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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 ..... rporate except the shares of another Nidhi, if specifically 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may after the publication of this notification, open branches only if it has earned profit for last three continuous years; (ii) a Nidhi or Mutual Benefit Society may open up to three branches, subject to the above condition, within the Revenue District; 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the deposit or part thereof as per the terms and conditions of such deposit, the depositor may approach the Bench of Company Law Board having jurisdiction over the company. (ii) in case of any deficiency of the Nidhi or Mutual Benefit Society in servicing its deposit, the depositor may approach the National Consumers Disputes Redressal Forum, the State Level Consumers Disputes Redressal Forum or District Level Consumers Disputes Redressal Forum for relief; (iii) a statement that the financial position of the Nidhi or Mutual Benefit 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 / dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment; (g) every Nidhi or Mutual Benefit Society shall invest and continue to invest, with effect from the 1st September, 2001, in unencumbered term deposits with a scheduled commercial bank, other than a co-operative bank or a regional rural bank, an amount which shall not be less than ten per cent of the deposits outstanding at the close of business on the last working day of the second preceding month; (h) every Nidhi or Mutual Benefit Society shall, - (i) give loan to its shareholders or members against the following securities:- (A) gold, silver and jewellery; Provided that the period of such loan shall not exceed one year (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 dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within six months from the close of the financial year) (iii) every such Nidhi or Mutual Benefit Society shall not declare dividend exceeding twenty five percent and further subject to the condition that an equal amount is transferred in General Reserve Provided that no dividend can be declared if there is default in repayment of deposits or interest thereon. (iv) dividend declared by a Nidhi or Mutual Benefit Society shall be disbursed to the members in terms of section 205/207 of the Companies Act, 1956; (v) any dividend remaining unclaimed for a period beyond seven years shall be transferred to the Central Government account in terms of section 205C of the Companies Act, 1956; (vi) in respect of every such Nidhi or Mutual Benefit Society which has 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 guideli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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