Section 406 of Companies Act 2013 and Companies (Nidhi Companies) Rules, 2014 governs The Law and Procedure for Nidhi Company.
Nidhi Company means a company which has been incorporated as a Nidhi with the object of:
-Cultivating the habit of thrift and savings amongst its members,
– receiving deposits from, and lending to, its members only, for their mutual benefit, and which complies with rules of Chapter XXVI of Companies Rules, 2014.
A Nidhi shall not declare dividend exceeding 25%.
If a company contravenes any of the provisions of the rules the company and every officer of the company who is in default shall be punishable with fine which may extend to Rs.5,000/- and where the contravention is a continuing one, with a further fine which may extend to Rs.500/- for every day after the first during which the contravention continues.