Speed Post News Network
New Delhi : The Ministry of Corporate Affairs (MCA) has advised investors to verify status of Nidhi companies before making investment in them. Investors are advised to verify the antecedents / status of a Nidhi Company especially the declaration of their status as Nidhi Company by the Central Government before becoming its member and investing their hard earned money in such companies.
Under the amended Companies Act, 2013, and the Nidhi Rules, 2014, companies need to get themselves updated (those companies which were earlier declared as Nidhi company under the Companies Act, 1956) or declared as Nidhi company (those companies which were incorporated as Nidhi company after April 1, 2014) by applying to the Ministry of Corporate Affairs (MCA) in form NDH-4.
While examining the applications in form NDH-4, it has been observed by the Central Government that these companies have not been complying with the provisions of the rules in-toto. This has resulted in rejection of applications filed by the companies for declaration since they have not been found fit to be declared as Nidhi Company, according to a PIB release.
It may be mentioned here that a Nidhi company is a company in Indian Non-banking financial sector with their core business being borrowing and lending money between their members.