Nidhi company regulation updated: new business permissions, capital ratio timelines, governance, KYC requirements and auditor limits.
The notification amendments permit compliant Nidhi companies to carry on insurance broking, locker services and member advisory work with regulatory approval, provided mortgage and jewel loan income remains at least 80% of gross income. They reset deadlines for achieving a net owned fund to deposits ceiling of 1:20 according to existing ratio bands, require RBI 'know your customer' documentary evidence for new depositors, allow post office deposits in the company's name, reduce a specified interest percentage to five per cent, limit continuous directorship to ten years, and bar reappointment of auditors after five continuous years.

Provisioning requirement for Nidhi companies: staged income reversal and NPA provisions, mandatory disclosure and auditor certification.
Amendment requires staged provisioning for income reversal and NPAs for loans outstanding as on 31-3-2002: 50% of pre-tax profit for 31-3-2006 and 31-3-2007, with the remaining unprovided balance to be recognised equally over the four years from 31-3-2008 to 31-3-2011. Entities may exceed these provision limits. Accounts for 31-3-2006 and subsequent years must disclose the total provision required, amounts provided and remaining balance; the statutory auditor must certify that the note gives a true and fair view.

Investor Education and Protection Fund committee constituted to administer fund, members appointed for a two-year term.
A committee is constituted under Section 205C(4) to administer the Investor Education and Protection Fund, chaired by the Secretary, Ministry of Company Affairs, and comprising ministry representatives, executive directors of financial regulators, and named expert members. The committee includes a Special Invitee and a Convener and is charged with Fund administration. Members shall hold office for a period of two years from the date of publication of the notification.

Prosecution authority under Companies Act granted to SFIO Assistant Director to file and conduct prosecutions on authorised complaints.
The Central Government, under section 621(1) of the Companies Act, 1956, authorises Shri M.S. Bhardwaj, Assistant Director in the Serious Fraud Investigation Office, Ministry of Company Affairs, to file and conduct prosecutions for offences under the Companies Act that are cognizable only on complaint by the Registrar, a shareholder, or the Government.

Electronic filings permitted for company applications and records under amended regulations, enabling electronic registration, certificates and inspections.
Part F authorises electronic submission and transmission of applications, documents, notices, declarations and statements required under the Regulations; permits electronic issuance and acknowledgement of certificates, licences, receipts and endorsements by Regional Directors and Registrars; allows electronic registration, recording and filing with the Registrar subject to compliance with specified procedural requirements; permits maintenance of registers and indexes in electronic form; and provides for electronic inspection of filed documents upon payment of the prescribed fee, while preserving specified exclusions and procedural conditions.

Investment of general reserves limited to specified securities, cooperative and scheduled banks, cooperative societies, and public financial institutions.
Investments from a producer company's general reserves must be made only in specified categories: approved securities, fixed deposits, units and bonds issued by central or state governments, cooperative societies or scheduled banks; cooperative banks including state, central and land development cooperative banks; any other scheduled bank; securities of the trusts regime; shares or securities of other cooperative societies; and shares, securities or assets of public financial institutions.

Electronic filing and digital signature required for applications to appoint sole selling or buying agents, with multiple payment options.
Amendments permit filing prescribed Forms through electronic or computer readable media with authentication by authorized signatories using digital signatures or manual signatures for physical filings; payment options for electronic applications include credit card, internet banking, bank counter remittance or other approved modes with fees payable through accredited bank branches. Substituted Form I and Form II set out detailed disclosure requirements for approval of sole selling and buying agents, mandatory attachments and a declaration to be digitally signed by an authorised company officer.

Electronic filing and digital authentication introduced for Cost Audit Report submissions, with new Form I and physical signature option.
The amendment permits filing Cost Audit Report forms electronically or via computer-readable media and mandates authentication of electronic forms by authorised signatories using digital signatures under the Information Technology Act, 2000; physical forms may alternatively be authenticated by manual signature. It substitutes the heading of the existing cost audit report form and inserts Form I, prescribing mandatory company and audit-specific fields, attachments (including the cost audit report), quantitative and cost-accounting schedules, and a declaration with authorised digital signing for submission to the Central Government.

Electronic filing and digital signature enablement for investor education fund filings, mandating authenticated Form One submission.
The Rules amend rule 3 to allow filing of prescribed forms through electronic or computer readable media, require electronic forms to be authenticated by authorized signatories using digital signatures, and permit manual signature for physical filings. The substituted Form 1 prescribes mandatory company identifiers, payment date and mode, detailed categories of amounts to be credited to the investor education and protection fund, financial year attribution, required attachments including the deposit challan, a declaration by an authorised company officer, and a verification certificate by a practicing accountant or auditor.

Electronic filing and digital signature requirement for dividend declarations enables approved e-Form submission and physical signature alternative.
The amendment permits prescribed forms under the Dividend Out of Reserves Rules to be filed electronically or on computer readable media, requires electronic authentication by authorised signatories using digital signatures, and allows physical forms to be signed manually. It inserts a detailed application form for approval to declare dividend out of reserves, requiring corporate and capital particulars, proposed dividend particulars, justification where profits are inadequate or losses exist, specified attachments including a no-objection letter and board resolution, a declaration of authorised signatory, and certification by an accountant or company secretary.

Electronic filing of director-disqualification reports permitted; prescribed forms require digital authentication or manual signature upon physical filing.
The amendment permits electronic filing of FORM DD-B and FORM DD-C through electronic or computer-readable media and requires electronic submissions to be authenticated by authorised signatories using digital signatures under the Information Technology Act, 2000. Physical filings remain permitted and may be authenticated by manual signature. The substituted Form DD-B and Form DD-C specify mandatory company identification fields, particulars of defaults and directors, and require board authorisation and prescribed attachments for reporting and applications to remove director disqualification.

Electronic filing and digital signatures permitted for foreign companies' annual returns, with physical signatures allowed for paper filings.
The amendment to rule 3 permits electronic filing of prescribed forms and requires authentication of electronic forms by authorised signatories using digital signatures under the Information Technology Act, 2000, while allowing manual signatures for physical filings. It substitutes the annual return Form for foreign companies with share capital, prescribing mandatory fields for company identity, balance sheet date, detailed schedules of share capital and debentures, disclosure of registers kept in India, total registrable indebtedness, required attachments of member and officer particulars, and verification by specified company officers to be signed or digitally signed by the authorised representative.

Electronic filing and digital signatures: companies must submit prescribed Forms electronically or physically with authorised authentication and payment options.
The rules permit filing of Annexure A forms through electronic or other computer readable media, require electronic filings to be authenticated by authorised signatories using digital signatures and allow physical filings to be authenticated by manual signature. They prescribe specific forms for annual returns, statutory returns, accounts and applications to the Central Government or Registrar (including applications for exemptions, modifications and nidhi company matters), and authorise online payment options and accredited banks for fee remittance.

Cost audit orders require electricity companies to maintain prescribed cost records and obtain annual independent cost audits.
Mandatory cost audit orders require the listed electricity-sector companies to have cost records maintained under the Cost Accounting Records (Electricity Industry) Rules, 2001 audited for the financial year ending 31-3-2006 and for each subsequent financial year, creating an ongoing compliance obligation to maintain prescribed cost records and procure periodic cost audits by qualified auditors.