Regulatory action against Nidhis, non-disclosure of beneficial ownership jump
Subscribe to enjoy similar stories. Regulatory action against Nidhi companies or mutual benefit societies, and firms defaulting on their beneficial ownership disclosure have shot up in 2024 compared to previous years, official data from the Registrars of Companies (RoCs) showed.
RoCs across the country issued as many as 131 adjudication orders, mostly imposing penalties for the alleged breaches, against Nidhi companies in calendar year 2024, about 72% more than last year's 76 notices. The focused regulatory action against Nidhi companies is very pronounced, given that only three notices were recorded in 2022 against Nidhis, and five in 2021, as per data from the ministry of corporate affairs (MCA) that regulates these entities.
The RoC action against defaulters of beneficial ownership disclosures also skyrocketed in 2024, with 79 adjudication notices to companies under sections 89 and 90 of the Companies Act in 2024, a massive surge compared to three notices sent the year before, MCA data showed. Most adjudication notices are penalty orders, which levy a penalty on both the company and the persons running the company.
Penalties imposed in the case of Nidhi companies ranged from ₹10,000 to about ₹30 lakh for the company and the individuals named for multiple years, and in the case of defaults on reporting significant beneficial ownership ranged from ₹50,000 to about ₹12.5 lakh. The regulatory glare on Nidhis this year followed last year's drive to weed out illegal lending by the Bihar RoC.
In February 2023, the Bihar RoC issued notices to about 550 Nidhis in its territorial jurisdiction after complaints of them allegedly duping investors, Mint reported on 27 Feb last year. Nidhis are a sort of non-banking financial
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