Meaning of Nidhi Companies
As per section 406 of the companies Act 2013 Nidhi Companies means Company incorporated as Nidhi having object of

o Cultivating the habit of thrift
o savings amongst its members
o receiving deposits from, and lending to, its members only, for their mutual benefit

Rule regarding incorporation of Nidhi Company

1. Nidhi company incorporated under The Companies Act 2013 shall be public company with minimum paidup capital of Rs 5,00,000.
2. Nidhi Company shall not issue Prefrence Share capital
3. If Nidhi Company had already been issued preference share then on the commencement of The companies act 2013 shall be redeemed.
4. Nidhi company shall have object of Cultivating the habit of thrift, savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit
5. If Nidhi company have any other object then after commencement of The Companies Act 2013 shall amend and incorporate above object.
6. Every Nidhi company shall have last word as “Nidhi Limited” as its part of the name.

Requirement of Member for Nidhi Company

1. Nidhi Company shall have not less than 200 members.
2. Nidhi company must have at least Rs. 10,00,000 as net owned fund.
3. As per rule 14 unencumbered term deposits shall not be less than 10 % of the outstanding deposits
4. Ratio of net owned fund to deposit shall not be more than 1:20
   
5. If the nidhi Company fails to comply with the point no 1-4 then it shall make an application to regional Director in NDH-2 within 30 days from the end of the first financial year.

Restrictions on Nidhi Company

1. Nidhi Company shall not carry carry on the business of chit fund, leasing finance, hire purchase finance, insurance or acquisition of securities issued by any body corporate
2. Nidhi Company shall not issue Preference share or Debenture or debt in any other form.
3. Nidhi Company shall not open a current account with its member.
4. Nidhi Company shall not acquire any other company unless its has passed special resolution and obtained previous approval of regional Director.
5. Nidhi Company cant carry on business other than borrowing and lending in its own name.
6. Nidhi company shall not accept Deposit or lend to any person other than its member.
7. Nidhi Company shall not pledge any of its assets lodged by its member as security.
8. Nidhi Company shall not deposit or lend to any body corporate
9. Nidhi Company shall not enter into partnership for borrowing and lending.
10. Nidhi Company shall not issue advetisment for soliciting of deposit.
11. Nidhi Company shall not pay any brokerage for deposit from member.

Share capital and allotment of share of Nidhi company

1. The nominal value of its equity share shall not be less than Rs 10 each
2. Nidhi company shall allote at least 10 share of Rs. 10 each to each deposit holder or share equivalent to Rs. 100 provided that member holding saving account or recurring deposit may hold at least one equity share of the company

Membership of Nidhi companies

1. Nidhi company shall not allow to body corporate to be member of the company
2. The number of member shall not reduce bellow to 200 member at any point of time.
3. Minor shall not be member although if legal guardian is natural person and member of the company then Deposit may be accepted

Branch of Nidhi Company
Nidhi company may open its branch office only if the company has earned Net profit ater tax in during last 3 financial year and nidhi company may open 3 office within the same district.

Rule regarding Acceptance of Deposit

1. The minimum and maximum period of Fixed Deposit shall be 6 month and 60 month respectively.
2. The minimum and maximum period of recurring Deposit shall be 12 month and 60 month respectively.
3. If Recurring deposit is relating to mortgage loan then maximum period shall be repayment period of such loan
4. Rate of Interest on saving account balance shall not be more than interest payable on saving bank by nationalised bank + 2 %
5. Maximum deposit in saving account for qualifying for interest on such deposit is Rs. 1,00,000 at any point of time.

Fixed Deposit and recurring deposit account shall be subject to following conditions
a. The nidhi company shall not repay deposit within the period of 3 month from the date of acceptance of deposit
b. At the request of depositor Nidhi company may repay deposit after expiry of 3 month from the date of deposit subject to condition that depositor will not be entitle for Interest on such deposit.
c. When Nidhi Company repays deposit before the expiry of period for which deposit was accepted then rate of interest shall be reduced by 2 % provided that in the case of death of Depositor premature deposit may be repaid to legal heir, nominee ot joint holder and interest shall be paid up to date of repayment at the rate at which deposit was accepted.

Rule regarding Loan and their Limit

1. The company shall give loan to its member only and
2. such loan shall be subject to following limit and limit such limit shall be calculated on the basis of last audited balance sheet;

a. Up to 2 lakh when total deposit of the company from its member is not more than 2 crore.
b. Up to 7.5 lakh when total deposit of the company from its member is more than 2 crore but less than 20 crore.
c. 12 lakh when total deposit of the company from its member is more than 20 crore but less than 50 crore.
d. 15 lakh when total deposit of the company from its member is more than 50 crore.

1. Provided that in case of continuous loss in 3 preceding previous year fresh loan shall be restricted to 50 % of the limit mentioned in A to D (Above Point).
   The member of the company shall not be eligible for any loan if he has made default in repayment of earlier loan.

1. Loan to its member shall be against following security namely
   a. Silver, Jewellery, Gold when repayment period doesn’t exceed 1 year.
   b. Immovable Property provided that loan shall not exceed the 50 % of the value of the immovable Property
   c. NSC, Govt Securities Insurance Policy and Fixed Deposit Receipt subject to condition that maturity period of these securities shall not be more than loan period or one year whichever is earlier .

Rate of Interest

1. Rate of interest on loan shall not exceed 7.5 % over and above the highest rate of interst offered on deposit by nidhi company

Rules relating to Directors

1. Director of the Nidhi Company shall be member of the company
2. Director shall hold office up to 10 year
3. Director shall be eligible for reappointment only after expiring of 2 year from the date of cessation of directorship.
4. If the tenure period is extended by central govt then shall be retired after expiry of such extended period.
5. The person appointed as director shall not be disqualified from being appointed as director and comply with the provision of section 152(4) of The Companies Act 2013.

Dividend

The rate of dividend shall not exceed 25 % .
If the Nidhi company declaring Dividend exceeding 25 % then prior approval of Regional Director is required and also shall be subject to the following condition.

a. Equal amount is also required to transfer in General Reserve.
b. There is no default in repayment of deposit and interest
c. The company has complied with applicable rules.

Auditor
An individual Auditor shall not be appointed for more than one term of 5 year
In case of firm period shall not be exceed 2 term of 5 consecutive year

The auditor shall be eligible for reappointment after expiry of 1wo year on completion of his term.

Half Yearly Return of the Nidhi Company

Every Nidhi Company shall file their Half Yearly return In the prescribed form NDH-3 along with fee within 30 days form the conclusion of each half year and suh return shall duly certified by CS in Practice or CA in Practice

Statutory Compliance
Every company incorporated as Nidhi Company shall file their return of Statutory Compliance in NDH-1 within the 90 days from the end of the financial year

Auditor Certificate
Auditor of the Nidhi Company shall furnish their certificate for compliance made by company and such certificate shall also be annexed to auditor report

Penalty for non-compliances
In case of any default or non-compliance by Nidhi company the every officer of the Nidhi Company who is in Default shall liable for punishment with fine of Rs. 5,000 for first contravention and in case of continuous of default then penalty shall be Rs. 500 for every day of default.