Nidhi Company

Closure of Nidhi Company: A Legislative Requirement

Closure of Nidhi Company

The article explains the closure of Nidhi Company. Like every other Company, the Nidhi Company can be wound up by its members. Nidhi Company is characterized as an entity where the members come together and pool their funds. They do the business of lending and borrowing of deposits with other members. A Nidhi Company is a part of the Non-Banking Financial Institution (NBFC) and is registered under section 406 the Companies Act, 2013.

A Nidhi company has the objective to cultivate the habit of savings amongst its members, or receiving deposits and lending to its members only for mutual benefits.

What is the Closure of Nidhi Company?

Nidhi Company’s closure means the dissolving the Company registered under the Companies Act, 2013[1]. The closure of Nidhi Company is mentioned under section 248(2) of the Act. This section read along with the Company (removal of companies’ names from the companies’ registrar) Rules, 2016 speaks about closure of Nidhi Company.

Reasons for Closure of Nidhi Company

The Nidhi Company can be dissolved because of several reasons:

  1. According to Section 248 (1) of the Companies Act, 2013 any company that has failed to commence its business or business of borrowing in the preceding two years.
  2. The Company has done no activity, and to save the Company from non-compliance it is mandatory to remove the Company’s name.
  3. The closure of Nidhi Company is possible due to, being non-functional, and not generating profits.
  4. The promoter is not willing to perform its obligations.
  5. The business is not able to multiply its resources and not able to generate profits.
READ  How to Register a Nidhi Company in India?

Procedure for Closure of Nidhi Company

Procedure for Closure of Nidhi Company

The procedure for the closure of Nidhi Company is as follows:

  1. Board Resolution means that the Company must conduct the board meeting to pass the resolution for the proposal to dissolve the Company.
  2. Special Resolution- A special resolution in the General Meeting must be passed, or the resolution must obtain the consent of at least 75 per cent members for the Company’s closure.
  3. Publishing in the newspaper – There must be an advertisement published in the local daily newspaper and in English too. It must be done 30 days before such closure, and notifying it to the public and informing about such cessation to its members.
  4. Fixing on the notice Board- The copy of such notice must be fixed on the notice board of NIDHI Company for not less than 30 days after the date on which announcement was published.
  5. Notice – The notice must be published under form INC-26.
  6. Application with Form STK-2-the application shall be submitted with the form.

Documents required for the Closure of Nidhi Companies

Documents required for the Closure of Nidhi Companies

The requisite documents for the closure of Nidhi companies are as follows:

  1. Bank Closure Certificate
  2. Indemnity Bond– A stamped and duly authorized in the prescribed Form –SKT-3.
  3. Affidavit- The affidavit must be duly stamped and notarized as prescribed in the Form SKT-4.
  4. Statement of Accounts- It is to be given in the Form SKT-8 after generation of Unique Number.
  5. Copy of Special Resolution- Special Resolution includes resolution of 75% of the members
  6. Balance Sheet- The balance sheet, along with the annual return, must be submitted. It must have include forms such as Form NDH-1, NDH-3, and NDH-4.
  7. Id Proof- Need to submit Id proof of all members of the Nidhi Company. The Id proof needs to be self-attested, and address proof of all directors must be submitted.
  8. Copy of newspaper- it must include the replica of newspaper which has published the advertisement.
READ  Is Director Salary Allowed in Nidhi Company?

Advantages of Closure of Nidhi Company

The following are the advantages on Closure of Nidhi Company:

  1. Saves the compliance cost
  2. There are no non-compliance of penalties
  3. No record-keeping
  4. No directors default to be recorded
  5. It stops unnecessary IT demands.

What are the methods of Closure of Nidhi Company?

There are various methods of the closure of Nidhi Company as:

  1. Defunct Company- The Company that has failed to provide compliance with legal levels as per the statute. It means that the Company has not been able to produce returns. The company operations are defunct, and it is free from all legal ties.
  2.  Voluntary Winding Up- The Company has decided to wind up the activities due to non-performance. The passing of SR (special resolution) in the board allows the company to wind up.
  3. Selling of Nidhi Company- . The owners are changed, and legal ties with the previous owners come to an end.


It can be concluded that the Closure of Nidhi Company has to be performed legally as per the Companies Act, 2013. The closure is essential to break the legal ties if there has been a non- continuance of business performance. The closure has legal compliances which have to be submitted to ROC. The Nidhi company registration and closure or winding has to be in accordance with the Companies Act.

Read our article:An Overview on Rules Regarding Nidhi Company

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