How to Start a Nidhi Company Compliance

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An Overview of Nidhi Company Compliance

Nidhi Company is a type of lending company, which doesn't require an RBI license. Like any other company, Nidhi Company also needs to file annual compliances, commonly known as Nidhi Company Compliances. These compliances are prescribed in Nidhi Rules, 2014 and the Companies Act, 2013. The annual compliance of the Nidhi Company is a period, and these compliances are filed annually; thus, they are required to be filed from time to time after certain intervals of time. The primary purpose behind these compliances is to show a clear picture of the company's work status and performance during a particular time. Nidhi Company needs to meet all the compliances prescribed under the Companies Act, 2013 and Nidhi Rules, 2014.

Pre-Incorporation Nidhi Company Compliances

Following are some vital Pre-Incorporation Compliances required for Nidhi Company Registration:

  • A minimum of 7 members are required for Nidhi Company Registration, of which 3 of them are Directors of the Nidhi Company;
  • A minimum capital of Rs. 5 lakhs or more is required;
  • Nidhi Company is not permitted to open any branches if it fails to gain any profit after the inspection for consecutive 3 Financial Years;
  • The interest rate on loan shall not exceed 7.5% over the most notable pace of intrigue provided on deposits;
  • A company must include "Nidhi Limited” last of the company name;
  • A Trust or a corporate body cannot be the partner of Nidhi Company.

Post-Incorporation Nidhi Company Compliances

Following are some vital compliance that should meet after the Nidhi Company Registration:

  • The number of the member should be 200 or more within one year days from its incorporation;
  • The NOF (Net Owned Fund) should be Rs 20 lakhs as per Nidhi Rules, 2022;
  • The ratio of NOFs to the deposits should not exceed 1:20;
  • Maintenance of Books of Accounts;
  • Maintain the statutory Registers;
  • Convene Statutory Meetings.

Types of Nidhi Company Compliances

Basically, there are two different types of Nidhi Company Compliances as prescribed in the Nidhi Company Rules and Companies Act and you can check the same below:

  1. Annual Compliances: These compliances are usually those compliances that comprise the performance and status of the Nidhi Company in the entire year. And these Nidhi Company Compliances are filled annual, but few such compliances are filed after a specific interval of time.
  2. Event-Based Compliances: These compliances are filed during the Nidhi Company Registration and these compliances are required to be fulfilled during any alteration in the structure of the Nidhi Company and such alteration is non-periodical, and these compliances of Nidhi Company are not compulsory to be filed at a fixed interval.

Annual Compliance of a Nidhi Company in India

Annual Nidhi Company Compliance is followed to keep the Government updated on the activities & functional divisions of the company and Nidhi Companies in India must follow the annual compliances mentioned below:

Form

Compliance

Due Date

Form NDH-1: Return of Statutory Compliance

This Form contains all the information regarding reserves, deposits, loan members, etc., for the complete Financial Year. E-form GNL-2 is used for the submission of the documents with the Registrar.

Within 90 days from the close of the Financial Year.

Form NDH-2: Extension of time

This Form is filled if:

·         The company fails to add a minimum of 200 members within 1 year of incorporation.

·         Failure to maintain the NOF to deposit ratio of 1:20

This Form should be filed within 30 days from the closure of the Financial Year, along with the prescribed fees.

Form NDH-3: Half-yearly return

This Form is to be filed with the ROC

With 30 days from the conclusion of the half-year.

Form NDH-4

This Form is for a declaration as Nidhi Company and updating the company’s status.

·         For New Company: within 120 days after the expiry of 1 year from its incorporation date.

·         For Existing Nidhi Company: Within 1 year of its incorporation date or within 6 months from the commencement date of Nidhi Rules, whichever is later.

Form AOC-4

This Form is for filing financial documents & other supporting documents to the ROC.

Within 30 days of the AMG (Annual General Meeting).

ITR-6

Income Tax Return

By 30the September

Form MGT-7

Annual Return

Within 60 days of the AMG (Annual General Meeting).

Event-Based Nidhi Company Compliances

Usually, Event-Based Nidhi Company Compliances are required to file only once during the Registration Process. Moreover, these compliances must be followed when there is any change in the Nidhi Company structure, which is non-periodical. Below is the list of Event-Based Nidhi Company Compliances:

  • Any change in the company's name;
  • Change in registered office address;
  • Transfer of Shares;
  • Appointment of the KMP (Key Managerial Personnel);
  • Appoint or Removal or Registration of Director/Auditor;
  • Increased the authorised capital of the company;
  • Any changes in the company’s objective;
  • Any other alterations that are event-based.

What are the Penalties of Non-Compliance?

It is mandatory to file compliances for every Nidhi Company in India. Non-Compliance attracts some penalties for the Nidhi Company and you can check the same below:

  • In case the Nidhi Company doesn’t meet the Nidhi Company Compliance, then the organisation and the concerned officers will be fined an amount up to Rs. 5000/-;
  • In the case of continuation of violation, the company will be charged a fine of Rs. 500/day.

New Rules of Nidhi Company Compliance

MCA (Ministry of Corporate Affairs) tightens the compliance rules for Nidhi Company vide the Nidhi (Amendment) Rules, 2022:

  1. Any public company registered as Nidhi Company with a share capital of Rs. 10 lakhs will have to submit a Form NDH-4 and apply with the Central Government to be notified as a Nidhi Company within 120 days of its incorporation;
  2. Nidhi Company to get consent or approval from the Central Government to function within 14 months from their incorporation;
  3. The company needs to have a minimum of 200 members & should have a NOF of Rs. 20 lakhs;
  4. If a company doesn’t receive any suggestion from the Central Government within 45 days of submitting the NDH-4 Form, the approval would be considered to be granted.

Restrictions on Nidhi Company in India

Registering a Nidhi Company in India is not easy; it holds some restrictions that all the stakeholders or the members have to follow it. Generally, a Nidhi Company is strictly prohibited from undertaking any of the following activities:

  1. A company shouldn't undertake the business of leasing finance, chit fund, acquisition of securities or insurance, hire purchase;
  2. A Nidhi Company should not open a current account for any company’s member;
  3. The members of the Nidhi Company are not permitted to pledge any of the assets which are submitted as their security;
  4. A Nidhi Company shouldn’t accept lend or deposit money to any individual or non-member who is not a member of the Nidhi Company;
  5. A Nidhi Company shouldn’t issue preference shares or debentures;
  6. A Nidhi Company shouldn't enter into any agreement or pay brokerage to encourage any deposits;
  7. This company are not allowed to issue any advertisement.

Frequently Asked Questions


The other name for Nidhi Company is Mutual Benefit Finance Company.

A Nidhi Company is a type of non-banking financial organization registered under the Companies Act 2013.

The primary motive of a Nidhi Company is to inculcate the habit of saving, borrowing and lending money amongst its members.

The Annual Compliances of a Nidhi Company are governed and regulated by the provisions of the Nidhi Rules 2014 and Companies Act 2013.

The Compliances that a Nidhi Company needs to fulfill within 1 year of incorporation are must have at least 200 members, NOF (Net Owned Funds) should be Rs 10 lakhs or more, the ratio of NOF to deposit must not exceed 1:20, the unencumbered deposits should not be less than 10% of the total outstanding deposits.

The term “Annual Compliance of Nidhi Company” include Form NDH 1, Form NDH 2, Form NDH 3, Maintenance of Books of Accounts, Form ADT 1, Maintenance of Statutory Registers, Conduct of Statutory Registers, Filing of Income Tax Returns, Form AOC 4, Form MGT 7.

The term “Event-based Compliance” of Nidhi Company include the change in the Registered Office, change in Company Name, Appointment or Resignation of Director, Appointment Or Resignation of Director, Amendment in Company’s Objective, Transfer of Shares, Change in Capital Structure, Increase of Authorised Capital, and Appointment of KMP.

The different types of Compliances of Nidhi Company are Pre-incorporation Compliances, Post-incorporation Compliances, and Event-based Compliances.

The two types of Post-incorporation Compliances are General Compliance and Annual Compliances.

The due date of filing Form MGT 7 is within 60 days starting from the date of Annual General Meeting.

The due date of filing Form NDH 1 is within 90 days starting from the end of the Financial Year.

The due date of filing Form NDH 3 is within 30 days starting from the end of the Half Financial Year.

The due date of filing Form AOC 4 is within 30 days starting from the date of Annual General Meeting.

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