Nidhi company compliance
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An Overview on Nidhi Company
A Nidhi Company is classified as a Public Limited Company. To avoid legal repercussions, it must strictly adhere to all prescribed compliances.
Limitations Imposed on Nidhi Companies
As per Rule 6 of the Nidhi Rules 2014, Nidhi Companies are restricted from engaging in the following activities:
1. Conducting business activities related to leasing finance, chit funds, and hire purchase.
2. Acquiring securities issued by any corporate entity.
3. Issuing debentures, preference shares, or other debt instruments.
4. Opening current accounts with members.
5. Engaging in any mergers, acquisitions, or concessions without approval through a special resolution in a General Meeting and consent from the Regional Director.
6. Conducting any form of business outside its primary function.
7. Accepting funds or providing loans to third parties or corporate entities.
8. Engaging in partnerships for lending or borrowing operations.
9. Advertising for deposits in any form.
10. Pledging assets provided by members as security.
11. Offering incentives or brokerage fees for obtaining deposits or issuing loans.
Note: If a Nidhi Company meets all required provisions, it may provide locker facilities to members, provided that revenue from locker services does not exceed 20% of its total income during a financial year.
1. Conducting business activities related to leasing finance, chit funds, and hire purchase.
2. Acquiring securities issued by any corporate entity.
3. Issuing debentures, preference shares, or other debt instruments.
4. Opening current accounts with members.
5. Engaging in any mergers, acquisitions, or concessions without approval through a special resolution in a General Meeting and consent from the Regional Director.
6. Conducting any form of business outside its primary function.
7. Accepting funds or providing loans to third parties or corporate entities.
8. Engaging in partnerships for lending or borrowing operations.
9. Advertising for deposits in any form.
10. Pledging assets provided by members as security.
11. Offering incentives or brokerage fees for obtaining deposits or issuing loans.
Compliances for Nidhi Company
A Nidhi Company must follow certain compliance requirements under the Companies Act and Nidhi Rules. These are categorized into:
1. Annual Compliances: These filings track the company’s financial health and activities throughout the year. Some forms are filed annually, while others follow specific timelines.
2. Event-Based Compliances: These filings are required upon the company’s incorporation and during any structural changes, such as amendments to the company’s details.
Filing
Compliance with Registrar of Companies as per Nidhi Rules 2014 and Amended
Rules 2022:
|
Form |
Due Date |
Contents |
|
NDH - 1 |
Within
90 days from the closure of the first financial year & applicable from
the second financial year |
Details
regarding members, deposits, loans, and reserves |
|
NDH - 2 |
Within
30 days from the financial year closure |
Application
for an extension if compliance requirements are not met |
|
NDH - 3 |
Within
30 days from the end of each half-year |
Half-yearly
return with details on members, deposits, and loans |
|
NDH - 4 |
For new
companies, within 60 days post the first year; for existing companies, within
one year from incorporation |
Application
for Nidhi Company status declaration |
|
NDH - 5 |
Required
for branch closures |
Notifications
to members and the Registrar |
|
AOC - 4 |
Within
30 days of the AGM |
Filing
of financial statements |
|
MGT - 7 |
Within
60 days of the AGM |
Annual
return along with member details |
Checklist for Nidhi Company Compliance
Annual Compliance Checklist:
Maintenance of Books of Accounts
1. NDH - 1
2. NDH - 2
3. NDH - 3
4. NDH - 4
5. NDH - 5
6. Declaration as a Nidhi Company by the Central Government
7. Form ADT - 1
8. Maintenance of Books of Accounts
9. Safeguarding of Statutory Register
10. Financial Statements
11. Director’s Report
12. Statutory Meetings
13. Filing of Annual Income Tax Returns
14. Form AOC - 4
15. Form MGT - 7
Event-Based Compliance Checklist:
1. Change in Company Name
2. Alteration in Registered Office Address
3. Appointment/Resignation of Directors
4. Appointment/Resignation of Auditors
5. Changes in Company Objectives (MOA)
6. Share Transfers
7. Alteration in Capital Structure
8. Increase in Authorized Capital
9. Appointment of Key Managerial Personnel (KMP)
Penalties for Non-Compliance
Non-compliance with the Companies Act or Nidhi Rules results in the following penalties:
1. A fine of Rs. 5000 for the company and responsible officers.
2. An additional fine of Rs. 50 per day until the default is rectified.
Other
Information
Key amendments under the Nidhi Company (Amendment) Rules 2022 include:
1. Increase in minimum paid-up share capital from Rs. 5 lakhs to Rs. 10 lakhs.
2. Requirement of net-owned funds increased from Rs. 10 lakhs to Rs. 20 lakhs.
3. Companies incorporated after the amendment must apply for Nidhi status within 120 days of incorporation.
4. Restrictions on external borrowing to finance member loans.
5. Limitations on share transfers exceeding 50% while loans or deposits are outstanding.
6. Requirement for regulatory approval before opening new branches.
7. Conditions for branch closures, including prior approval and public notifications.
8. Inclusion of silver as an eligible security for loans.
9. Declaration of a maximum dividend cap of 25% per financial year.
Fastzeal Support
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4. Streamlined solutions to simplify complex compliance procedures.
Frequently Asked Questions:
To incorporate a Nidhi Company it is important to satisfy following rules:
1. It ought to have in any event atleast 3 Directors.
2. It ought to have in any event atleast 7 Members.
3. The principle goal to be written in the MOA ought to be to develop the propensity for frugality and reserve funds among its individuals. Also, it can acknowledge stores and loan cash just to its individuals and will work for the shared advantage of its individuals.
1. It must have at any rate 200 individuals/investors.
2. Least Net Owned Fund ought to be Rs. 10 Lakhs.
3. Unhampered term deposit must be in any event 10% of the term store.
4. The proportion of Net Owned Fund to term store ought not be under 1:20.
The Nidhi Company utilizes the assets in loaning to investors according to Nidhi Rules. It loans such cash as little credit for business and fund.
1. Minimum of seven members can form a Nidhi Company out of which three are appointed as Directors of the company.
2. Nidhi Company can come into existence with a minimum share capital of Rs 5, 00,000.
3. In case preference shares are issued they are to be redeemed as per the same terms of the issue.
4. A minor cannot considered as the member of Nidhi Company.
5. Company must have "Nidhi Limited" in its name.
6. Minor cannot be a member of a Nidhi Company.
7. A trust or a corporate body cannot be the member of Nidhi Company.
8. Can't acknowledge the store of over 20% of Net Owned Funds.
9. Nidhi Company can't open branches in case it fails to earn any profit after assessment for sequential three money related years.
10. The rate of interest on the credit will not surpass 7.5% over the most noteworthy pace of intrigue offered on deposits.
1. They are not permitted to begin the matter of chit funds, Insurance, Hire Purchase Finance, Leasing Finance and obtaining of shares gave by organizations.
2. Nidhi Company can't give protections, for example, preference shares, debentures and so on.
3. They are denied from opening any present record with its individuals.
4. It can't go into organization for doing lending and getting business.
5. It isn't permitted to secure some other organization.
Any individual who is over 18 years old according to the standard age verification can turn into an individual from the Nidhi Companies. The individual covetous of turning into a part ought to have legitimate ID Proof and Address Proof.
1. As they are joined into the idea of Public Company so rules and guidelines of Companies Act, 2013 are pertinent.
2. RBI arrangements identified with Interest rate payable on store are relevant to Nidhi Companies. In any case, the center arrangements of RBI are not material to Nidhi Companies as RBI has absolved the Nidhi Companies from the equivalent.
3. Nidhi Rules, 2014.
1. Compliances help in forming exact insights about the company's working performance.
2. It is necessary for every company which is registered under the Companies Act 2013 to file for the compliances.
3. Moreover Nidhi Company falls under the category of public company hence in order to protect the interest of its stakeholders it becomes compulsory for the Nidhi Company to follow the compliances.
1. Nidhi with the object of developing the propensity for thrift and reserve funds among its individuals, accepting deposits from, and lending to, its individuals.
2. The essential object of Nidhi is to carry on the matter of accepting deposits and loaning cash to members.
