Opening a branch company offers visibility and exposure of the brands and company which can positively affect the profit of the company. The branch office acts as an extension of the head office and carries on the same business activities as that of its parent company. In this article we will discuss how a Branch office of Nidhi Company can be opened?
Compared to other companies, Nidhi Company is being imposed with a lot of restrictions. Out of many limitations and restrictions, one of the most important restrictions is that a Nidhi Company can not open a branch office without complying with the prescribed conditions.
As per Rule 10 of Companies (Nidhi Companies) Rules, 2014, Nidhi Companies are allowed to open a branch only if it complies with the conditions and regulations prescribed under the rule 10.
A Nidhi Company is allowed to open a Branch office, only if it has earned net profits after deductions of taxes on a continuous basis during past three financial years.
There is restrictions in number of branches a Nidhi company can open.
Within one district, a Nidhi Company can open maximum up to three branches only. If a Nidhi company wishes to open more than three branches within a district without prior approval of Regional Director.
Also, if a Nidhi Company wishes to open any branch outside the district, it shall acquire prior permission of the Regional Director. and an intimation needs to be given to the registrar about the opening of every branch within thirty days of such opening of a branch.
A Nidhi Company can not by any means open any branches or collection centres or offices or deposit centres outside the state where the registered office is situated.
Nidhi Company can not open any branches or collection or deposit centers or offices unless financial statement and annual returns are filed with the ROC.
During the business at any time if Nidhi Company wishes to close any of its branch offices, it has to comply with the conditions prescribed under rule 10 (6) of the of Companies (Nidhi Companies) Rules, 2014 as follows:
Prior to closing of the Nidhi Company, it is mandatory to publish an advertisement in a newspaper in vernacular language in the place where it performs its business operations. Also, it should inform its members and public about such closure of Nidhi Company Branch.
Nidhi Company shall affix a copy of advertisement or notice given earlier in the newspaper notifying about the closure of the branch on the notice board of the company for a continuous thirty days time limit from the date on which the advertisement got published.
About the closure of the branch of the Nidhi Company, It must give intimation to the registrar within the 30 days of such closure of the branch.
For Opening or closing a branch office, it is mandatory for Nidhi Company to abide by the Nidhi Company rules and regulations. Moreover, It must also abide by the Companies Act, 2013.
Suggested read: Things a Nidhi Company can not do as an NBFC.
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