Annual Compliance for Nidhi Company |

Annual Compliance for Nidhi Company

Just like all other companies, Nidhi Company shall also comply with few annual compliance popularly known as Nidhi Company Compliances. The statutory compliances related to Nidhi Company are disclosed in Nidhi Rules 2014 and the Companies Act 2013.

Overview of Nidhi Company Compliance

Nidhi Company is consideredas the Non-Banking Financial Company (NBFC), It does not require the Reserve Bank of India (RBI) license or approval.

Section 406 of the Companies Act, 2013 recognizes a Nidhi Company and is managed and controlled by the MCA. Their primary fundamental business is borrowing and lending money between its members. Entities who wish to operate a lending business with low funds investment can opt for Nidhi Company. A Nidhi Company functions for the common benefit of all its members and shareholders. Section 406 of the Companies Act, 2013 and Nidhi Rules, 2014 prescribes some major compliance for a Nidhi Company.

Compliances of a Nidhi Company are divided into three parts:

1. Pre-Incorporation Compliances,

2. Post –Incorporation Compliances, and3. Event-based Compliances.

1. Pre-Incorporation Compliances

Minimum of 7 members arerequired to start a Nidhi Company, out of which 3 members must be the Directors of the Company.

Minimum paid-up equity share capital requirement is of Rs. 5 lakh

Not to issue preference shares and if it is issued the same to be redeemed as per the terms of the issue.

“Nidhi Limited” must be included in the name of the Company.

Minor is prohibited to be a member of a Nidhi Company.

A trust or body corporate cannot be admitted as a member of Nidhi Company.

Cannot accept the deposit of more than 20% of Net Owned Funds.

Nidhi Company cannot open branches if it has not earned any profit after tax for consecutive 3 financial years.

The rate of interest on the loan shall not exceed 7.5% above the highest rate of interest offered on deposits.

2. Post –Incorporation Compliances of Nidhi Company

Post Incorporation of Nidhi Company compliance is divided into two:

a. General Compliances b. Annual Compliance
a. General Compliance

The number of members should increase to at least 200 within one year of its incorporation.

The Net owned Fund should be Rs. 10 lakh or more.

The ratio of Net-owned Funds to the deposits must not exceed 1:20.

As prescribed in Rule 14 of the Nidhi Rules, 2014, the deposits should not be less than 10% of the outstanding deposits.

Maintenance of Books of Accounts.

Maintain the statutory Registers.

Convene Statutory Meetings.

b. Annual Compliance of a Nidhi Company
The Nidhi Companies must follow annual compliances mentioned below:

Form No

Compliance

Due Date

Form NDH-1

Return of Statutory Compliance. This form contains all the details regarding members, deposits, loans, reserves etc. for the full financial year. e-Form GNL-2 for submission of the documents with the Registrar.

Within 90 days from the close of financial year

Form NDH-2

Application for Extension of Time. This form is filled in case :

The company fails to add at least 200 members within one year of incorporation.

Failure to maintain the Net owned Fund to deposit ratio of 1:20

Within 90 days from the closure of financial year

Form NDH 3

Half-yearly return to be filed with the ROC (Registrar of Companies).

Within 30 days from the closure of half a year.

Annual General Meeting

30th September

Form AOC-4

For filing financial documents and other supporting documents to the Registrar of Companies.

Within 30 days of the AGM

Form MGT-7

Annual Return

Within 60 days of the AGM

ITR-6

Income Tax Return

30^thSeptember

NDH-1
Filing NDH-1is necessary for Nidhi Companies. This form shall be submitted along with the prescribed fees and make sure that it is duly certified by either the chartered accountant, cost accountant or by the company secretary. File the return within 90days, begin from the end date of the first or second financial year once your incorporation is done.
NDH-2
The purpose of filing for form NDH-2 is to appeal for request for time extension in case following compliances are not met: 1. Fails to add minimum 200 members in a financial year 2. Inability to keep net owned fund to deposit ratio 1:20 NDH-2 form is submitted to the Regional Director with the prescribed fee; the director can accept it and pass orders within 30 days from the date of receiving application.
NDH-3
It’s a half-yearly return form which is filed by the Nidhi Company.

Maintaining Books Of Accounts

Each Nidhi Company needs to guarantee that it will keep accurate books of accounts. The Company must maintain books of Accounts precisely.

Maintain Statutory Register

One of the mandatory compliances for a Nidhi Companyfor Nidhi Company is to maintain statutory registers as per Companies Act 2013.

Convene Statutory Meetings

Conducting meeting of Board of Directors and Shareholders as per the Companies act 2013.

Preparation Of Financial Statements

Financial statements of a Company include Profit & Loss Account, Balance Sheet and Cash Flow Statement, it is compulsory for a Nidhi company to prepare financial statements.

Income Tax Returns

Nidhi Company should file for annual income tax returns by 30th September of the next financial year..

Financial Statement Returns Filling (AOC-4)

The form AOC-4 is filled up with details of the budget reports of the Company. This form is upheld by other documents that are endorsed to transfer alongside this form.

Annual Return Filling (MGT-7-ROC Annual Return)

Nidhi Company is required to file for an annual return with the Ministry of Corporate Affairs (MCA) via Form MGT-7.

3. Event-Based Compliances of a Nidhi Company

In case of change in any details of the Company that was provided at the time of registration, Nidhi Company must comply with regulatory requirements. Hence, A Professional must be approached before executing any such change.
The list of event-based compliances:

Any change in the company’s name
Change in Registered office address
Appointment or Resignation or Removal of Director
Appointment or Resignation or Removal of Auditor
Any amendment in the company’s objective
Transfer of shares
Increase in the authorised capital of the company
Appointment of the Key Managerial Personnel
Any other changes that are event-based

Penalties for Non-Compliance

Timely filing of compliances is mandatory for every Nidhi company. Non- Compliance attracts penalty for the Nidhi Bank Operators.

If the company does not meet the compliance, the organisation and the concerned officers will be fined an amount up to Rs. 5,000.

In the case of continuation of infringement, the company will be charged a further fine of Rs.500 per day.

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