NDH-4 application
Why in News?
- The Ministry of Corporate Affairs (MCA) issued an advisory on 24 September 2026 cautioning the public against investing in non-compliant Nidhi companies that promise unusually high returns.
- The advisory reiterated that every company seeking to function as a Nidhi must file Form NDH-4 for declaration or updation of its Nidhi status. Only 395 companies had been declared as Nidhis by the Central Government as of the advisory.
About NDH-4 Application
- Core Definition: Form NDH-4 is the official "Application for declaration/updation of status as Nidhi Company" under Section 406 of the Companies Act, 2013.
- Mandatory Gateway: No public company can legally operate, accept deposits from the public, or give loans to its members as a Nidhi company until its NDH-4 application is officially approved by the Central Government.
- The Approval Window: As per current rules, the Central Government examines the submitted form and must convey its decision within 45 days. If no update is given within 45 days, it is treated as a deemed approval.
Mandatory Timeline & Filing Rules
- Filing Timeline: A public company wishing to function as a Nidhi must file the NDH-4 form within 120 days of its incorporation.
- Pre-requisites for Filing: Before hitting submit on Form NDH-4, the entity must meet these strict criteria:
- Have a minimum of 200 members.
- Possess Net Owned Funds (NOF) of ₹20 Lakhs or more.
- All promoters and directors must clear the "fit and proper person" criteria laid out by the rules.
- Business Restriction: A newly incorporated Nidhi company cannot file its Form 20A (Commencement of Business) or legally begin its financial operations until the NDH-4 application is approved.
Consequences of Not Filing or Rejection
- Ban on Deposits/Loans: If a company's NDH-4 application is rejected or not filed, it is completely restricted from raising deposits or offering any loans.
- Filing Restrictions: Non-compliant companies face automated technical blocks on the MCA portal, preventing them from filing major mandatory returns like Form SH-7 (Alteration of share capital) or Form PAS-3 (Return of Allotment).
