CAN A NIDHI COMPANY OPEN BRANCHES ?
As we know Nidhi Companies are created for cultivating the habit of saving amongst 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):
The article has been prepared considering the relevant Guidelines/Circulars/Notifications/Provisions of the Companies Act, 2013 and the Nidhi rules made thereunder. Readers are requested to cross-check the provisions before acting upon the same. The author will not be liable for any damages or penalties caused.
Deepak Sharma is a Practicing Company Secretary at Jaipur (Rajasthan) The author has written articles relating to corporate matters . Some of the articles have been published on Taxguru.
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