Increased Regulatory Action on Nidhi Companies | 30 Dec 2024
In 2024, the Ministry of Corporate Affairs (MCA) and Registrars of Companies (RoCs) significantly intensified action against Nidhi companies and firms defaulting on beneficial ownership disclosures.
- This was done to ensure financial transparency, curbs illicit activities in the non-banking sector, and strengthens corporate governance.
- RoCs issued 131 orders against Nidhis, a 72% rise from 2023, with penalties ranging from Rs 10,000 to Rs 30 lakh.
- Beneficial Ownership refers to the individuals who ultimately own or control a company, even if the shares are held in another person’s name.
- Under the Companies Act, 2013, companies must disclose the identity of individuals who have significant control or own 25% or more of the shares.
- Nidhi Companies are non-banking financial entities (NBFC) that operate under Section 406 of the Companies Act, 2013.
- These companies are formed to encourage savings and provide loans exclusively to their members.
- Nidhis are not required to obtain an RBI license but must adhere to strict disclosure and operational norms.
- They are registered as public limited companies and include "Nidhi Limited" in their name.
- They must maintain a minimum of 200 members within a year and Rs 20 lakh in net owned funds.
Read More: Nidhi Companies