Opening of branches by Nidhi
Updated: Sep 17, 2020
CAN A NIDHI COMPANY OPEN BRANCHES ?
Nidhi Companies are regulated by Ministry of Corporate Affairs, Section “406” of Companies Act 2013 and Companies (Nidhi Companies) Rules, 2014. As we know Nidhi Companies are created for cultivating the habit of saving among the members and accept/lend funds only from/to its members, there are separate Rules being imposed on Nidhi Companies to ensure the safety of stakeholders interests and to ensure good governance in Nidhi Business.
Rule “10” of Companies (Nidhi Companies) Rules, 2014 deal with opening of branches by Nidhi Companies. Nidhi Companies are allowed to open a branch if it complying with the conditions prescribed under the rule’10:
Provisions for branch opening by Nidhi:
Required a good track record of profit:
A Nidhi may open branches, only if it has earned net profits after tax CONTINUOUSLY during the preceding three financial years.
Maximum Branches allowed to Nidhi:
A Nidhi may open up to three branches within the district, it cannot open any branch outside the district without prior approval of Regional Director.
If a Nidhi proposes to open more than three branches within the district or any branch outside the district, it shall obtain the prior permission of the Regional Director and an intimation is to be given to the Registrar about opening of every branch within thirty days of such opening.
Branches outside the state:
Nidhi shall not open branches or collection centres or offices or deposit centres, or by whatever name called outside the State where its registered office is situated.
Up to date Compliance required:
Nidhi shall not open any branches or collection centres or offices or deposit centres, or by whatever name called unless financial statement and annual return (up to date) are filed with the Registrar.
Closure of Branch:
Nidhi Company shall not close any of its branch until it complies with the conditions prescribed under rule 10 (6):
(a) Nidhi Company will publish an advertisement in a newspaper in vernacular language in the place where it carries on business at least thirty days prior to such closure for informing the public about such closure.
(b) A copy of such advertisement or a notice informing such closure of the branch will be fixed on the notice board of Nidhi for a period of at least thirty days from the date on which advertisement was published under clause (a)
(c) Nidhi will intimate Registrar within thirty days of such closure.
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