself declared as such in accordance with rule 3A within a period of 1 year from the date of its incorporation or within a period of 6 months from the date of commencement of Nidhi (Amendment) Rules, 2019, whichever is late.

Every company referred in clause (a) of rule 2 [every company which had been declared as a Nidhi or Mutual Benefit Society under sub-section (1) of section 620A of the Companies Act, 1956] shall file Form NDH-4 along with fees as per the Companies (Registration Offices and Fees) Rules, 2014 for updating its status.  No fees shall be charged under this rule for filing Form NDH-4, in case it is filed within 6 months of the commencement of Nidhi (Amendment) Rules, 2019.

On and after 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 120 of its incorporation for declaration as Nidhi, if it fulfills the following conditions-

• it has not less than 200  members; and
•  it has Net Owned Funds of Rs.20 lakhs  or more. (before amendment the limit is Rs.10 lakhs).

Consequences

If  NDH - 4 form is not filed within the stipulated time the company will not be allowed to file-

• Form No. SH-7 (Notice to Registrar of any alteration of share capital); and
• Form PAS-3 (Return of Allotment).

Procedure for declaration as Nidhi

The Nidhi Company is to apply NDH - 4 within the prescribed time limit along with the fees online with the Central Government.  The Central Government, on receipt of application of a public company for declaring it as Nidhi and on being satisfied that the company meets the requirements under these rules, shall notify the company as a Nidhi in the Official Gazette.

After the amendment Rules, 2022, the procedure is entirely different from that of the previous one.  In the present scenario the Central Government shall examine the application filed in Form NDH-4 and convey its decision within a period of 45 days to the company.  In case a decision on an application filed in form NDH-4 is not taken by the Central Government within the aforesaid period of receipt of such application, the same shall be deemed as approved.

The Central Government shall take into account the following to decide as to whether any promoter or Director is a ‘fit and proper person’-

• integrity, honesty, ethical behavior, reputation, fairness and character of the person; and
• the person not incurring any of the following disqualifications,-

• criminal complaint or information under section 154 of the Code of Criminal Procedure, 1973 has been filed by a person authorized 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 categorized 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.

The decision of the Central Government approving the application shall be filed by the company with the Registrar along with Form 20A required under section 10A of the Act.

Such company shall commence its business only once the decision of the Central Government approving its application is obtained from the Central Government pursuant to the declaration given under rule 12 of the Companies (Incorporation) Rules, 2014.

Rejection

If the NDH - 4 form is not in order the Central Government may reject the said form after giving a reasonable opportunity to the applicant.

Effect of non compliance

No company, which has not complied with the requirements of this rule, or fails to comply with such requirement on or after the commencement of the Nidhi (Amendment) Rules, 2022, or in case the application submitted by the company in Form NDH-4 is or has been rejected by the Central Government, shall raise any deposit from its members or provide any loan to its members under the provisions of these rules from the date of such non-compliance, or from the date of the commencement of the above said rules, or the date of rejection of the application in Form NDH-4, whichever is later.

If any deposit raised by a company after the date of non-compliance, or the date of commencement of the above said rules, or the date of rejection of the application in Form NDH-4, whichever is later as referred to in the fourth proviso shall be deemed to have been raised in pursuance of Chapter V of the Act, and shall be subject to all the requirements under that Chapter, or under any other provisions of the Act or the rules made there under, as the case may be.

NDH - 4 form

In the form it is to be indicated whether the NDH - 4 is filed for declaration as Nidhi Company or application for updation of the status by Nidhis. The NDH - 4 form has the following 8 parts in which the relevant information, data are to be entered-

1. Company information;
2. Member details;
3. Financial parameters;
4. Deposit details;
5. Loan details;
6. Branch details;
7. Profit details;
8. Other details.

Company information

The following information is to be furnished in this part-

• Corporate Identity Number;
• Name of the Company;
• Registered Office address;
• Email id;
• Date of incorporation (DD/MM/YYYY)
• SRN of NDH - 2 for application to Regional Director for extension of time.

Member details

The following information is to be furnished in this part-

• Number of subscribers to the memorandum of association;
• Number of members admitted from the date of incorporation up to the due date (as applicable);
• Number of members who have ceased to be members up to the due date (as applicable);
• Number of members at the end of due date.

Financial parameters

The following information is to be furnished in this part-

• Paid up share capital;
• Free reserves;
• Less: Accumulated losses;
• Other intangible assets;
• Net owned funds.

Deposit details

The following information is to be furnished in this part-

• Unencumbered Term Deposit-

1. i. Deposits in scheduled commercial banks (in Rs.);

ii. Deposits in Post Offices (In Rs.);

iii. Total unencumbered term deposit.

2. Deposits outstanding at the close of the business on the last working day of the second preceding month;
3. Percentage of a/b;
4. SRN of NDH-2/RD-1

• Ratio of net owned funds to deposits.

Branch Details

The following information is to be furnished in this part-

• Number of branches opened by the Company;
• Details of the branches-

• Name of the branch;
• Date of opening (DD/MM/YYYY);
• Address Line 1;
• Address Line 2;
• Country;
• PIN Code/ZIP Code;
• Area/Locality;
• City;
• District;
• State/Union territory.

• SRN of NDH-2/RD-1 for application to Regional Director.

Profit details

The following information is to be furnished in this part-

• Profits during the three preceding financial years-

• Serial Number;
• Financial year;
• Net profit after tax.

Other details

The following information is to be furnished in this part-

• Do the objects of the company as per its memorandum and articles of association cover only those activities approved for Nidhi Companies? - Yes/No;
• Whether the company has carried out any financial dealings with any person other than its members? - Yes/No;
• Has the company acquired another company by purchase of securities or controlled by the composition of the Board of Directors of any other company in any manner whatsoever entered into any arrangement for the change of its management?

If yes, please enter SRN of NDH - 2/RD-1 where such approval is taken.

• Whether the company has filed with the Nidhi Rules, 2014? - Yes/No.

Attachments

The following documents are to be attached with NDH - 4 form-

• Copy of notification through which company was declared Nidhi under the Companies Act, 1956 or previous company law (where applicable);
• List of members with PAN, complete residential address and amount of deposit accepted;
• Break up of deposits with bank/Post Office, name, branch and account number.
• Certificates signed by two directors regarding the number of members as on the date of application (membership should not be less than 200);
• Declaration with regard to fulfillment of fit and proper person criteria as per Rule 3B(3) by all promoters and Directors of the company;
• Copy of the resolution of the Board of Directors in support of the proposal of the company;
• Optional attachments, if any.

Declaration

The Board of Directors may authorize a Director or Officer by resolution to sign the Form NDH - 4 and to declare that all requirements of the Companies Act, 2013 and the rules made there under in respect of the subject matter of this form and matters incidental thereto have been complied with.  He is to also declare that all the information in the application is true, correct and complete including the attachments to this form and nothing material has been suppressed.  The authorized person shall sign this form digitally.

Certificate

The practicing professional such as practicing Chartered Accountant or practicing Company Secretary or practicing Cost Accountant is to certify that he has verified the particulars, including attachments, from the original/certified records maintained by the company/applicant which is subject matter of this form and found them to be true, correct and complete and no information material to this form has been suppressed.

He is to further certify that-

• The said records have been properly prepared, signed by the required officers of the Company and maintained as per the relevant provisions of the Companies Act, 2013 and were found to be in order;
• All the required attachments have been completely and legibly attached to this form.

The said certificate is to be signed digitally by the professional.

Declaration by Auditor

The Auditor is also to certify that the company is complying with the Nidhi Rules, 2014 and sign digitally.