Ministry of Corporate Affairs tightened the rules

Ministry of Corporate Affairs tightened the rules

Team Ambitiousbaba are here with a Current Affairs Special Series. In this series, candidates will be introduced to current affairs topics daily, which will not only improve their general awareness but also will ensure that the candidates do not lack in any current affairs topic. Today’s Current Affairs topic is “Ministry of Corporate Affairs tightened the rules”

The Ministry of Corporate Affairs (MCA) made the rules tightened for Nidhi Companies.

What is Nidhi Company?

It is type of company in the Indian non-banking finance sector which recognized under section 406 of companies Act, 2013. Nidhi Company is majorly working to borrow and to lend money to their needed members. It can be understood in simple word as it is small finance company which operates at small level of population.

Rules by Ministry of Corporate Affairs:

  • Any public company incorporated as Nidhi with a share capital of Rs 10 lakh will have to submit NDH-4 form and apply with the central government to be notified as a Nidhi company within 120 days of its incorporation.
  • There is required to have minimum 200 members in the company. It is expected to have a net owned fund (NOF) of Rs 20 lakh.
  • MCA also notified that the promoters and directors of the company will have to fulfill the criteria. Under the current rules, a Nidhi company to get consent from the central government to operate within 14 months from their incorporation.


Why the tightened rules formed?

  • MCA has noticed that several companies are not abiding with the directed NDH-4 form submission rule. According to the ministry, between the periods of 2014-19 more than 10,000 new companies were incorporated out of which only 2,300 of them submitted the NDH-4 form.
  • To protect the interest of general public, it has become immediate required action before becoming its member; everyone must check declaration of a company as a Nidhi by the Central Government.


MCA has notified that if a company doesn’t get any intimation from the Central government within 45 days of submitting the NDH-4 form, the approval would be taken for granted. This action was taken to achieve the timely disposal.

However, this provision won’t employ to already incorporated companies but only to those Nidhi companies that are floated after these new Nidhi rules come into effect.

Question & Answer:

Q1. Which Ministry is released a new set of rules for Nidhi companies?

Ans. Ministry of Corporate Affairs

Q2. How many minimum members required for Nidhi Company?

Ans. 200

Q3. Which form will have to be required after incorporation of Nidhi Company?

Ans. Form- NDH-4

Q4. In how many days Nidhi companies have to apply with the Central government?

Ans. 120 Days

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