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TMI BlogPursuant to Sabanayagam Comm. Report on NidhisX X X X Extracts X X X X X X X X Extracts X X X X ..... ifically permitted by Central Government; (ii) open any new current account with its members; (iii) admit as member, any body corporate or trust; (iv) issue any equity share of nominal value less than Rs. 10/- : Provided that in the case of existing Nidhis having face value of shares of less than Rs. 10/- such companies shall increase the face value of the shares to Rs. 10/- within a period of one year from the date of this Notification. Provided further that no service charges shall be levied for issue of shares; Provided also that the Central Government may, if satisfied, grant exemption on merits in individual cases; (v) make any preferential allotment of shares to any persons or group of persons but shall make only rights issue of shares and the unsubscribed portion can be apportioned by the Board of Directors in terms of Section 81 of the Companies Act, 1956. (vi) acquire another company by purchase of shares or control of composition of Board of Directors otherwise than through amalgamation or merger under the Companies Act and subject to the regulations applicable to Nidhi companies in force; (vii) carry on any business other than the business of borrowing or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and beyond three branches outside the District, with the prior permission of the Regulatory Authority; (iii) no such company shall open branches or collection centres or offices or deposit centres, by whatever name called, outside the State of its Registered Office; (d) (i) a Nidhi or Mutual Benefit Society may accept deposits not exceeding twenty times of its Net Owned Funds (NOF) as per last audited balance sheet: Provided that in the case of existing Nidhis having deposits in excess of the aforesaid limits, the same shall be brought to the prescribed limit by increasing the Net Owned Fund position or alternatively by reducing the deposit within two years from the date of this notification; Provided further that the ratio will apply to incremental deposits immediately. Explanation : "Net Owned Funds" means the aggregate of the paid up equity capital and free reserves as reduced by accumulated losses and intangible assets appearing in the last audited balance sheet prior to issue of this notification. A reserve shall be considered as a 'free reserve' if it is available for distribution as dividend. Further, the amount representing the proceeds of issue of preference shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efit Society as disclosed and the representations made in the application form are true and correct and that the Nidhi and the Board of Directors are responsible for the correctness and veracity thereof; (iv) the financial activities of the Nidhi or Mutual Benefit Society are regulated by the Department of Company Affairs. It must, however, be distinctly understood that the Department of Company Affairs does not undertake any responsibility for the financial soundness of the Nidhi or for the correctness of any of the statement or the representations made or opinions expressed by the Nidhi and for repayment of deposit / discharge of liabilities by the Nidhi; (v) at the end of application form but before the signature of the depositor, the following verification clause by the depositor shall be appended namely : "I have gone through the financial and other statements / particulars / representations furnished / made by the Nidhi and after careful consideration I am making the deposit with the Nidhi at my own risk and volition"; (C) Every Nidhi or Mutual Benefit Society shall obtain proper introduction of the new depositors before opening their accounts and accepting the deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r (B) immovable property; Provided that the loan against immovable property shall not exceed fifty percent of the overall loan outstanding on the date of approval by the board and the individual loan shall not exceed fifty percent of the value of property offered as security. The period of such loan shall not exceed five years. Explanation: Existing Nidhi companies shall bring down the ratio of loan against immovable property to fifty percent of the overall loan outstanding within two years from the date of this notification; (C) fixed deposit, Kisan Vikas Patra/National Savings Certificate Scheme/insurance policies and other Government Securities; Provided that such securities shall be pledged with the company duly discharged and the lock-in period of such securities shall not fall beyond the loan period or one year whichever is earlier. (ii) The rate of interest charged on loan given by every such company shall not exceed five percent above the highest rate of interest offered on deposits by the Nidhi and shall be based on reducing balance method; (iii) give loan to any member/shareholder subject to the following ceiling on each loan: (A) two lakh rupees, where the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... violated the notifications or regulations framed by the Regulatory Authority with the approval of Central Government or failed to function in terms of the Memorandum and Articles of Association, the Regulatory Authority shall be entitled to appoint a Special Officer to take over the management of the Nidhi and such Special officer shall function as per the guidelines stipulated by the Regulatory Authority ; Explanation: Regulatory Authority denotes the concerned Regional Directors of Department of Company Affairs where the Registered Office of the Nidhi is located. 2. The directions specified herein above shall, as far as may be, apply to every company declared as a Nidhi or Mutual Benefit Society under section 620A of the said Act before or after the publication of this notification and to potential Nidhi companies desiring to get Nidhi status under the said Act. 3. The Central Government, if satisfied that the circumstances have arisen and if found in public interest, after recording the reasons in writing, may relax any of the directions mentioned above either generally or for any specified period, subject to such terms and conditions, as the Central Government may specify, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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