Nidhi Company Compliances, Nidhi Company Annual compliances, What is Nidhi Company, Ebizfiling

Nidhi Company Compliances: A complete guide

What is Nidhi Company and what are the necessary Nidhi Company Compliances to be filed?

Introduction

The main objective of Nidhi Company is to borrow or lend money to its members. These companies fall under the Non-Banking Financial Company (NBFC). Nidhi Company should file annual compliances, like all other companies in India. It should also comply with all the rules and regulations mentioned under the Companies Act, 2013, Nidhi Company Rules, 2014, and Nidhi Company (Amendment) Rules, 2022. In case of non-compliance, the company will be liable to pay fines and also to pay penalties for such defaults with its officers. In this blog, we will discuss the required compliances to be filed by Nidhi Company.

What is Nidhi Company?

The Nidhi Company is governed or regulated by section 406 of the Companies Act, 2013. It is defined under section 406 (1), which stays that:

 

“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.”

 

Source: mca.gov.in 

 

This is the most suitable type of company for the individual who wants to establish a company with minimum capital investment.

Nidhi Company compliances

The Nidhi company compliance requirements are parted into 3 categories:

  1. Pre-incorporation compliance
  2. Post- incorporation compliance
  3. Event-based compliance

 Pre-incorporation compliance

  • To incorporate Nidhi Company, a minimum of seven members are required and out of which 3 members should be the directors of the Company.
  • A minimum paid-up share capital of Rs. 5 lakhs or more is required.
  • To incorporate, Nidhi company it is mandated to include “Nidhi Limited” at the end of the company name.
  • Members of Nidhi Company can be anyone except minor, corporate body and a trust.
  • If the company has not earned any profit after paying tax for three consecutive years, then it cannot open any other branch.
  • Not more than 7.5% of maximum rate of interest available on deposits. .

Post- incorporation compliance

There are 2 types of post-incorporation compliance that are:

1. General compliance

The Nidhi Company has to satisfy the following compliance within the one year of incorporation:

  • Within one year of its formation, the number of members shall reach at least 200.
  • The minimum amount of Net Owned Funds is Rs. 20 lakhs (Modified under Nidhi (Amendment) Rules, 2022).
  • The ratio between net owned funds and deposits must not be more than 1:20 i.e., net owned fund: deposits..
  • According to Rule 14 of the Nidhi Rules 2014, unencumbered term deposits should not be less than 10% of the total outstanding deposit.
  • The statutory registers and books of accounts need to be maintained by Nidhi Company.
  • It is necessary for the Nidhi Company to convene statutory meetings.
2. Annual compliance

Sr.No.

Form Name

Compliance

Due date of filing

1

Form NDH-1 Return of Statutory Compliance

 

This form includes all the data for the entire financial year on reserves, deposits, loan members, etc. These documents are sent to the Registrar using E-form GNL-2.

Within the 90 days of the closure of financial year.

2

Form NDH 3 Half-yearly return

This form is filed with the Registrar of Companies (ROC)

Within 30 days from the conclusion of half a year. It needs to be properly certified by a professional expert.

3

Form ADT-1

Appointment of auditor

Within 15 days from the date of annual general meeting

4

Form AOC-4

For submitting  financial records and other supporting documents with the ROC.

Within the 30 days from the date of annual general meeting

5

Form MGT-7

Filing of annual return

Within the 60 days from the date of Annual General Meeting

6

ITR-6

Income tax return

30th September

3. Event-based compliance

The third or final type of compliance of Nidhi Company is event-based compliance. This type of compliance is required to file once during the registration process of the company. Additionally, these compliances must be fulfilled whenever the non-periodic structure of the Nidhi Company changes. The events in which Nidhi Company has to file compliance are listed below:

  • Any modification in the company’s name.
  • Any modification to the company registered address.
  • Appointment of key managerial personnel.
  • Appointment or registration or removal of any director or auditor.
  • Any modification in the goals of company.
  • Transfer of shares.
  • Any change to the capital structure of the company.

Penalties for non-compliance of Nidhi Company 

It is compulsory for Nidhi Company to file compliances as per the provision specified under the Companies Act, 2013 and all other relevant acts. In case of failure to comply with compliances the company will incur some liabilities, which are:

  • In case of not meeting the necessary compliance, the company and concerned officers are liable to pay fine up to Rs.5000.
  • In case of continuing the violation, the company is liable to pay a fine of Rs. 50 per day.

New rules related to Nidhi Company compliance under Nidhi Company (Amendment) Rules 2022

  • A minimum paid-up capital of ten lacs is required.
  • Within 120 days of incorporation, file an application form in NDH-4.
  • An application needs to be approved by the Central Government within 45 days.
  • Twenty lacs to be kept in a net-owned fund.
  • A Nidhi company must implement the amendments made in the Nidhi rules 2022, after company incorporation.

Bottom line

Nidhi Companies were formed to motivate its shareholders to save money for unexpected expenses and with careful preparation to save money, they might become financially independent and be prepared for unforeseen expenses. A Nidhi company must comply with annual filings and other compliances in order to avoid fines and smooth running of business.

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