Under section 406 of the Companies Act, 2013 (CA, 2013) and Nidhi Rules, 2014 (as amended), companies incorporated as Nidhi Companies need to apply to the Central Government in form NDH-4 for declaration as a Nidhi Company.

It has been observed that companies have been applying to the Central Government for declaration as Nidhi under the CA, 2013 but of the 348 number of forms scrutinized upto 24.08.2021 not a single company could satisfy the requisite criteria for it to be declared as a Nidhi Company by the Central Government. There are large number of companies which though functioning as Nidhi Company have not yet applied to the Central Government for declaration as Nidhi Company which is violation of the CA, 2013 and Nidhi Rules, 2014.

Stakeholders are advised to verify the antecedents of the company functioning as a Nidhi company and ensure that the company has been declared as a Nidhi Company by the Central Government before becoming its member and depositing / investing their hard-earned money in such companies.

Nidhi company declaration: confirm statutory eligibility and Central Government declaration before joining or depositing funds. Companies incorporated as Nidhi Company must apply to the Central Government in Form NDH-4 for declaration; a recent scrutiny of 348 applications found none met the statutory criteria, and many entities operate as Nidhis without formal declaration, creating compliance and investor-protection risks. Stakeholders should verify Central Government declaration before membership or depositing funds.