The Indian government has passed a provision to share disclosers or inform about the merger and acquisition (M&A) of Nidhi companies. Such entities must have to share their profit-earning and collection centers with the competent authority. These details will be a part of additional disclosers.
In case of any alteration in the company via M&A, these companies must fill the revised forms NDH-1 (return of statutory compliances), NDH-2 (application to Regional Director and intimation to the Registrar), NDH-3 (return for the half year ended) and NDH-4 (form for filing an application for a declaration as a Nidhi company and for updating the status by Nidhis). This notification is issued by the government. Now, new forms are effective to fill from January 23.
Expansion-Based Details
As aforementioned, Form NDH-4 is introduced to determine if the company has acquired another company by purchasing the securities or controlling the Board of Directors of any other company via an agreement. This deal could have been done for the purpose of changing the management or whatsoever. There is another addition to the provision, which is concerned with extension.
Basically, the MCA has introduced some updated forms for a Nidhi company. If you see Form NDH-1, a few changes can be seen. These changes are mainly launched to seek details, such as if the application has been filed with a regional director, or determining the extension of time to maintain the ratio of net owned funds to deposit.
Why Revised Forms?
The revised forms are more relevant and significant from the point of expansion. They show confirmation of other extensions being obtained. Now, the owner or company representatives have to share a few more details, such as the date of closure of the branch, the date of opening of the branch, the proposed date of closure of the branch, and the date of closure of collection centres. Furthermore, it is now compulsory to incorporate the details of collection centres and profit details. Eventually, it is a must to provide confirmation from the owner or directors about the change in control or acquisition.
How Will a Public Company Declare It a Nidhi Company?
Last April was significant when the forms are altered after amendments in Nidhi rules. It clearly states that a public company, which passes through the official formality of Nidhi Company registration, must inform the Central government. It has to get itself declared as a Nidhi by filling a form, i.e. form NDH-4. Not only that but it can be incorporated with a minimum membership of 200 and NOF of ₹20 lakh within 120 days of its incorporation.
Best-Fit Criteria
It is the responsibility of the promoters and directors of the company now to match the criteria, as mentioned in the rules. For quick and timely disposal, the Central government has launched the changes in rules. The praiseworthy change is that in case the Central government does not make any decision within 45 days of the receipt of applications (in form NDH-4), it would be recognised as "granted" or "approved". This new rule is applicable to such companies that shall be registered after Nidhi (Amendment) Rules, 2022.
It is observed that around 390 companies were declared Nidhi Companies under the Companies Act, 1956. However, the number of such incorporated companies during 2014-2019 is over ten thousand. But, the count of such companies that have applied in form NDH-4 for declaration is nearly 2,300. Here, a big gap appears. Therefore, these amendments were necessary to introduce.
A nidhi company registration sets up a corporate entity in the Indian non-banking finance sector, whose core function is to avail funds to their members via lending. This practice is recognised under section 406 of the Companies Act, 2013.
