Rules 23A and 23B explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Rules 23A and 23B were inserted by the Nidhi (Amendment) Rules, 2019 to bring older companies into the declaration system. Rule 23A deals with companies functioning on the lines of a Nidhi and with Nidhis incorporated under the Act before 15 August 2019. Rule 23B deals with companies declared as Nidhis under the 1956 law. This article reads both rules as amended up to G.S.R. 413(E) dated 16 July 2024; later amendments should be checked. Older Nidhis unsure of their position can take a compliance advisory review.
Under rule 23A, a company functioning on the lines of a Nidhi, and every Nidhi incorporated under the Act before 15 August 2019, must get itself declared under rule 3A within one year of incorporation or nine months from 15 August 2019, whichever is later. Under rule 23B, every company declared as a Nidhi under the 1956 law files Form NDH-4 for updating its status. Non-compliance bars Form SH-7 and Form PAS-3, and, under 23A, deposits and loans.
Which rule applies to which company
| Company | Rule that applies |
|---|---|
| Declared as a Nidhi or Mutual Benefit Society under the 1956 Act (rule 2(a)) | Rule 23B: Form NDH-4 for updating status |
| Company functioning on the lines of a Nidhi (rule 2(b)); every Nidhi incorporated under the Act before 15 August 2019 | Rule 23A, in accordance with rule 3A |
| Incorporated 15 August 2019 to 18 April 2022 | Rule 3A and rule 5 |
| Incorporated as Nidhi on or after 19 April 2022 | Rule 3B |
The classes of rule 2 are explained in our article on rules 1 and 2. Rules 23A and 23B refer to the commencement of the Nidhi (Amendment) Rules, 2019, which is 15 August 2019, and the Companies Act, 1956 is mentioned in rule 2 as printed; readers should check the current law for that reference, and this article names no replacement.
Rule 23A: compliance with rule 3A by certain Nidhis
Rule 23A (inserted by G.S.R. 467(E) of 1 July 2019) reads in substance: every company referred to in clause (b) of rule 2 and every Nidhi incorporated under the Act before the commencement of the Nidhi (Amendment) Rules, 2019, "shall also get itself declared as such in accordance with rule 3A within a period of one year from the date of its incorporation or within a period of months from the date of commencement of Nidhi (Amendment) Rules, 2019, whichever is later".
The amendment of 2020. The 2019 text said "six months". G.S.R. 114(E), the Nidhi (Second Amendment) Rules, 2020, dated 14 February 2020 and in force on publication, provides that in rule 23A "for the words 'six months' the words 'nine months' shall be substituted". The notification held amends rule 23A; a corrigendum of 2 March 2020 is reported to extend the change to the first proviso to rule 23B, but its text was not available for this article.
How the period works. There are two limbs: one year from the date of incorporation, or nine months from the commencement of the 2019 Rules (15 August 2019), "whichever is later". The rule gives the words and the commencement date, and we do not compute a calendar end date. For a company incorporated long before 2019, the second limb will usually be the later one, because one year from an old incorporation date has already passed. For a Nidhi incorporated shortly before 15 August 2019, the one-year limb may be the later one.
Declaration under rule 3A means an application in Form NDH-4 with fee and a notification in the Official Gazette; see our article on rule 3A.
The provisos to rule 23A
- First proviso (2019): no SH-7 or PAS-3. "In case a company does not comply with the requirements of this rule, it shall not be allowed to file Form No. SH-7 (Notice to Registrar of any alteration of share capital) and Form PAS-3 (Return of Allotment)." See our posts on Form SH-7 and Form PAS-3.
- Second proviso (2022): no deposits or loans. No company which has not complied with the requirements of the rule, or fails to comply on or after 19 April 2022, or whose Form NDH-4 application "is or has been rejected by the Central Government", shall raise any deposit from its members or provide any loan to its members under the provisions of these rules from the date of such non-compliance, or the date of commencement of the 2022 Rules, or the date of rejection of the application, whichever is later.
- Third proviso (2022): deemed Chapter V deposits. Any deposit raised after that later date "shall be deemed to have been raised in pursuance of Chapter V of the Act, and shall be subject to all the requirements under that Chapter, or under any other provisions of the Act or the rules made thereunder, as the case may be." See our posts on section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.
Note that rule 23A, unlike rule 3A, has no proviso saying it does not apply to companies incorporated from 19 April 2022; those companies are outside it because it speaks only of companies and Nidhis that existed before 15 August 2019.
Rule 23B: companies declared under the previous company law
Rule 23B is headed "Companies declared as Nidhis under previous company law to file Form NDH-4". It reads in substance: every company referred to in clause (a) of rule 2 "shall file Form NDH-4 alongwith fees as per the Companies (Registration Offices and Fees) Rules, 2014 for updating its status". The fee amount is not in the Nidhi Rules and should be checked in the Companies (Registration Offices and Fees) Rules, 2014.
First proviso: no fee within six months. "No fees shall be charged under this rule for filing Form NDH-4, in case it is filed within six month of the commencement of Nidhi (Amendment) Rules, 2019." As inserted in 2019, the period is six months; a later change by corrigendum is not verified. We do not compute an end date: the period ran from 15 August 2019.
Second proviso: no SH-7 or PAS-3. "In case a company does not comply with the requirements of this rule, it shall not be allowed to file Form No. SH-7 (Notice to Registrar of any alteration of share capital) and Form PAS-3 (Return of Allotment)."
Rule 23B has no time limit for filing the form for updating status. Its first proviso concerns only the fee. Rule 23B does not carry the 2022 provisos on deposits and loans that rule 23A and rule 3A carry.
An example
Bharat Mutual Benefit Limited was declared a Nidhi under the 1956 Act and is a rule 2(a) company. Rule 23B requires it to file Form NDH-4 for updating its status. If it does not, it cannot file Form SH-7 or Form PAS-3. Another company, Janta Thrift Limited, functioned on the lines of a Nidhi without being declared; rule 23A required it to get declared in accordance with rule 3A within the later of the two limbs. If it has not complied or its application is rejected, it cannot raise deposits or give loans under the Rules from the later date described in the second proviso, and deposits raised in that situation are treated as Chapter V deposits.
Need help with Form NDH-4 for an older Nidhi?
An older Nidhi has to place itself on the correct track, deal with any default and, where needed, understand the effect of the 2022 provisos on its deposits and loans. Our compliance advisory team can review the company's history and advise on the Form NDH-4 position.
Key takeaways
- Rule 23A covers companies functioning on the lines of a Nidhi and Nidhis incorporated under the Act before 15 August 2019: get declared under rule 3A within one year of incorporation or nine months from 15 August 2019, whichever is later.
- "Nine months" was substituted for "six months" by G.S.R. 114(E) of 14 February 2020.
- Rule 23B covers companies declared under the 1956 law: Form NDH-4 for updating status; no fee if filed within six months of 15 August 2019 (as inserted; later corrigendum not verified).
- Non-compliance bars Form SH-7 and Form PAS-3; under rule 23A it also bars deposits and loans and treats deposits as Chapter V deposits.
Read next
- Rules 1 and 2: commencement and the companies the Rules apply to
- Rule 3A: declaration and the Form NDH-4 deadline
- Rule 3B: declaration within 120 days and fit and proper criteria
- Section 406 of the Companies Act, 2013: Nidhi companies
Disclaimer: Based on the Nidhi Rules, 2014 as notified (G.S.R. 258(E), 31 March 2014) and as amended by G.S.R. 467(E) of 2019, G.S.R. 81(E) and 114(E) of 2020, G.S.R. 301(E) of 2022, G.S.R. 35(E) of 2023 and G.S.R. 413(E) of 2024, as consulted on 3 October 2026. Later amendments, fees, forms and the Companies Act, 2013 provisions referred to should be checked. This article is general information, not legal advice; check the official text before acting.