Pursuant to Notifications GSR 555 (E) dated July 26, 2011 and GSR 308 (E) dated April 30, 2002, MCA directed Nidhi Companies to not carry out certain activities such as:-
- (i) Carrying on the business of chit fund, hire purchase finance, leasing finance, insurance or acquisition of shares or debentures issued by any body corporate except the shares of another Nidhi Company, if specifically permitted by MCA;
- (ii) Opening any new current account with its members;
- (iii) Admitting as member, any body corporate or trust;
- (iv) Issuing any equity share of nominal value less than rupees 10/- except in case of Nidhi Companies incorporated on and after July 26, 2001:
- (v) Levying service charge for issue of shares to members;
- (vi) Making any preferential allotment of shares to any persons or group of persons but shall make only rights issue of shares and the unsubscribed portion can be apportioned by the Board of Directors in terms of Section 81 of the Companies Act, 1956;
Provided that this restriction shall not apply to allotment of shares up to the face value of
Rs.100/- to new deposit holders or borrowers and in respect of qualification shares held by Directors.
- (vii) Acquiring another company by purchase of shares or control of composition of Board of Directors otherwise than through amalgamation or merger under the Act and subject to the regulations applicable to Nidhi Companies in force;
- (viii) Carrying on any business other than the business of borrowing or lending in its own name and allow use of its name by any other body corporate whose main object is to earn profit by borrowing and lending;
- (ix) Entering into any financial dealing with any person other than its members;
- (x) Pledging any type of security lodged with it by its members;
- (xi) Taking further deposits from or lends further money to any body corporate;
- (xiii) Issuing or causing issuance of any advertisement in any form for soliciting deposit. However, Private circulation of the details of fixed deposit schemes among the members shall not be considered to be "advertisement" inviting deposits;
- (xiv) Paying any brokerage or incentive for mobilizing deposits from members or for deployment of funds or for granting loans;
- (xv) Issuing prepaid interest warrant; and
- (xvi) Entering into any arrangement for the change of its management without a special resolution passed in its general meeting and approval of MCA.