{"id":11232,"date":"2022-07-01T06:10:16","date_gmt":"2022-07-01T06:10:16","guid":{"rendered":"https:\/\/swaritadvisors.com\/blog\/?p=11232"},"modified":"2022-07-06T07:17:33","modified_gmt":"2022-07-06T07:17:33","slug":"nidhi-finance-company-promoter","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/blog\/nidhi-finance-company-promoter\/","title":{"rendered":"An Overview of Fit and Proper Criteria for Nidhi Finance Company Promoter"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Intending to protect the interests of the public, the Ministry\nof Corporate Affairs has amended rules governing Nidhi companies, whereby it is\nmandatory for the promoters to meet the Fit and Proper Criteria for Nidhi\nFinance Company as laid down in the rules. Therefore, in this write-up, we will\ndiscuss the Fit and Proper Criteria for Nidhi Finance Company Promoters. <\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3a62bfc49ef\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3a62bfc49ef\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/blog\/nidhi-finance-company-promoter\/#Overview-Fit_and_Proper_Criteria_for_Nidhi_Finance_Company_Promoters\" title=\"Overview-Fit and Proper Criteria for Nidhi Finance Company\nPromoters\">Overview-Fit and Proper Criteria for Nidhi Finance Company\nPromoters<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/blog\/nidhi-finance-company-promoter\/#Amendment-_Nidhi_Amendment_Rules2022\" title=\"Amendment- Nidhi (Amendment) Rules,2022\">Amendment- Nidhi (Amendment) Rules,2022<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/blog\/nidhi-finance-company-promoter\/#Key_Amendments_in_meeting_the_Fit_and_Proper_Criteria_for_Nidhi_Finance_Company_Promoter\" title=\"Key Amendments in meeting the Fit and Proper Criteria for\nNidhi Finance Company Promoter\">Key Amendments in meeting the Fit and Proper Criteria for\nNidhi Finance Company Promoter<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/blog\/nidhi-finance-company-promoter\/#To_comply_with_the_Fit_Proper_criteria_the_Promoter_of_Nidhi_Company_shall_comply_with_the_below-mentioned_criteria\" title=\"To comply with the Fit &amp; Proper criteria, the\nPromoter of Nidhi Company shall comply with the below-mentioned criteria-\">To comply with the Fit &amp; Proper criteria, the\nPromoter of Nidhi Company shall comply with the below-mentioned criteria-<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/blog\/nidhi-finance-company-promoter\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Overview-Fit_and_Proper_Criteria_for_Nidhi_Finance_Company_Promoters\"><\/span>Overview-Fit and Proper Criteria for Nidhi Finance Company\nPromoters<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Suppose you plan to start a Nidhi Company or run a Nidhi\ncompany. However, you are not sure about the recent updation of status by Nidhi\nand are already confused with the amount of compliance you need to follow. In\nthat case, we have some good news for you.<\/p>\n\n\n\n<p>As per the New Rules, the public companies which want to run a\nNidhi Company need to obtain a prior declaration by the Government of India\nbefore accepting deposits. The changes are made to ensure the protection and safety\nof the general public.<\/p>\n\n\n\n<p>&nbsp;After various recommendations from the committee formed for Nidhi Company, the Government of India has amended the Nidhi rules 2014 as amended by <strong>Nidhi (amendment) rules 2019<\/strong><sup><a class=\"text-primary\" href=\"https:\/\/pib.gov.in\/PressReleasePage.aspx?PRID=1818298#:~:text=2019%20and%20resultant%20amendments%20in,(Amendment)%20Rules%20w.e.f%2015.08.\"><strong>[1]<\/strong><\/a><\/sup><strong> <\/strong>and come up with Nidhi (amendment) rules 2022.<\/p>\n\n\n\n<p>With new rules, the government has attempted to streamline the things to get Nidhi company get themselves stated as <a href=\"https:\/\/swaritadvisors.com\/nidhi-company-registration\" class=\"text-primary\"><strong>Nidhi Company<\/strong><\/a> by getting their NDH4 Approved within strict timelines specified by these rules. However, to safeguard the general public&#8217;s interest, the government wants that before becoming a Nidhi company, one must ensure the company&#8217;s declaration as a Nidhi by the Central Government. For the same, a few necessary amendments in the Rules have been performed, which are applicable to the Companies to be registered after Nidhi (Amendment) Rule, 2022. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Amendment-_Nidhi_Amendment_Rules2022\"><\/span>Amendment- Nidhi (Amendment) Rules,2022<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As per the Amendment, the Nidhi Finance Company Shall File NDH-4\nwithin 120 days from its incorporation date. It shall comply with the\nbelow-mentioned Requisites-<\/p>\n\n\n\n<ul><li>Before filing NDH-4, NidhiCompany must have a minimum of 200 Members. Also, the Net Owned Fund should not be less than 20 Lakh.&nbsp;<\/li><li>The Promoters and Directors of the Nidhi Finance company must meet the criteria of fit &amp; proper person as laid down in the rules.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Key_Amendments_in_meeting_the_Fit_and_Proper_Criteria_for_Nidhi_Finance_Company_Promoter\"><\/span>Key Amendments in meeting the Fit and Proper Criteria for\nNidhi Finance Company Promoter<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>Nidhi Company can start its business only after getting approval of NDH-4 by filing form 20A. <\/li><li>Government must approve NDH-4  within 45 days of filing. If the government has not given any revert or approval, NDH-4 will be considered approved.&nbsp;<\/li><li>After getting approval of NDH-4, Form 20A needs to be filed. It means that the promoter can only commence the business of the Nidhi company after getting the NDH-4 approval.<\/li><li>NDH-1 and NDH-2 filling are not applicable for companies incorporated after the commencement of these rules.&nbsp;<\/li><li>For Existing companies before the commencement of these amendment rules, the Minimum Capital for Nidhi company is ten lakhs; this condition needs to be fulfilled within 18 months from the date of commencement of these rules.&nbsp;<\/li><li>The Nidhi Finance company shall not raise loans from a bank or any financial institution for advancing loans to its members,<\/li><li>A member is not allowed to transfer more than 50% of his shareholding (as on the date of getting a loan\/making of deposit) during the subsistence of such loan\/deposit. <\/li><li>Net Owned Fund limit should be 20 lakh and be fulfilled within 120 days (4 months) of Incorporation for new and existing Nidhi companies. This rule is relaxed &amp; those companies will have a time duration of 18 months from the commencement date of these rules to maintain this NOF limit. <\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"To_comply_with_the_Fit_Proper_criteria_the_Promoter_of_Nidhi_Company_shall_comply_with_the_below-mentioned_criteria\"><\/span><strong>To comply with the Fit &amp; Proper criteria, the\nPromoter of Nidhi Company shall comply with the below-mentioned criteria-<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul><li>The Promoter of Applicant Company needs to attest a Declaration that clarifies that all the Fit &amp; Proper Criteria are met by the Promoters &amp; Directors of the Company as specified in the NDH \u2013 4 Application Form.<\/li><li>The Uprightness, Potency, Moral and Ethical Behavior, Unbiasedness, Reputation, and Character of the Promoters of the Applicant Company.<\/li><\/ul>\n\n\n\n<p><strong>The Promoters of the Nidhi Finance Company should not be\ninvolved in any of the below-mentioned criteria, which may result in an immediate\ndisqualification \u2013<\/strong><\/p>\n\n\n\n<ul><li>No complaints shall be\nfiled or pending against the Promoters of Nidhi Finance Company under Sec 154\nof CrPC (The Code of Criminal Procedure 1973.<\/li><li>No Restraining,\nProhibition or Department Order passed against the Promoters of Nidhi Company\non criminal or civil matters relating to Company Laws, Securities Laws,\nFinancial Market in Force.<\/li><li>Any Order passed of\nConvictions filed against the Promoters and Directors of the Applicant Company\naffects the moral and ethical character.<\/li><li>Involvement in any\noffenses declared any not yet discharged.<\/li><li>The Promoters of Nidhi\nCompany should not be declared of unsound mind.<\/li><li>The Promoters of the\nNidhi Company should not be declared as Wilful Defaulters.<\/li><li>The Nidhi Company\npromoters should not be declared Fugitive for any Economic Offences.&nbsp;<\/li><li>The Nidhi Finance Company\npromoters should not be appointed as Promoters of 3 or more Nidhi Companies.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The amendments of the Nidhi (Amendment) Rules, 2022, have\nreplaced The Nidhi Rules 2014. The Nidhi (Amendment) Rules, 2022 were enforced\nto serve the public interest, with the primary objective being directed on the\ndeclaration of the Applicant (Nidhi Finance Company) by the Central Government\nof India. As per the amendment, the company&#8217;s promoter must comply with the Fit\nand Proper Criteria.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Intending to protect the interests of the public, the Ministry of Corporate Affairs has amended rules governing Nidhi companies, whereby it is mandatory for the promoters to meet the Fit and Proper Criteria for Nidhi Finance Company as laid down in the rules. Therefore, in this write-up, we will discuss the Fit and Proper Criteria [&hellip;]<\/p>\n","protected":false},"author":10,"featured_media":11233,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[8],"tags":[1035],"acf":[],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/11232"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/comments?post=11232"}],"version-history":[{"count":10,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/11232\/revisions"}],"predecessor-version":[{"id":11243,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/11232\/revisions\/11243"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media\/11233"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media?parent=11232"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/categories?post=11232"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/tags?post=11232"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}