Ragavi and her six more relatives & friends want to incorporate a Nidhi Company. They seek your advice on the following issues with respect to the formation of company: (iii) Whether Nidhi is allowed to raise funds t

CS Executive · Setting up of Business Entities and Closure · PYQS · June 2019
Ragavi and her six more relatives & friends want to incorporate a Nidhi Company. They seek your advice on the following issues with respect to the formation of company: (iii) Whether Nidhi is allowed to raise funds through issue of equity shares and preference shares ? As a practising Company Secretary, advise with reference to the provisions of the Companies Act, 2013.

Answer & Explanation:

As per rule 6 of the Nidhi Rules, 2014, no Nidhi Company shall issue preference shares, debentures or any other debt instrument by any name or in any form whatsoever.

Topics: Companies Act, 2013; Nidhi Rules, 2014

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