2022-06-29 09:44:27

MCA Notifies NIDHI (Amendment) Rules, 2022

Introduction

The legal process refers to the incorporation of the company that is used to form a corporate entity or a Company. It has a separate legal entity on its own which is recognized by the law. It is separate from its owner when it becomes a corporate legal entity. A group of seven or more people can come together to form a public company whereas, only two persons are needed to form a private company.

Mode of forming incorporated company

Any 7 or more people associated for any lawful purpose may form an incorporated company, with or Without Limited Liability. They shall subscribe their names to a Memorandum of Association and also follow the other formalities for registration of the Incorporation Of Company. A Company may be formed as-

A company limited by shares
A Company limited by a guarantee
An unlimited company

Incorporation of Company

According to section 7 of the Companies Act, 1956 there shall be filed with the Registrar within whose jurisdiction the registered office of a company is proposed to be situated. Some information and documents for registration of the incorporated company. They are given the following:-

All the subscribers of the company duly signed the Memorandum and the Article of the Company which may be prescribed by Law.
The formation of the company is declared by an advocate, a chartered accountant, cost accountant, or company secretary which may be the practice according to the prescribed form.
All the documents filed with the registrar for the registration of the company contain all the information that is correct and complete and true to the best knowledge of all the subscribers and the first director to the memorandum of the company.
The correspondence address of the company refers to the Registrar's office for all the official communications with the company.
The registrar shall register all the documents and information which is given by the company and issue a certificate of incorporation in the prescribed form to the effect that the proposed company is incorporated under the companies act.
The registrar shall allot a corporate identity number to the company which shall be the distinct identity for the company and which shall also be included in the certificate.
If any person is aware to give the false or incorrect information to the Registrar for the registration of the company then he shall be liable for punishment under section 447.

Certificate of Incorporation

When the documents and information are filed or given to the registrar for the registration of incorporation of the company. If the registrar shall satisfy the statutory requirements, he may register the Memorandum, the Article, and the other documents filed with him and issue a ‘Certificate of incorporation of the Company.

Effects of registration:

The certificate of incorporation mentioned the date when the company incorporated at that time all members of the company and all other persons shall be a body corporate which is mentioned in the memorandum and those members are capable of exercising all the functions of an incorporated company under the Companies Act, 2013. And person having perpetual succession and a common seal with power to acquire, hold and dispose of property, both movable and immovable, tangible and intangible to contract and to sue and be sued.

When a company is registered and a certificate of incorporation is issued by the Registrar, there are the following important consequences:-

The Company becomes a distinct legal entity. When the life of the company commences as a legal entity from the date which is mentioned in the certificate of incorporation.
The company acquires a perpetual succession. The members may come and go but if the company wound up then the members are going on forever.
The company’s property is not the property of the shareholders. When realized and divided then the shareholders have the right to share in the profits of the company.

Company Incorporation (Amendment) Rule, 2022

The Ministry of Corporate Affairs (MCA) is primarily concerned with the administration of the Companies Act 2013, the Companies Act 1956, The Limited Liability Partnership Act, 2008 & other allied Acts, rules & regulations framed for regulating the functioning of the corporate sector in accordance with the law. In order to simplify the obedience procedures and provide collected information on applicable Acts, Rules, and Regulations to the stakeholders. The Ministry of Corporate Affairs (MCA) vide notification dated 19 April 2022 has issued the NIDHI (Amendment) Rules, 2022 further amending the Companies (Incorporation) Rules, 2014.

According to a new rule 3-B of the company Incorporation (Amendment) Rule, 2022 has been inserted as follows:

On and after commencement of Nidhi (Amendment) Rules, 2022, a Public company that desired to be declared as a Nidhi shall apply the Form NDH-4 within a period of 120 days of its incorporation for declaration as Nidhi if it fulfills all the conditions which are given following:

The company has not less than 200 members.
It has Net Owned Funds of Rs.20, 00,000 or more.
The company shall also attach Form NDH-4 for the declaration with regard to the fulfillment of fit and proper person criteria by all the promoters and directors of the company. The Central Government shall examine the application which is filed in Form NDH-4 and announce its results within a period of 45 days to the company.
According to Rule 4, Nidhi company is to be incorporated shall be a public company and shall have a minimum paid-up equity share capital of Rs.10, 00, 000.

Provided according to the Nidhi Amendment Rules, 2022, shall fulfill all the requirements within a period of 18 months from the date of such commencement.

According to rule 6 (d), No Nidhi shall acquire or purchase securities of any other company or control the composition of the Board of Directors of any other company in any manner or enter any arrangement for the change of its management.
According to the rule 6(k) (1), No Nidhi shall raise loans from banks or financial institutions or any other source for the purpose of advancing loans to members of Nidhi.
According to the amended rule 9, Every Nidhi shall maintain Net Owned Funds not less than Rs.20, 00,000 or such higher amount which is specified by the central government from time to time.

Provided that every Nidhi existing on the date of commencement of the Nidhi (Amendment) Rules, 2022 shall fulfill all the requirements within a period of 18 months from the date of the commencement”.

Conclusion

It concluded that any 7 or more people associated for any lawful purpose may form an incorporated company, with or without Limited Liability. They shall subscribe their names to a Memorandum of association and fulfill all the formalities for registration of the Incorporation of Company. The certificate of incorporation mentioned the date when the company incorporated at that time all members of the company and all other persons shall be a body corporate which is mentioned in the memorandum and those members are capable of exercising all the functions of an incorporated company under the Companies Act, 2013. After commencement of Nidhi (Amendment) Rules, 2022, a Public company that desired to be declared as a Nidhi shall apply the Form NDH-4 within a period of 120 days of its incorporation for declaration as Nidhi.