Nidhi Company Compliances

Nidhi Company Compliances

Nidhi Company's primary goal is to lend or borrow money to its members. These businesses are classified as non-banking financial corporations (NBFC). They were founded specifically to encourage their members to save and practice frugal living. They go by a variety of names, including Mutual Benefit Funds, Benefit Funds, Permanent Funds, and Mutual Benefit Companies. The current article by Lawgical Adda provides a brief overview of Nidhi Companies' compliance requirements.

Conditions Needed to Establish a Nidhi Company

The following requirements must be fulfilled in order to form a Nidhi Company:

1. The name of the company must include the suffix "Nidhi Limited."
2. It has to be a publicly traded corporation.
3. A minor, a body corporate, or a trust are not eligible to join Nidhi as members.
4. A minimum of Rs. 5 lakh must be the paid-up share capital.
5. The firm cannot issue preference shares; if the company issued them before the Act's implementation, they must be redeemed.
6. The company's main goal should be to instill in its members the habit of conserving money.

General Compliance

Within a year of its incorporation, the Nidhi Company must comply with the following requirements:

• The organisation must have at least 200 members within a year.
• The Nidhi (Amendment) Rules, 2022 have modified the minimum Net Owned Funds amount to Rs. 20 lakhs.
• Net owned fund:deposit ratios, or net owned fund:net owned fund, cannot exceed 1:20.
• Unencumbered term deposits cannot make up less than 10% of the entire outstanding deposit, under Rule 14 of the Nidhi Rules 2014.
• Nidhi Company shall keep the books of accounts and statutory registers.
• The Nidhi Company is required to call statutory meetings.

Nidhi Company's Event-Based Compliances

Event-based compliances typically only need to be submitted once while registering a corporation. Additionally, these compliances need to be adhered to in the event that the non-periodic structure of the Nidhi organization changes.

The list of event-based compliances is as follows:

1. Any modification to the company's name.
2. Modification of the Registered Office Address.
3. Director Appointment, Resignation, or Removal.
4. The designation, resignation, or dismissal of an auditor.
5. Any modification to the company's goal.
6. Exchange of stock.
7. An increase in the company's authorized capital.
8. The designation of the principal administrative staff.
9. Anything else that is contingent on an event.

Annual Compliances of Nidhi Company Must Be Followed

The government receives annual updates on the company's operations and functional divisions.

1. Submission of the Nidhi Company's Annual Return on Form NDH-1

Every Nidhi Company must file Form NDH-1 with the ROC within ninety days after the end of the fiscal year. For the entire fiscal year, all of the member, loan, deposit, reserve, and other information is contained on this form.

2. Completing Form NDH-4

Each Nidhi Company must file Form NDH-4 once to declare its status as a Nidhi Company and attest to the fact that it has 200 or more members and Rs. 10 lakhs in net owned funds, among other compliance declarations with the Nidhi Rules, 2014.

3. Request for a Time Extension Form NDH-2.

If the company doesn't sign up at least 200 new members in its first year of operation, this form gets filled out. failing to keep the Net Owned Funds to Deposits ratio at 1:20. The NDH-2 and the necessary fees must be submitted to the Regional Director within ninety days of the fiscal year's conclusion.

4. Nidhi Company Files Form NDH-3: Half-Yearly Return

Every Nidhi Company must file Form NDH-3 with ROC within 30 days of the end of each half-year, which ends on April 30 for the half-year ending on March 31 and October 30 for the half-year ending on September 30. The data that is included in Form NDH-3 is the total number of members as of the date; the number of members who were admitted during the half-year; the number of members who ceased to be members; the loan that the Nidhi business provided against the particular security; and the deposits that the Nidhi company accepted from its members. Form NDH-3 should be certified by the CA, CMA in Practice Company Secretary.

5. Filing Financial Statements (AOC-4)

Every Nidhi corporation must file its Financial Statements with the ROC within 30 days following the Annual General Meeting. The Notice Calling General Meeting, Directors Report, Auditors Report, and Balance Sheet must also be filed.

6. Annual Return (MGT-7)

Every Nidhi firm is required to file its Annual Return and a list of its members within sixty days from the date of the Annual General Meeting.

7. ITR-6 

Income Tax Returns must be filed by September 30th.

8. Reporting on Resolutions

As a Public Limited Company, Nidhi Company must submit Form MGT-14 for the Disclosure of Directors' Interests, Approval of Financial Statements, and Directors' Report.

The Repercussions of Non-Compliance

All Nidhi bank registrations must file compliances promptly. If Nidhi Bank Operators don't follow the rules, they risk penalties.

a) The company and the officers in charge could be fined up to Rs. 5,000 if they don't follow the rules.

b) The company may be fined Rs. 500 daily if the violation persists.

c) For this reason, hiring experts to help with compliance procedures is essential.

d) Unless exempted from compliance with specific provisions with or without modification, every Nidhi Company, being a Public Limited Company, is required to comply with the conditions of the Companies Act, 2013, and the Nidhi Rules, 2014 (i.e., Nidhi Company ROC Filing).

New Nidhi Companies Compliance Regulations

Through the Nidhi (Amendment) Rules, 2022, MCA strengthens compliance requirements for Nidhi companies.

1. Any public company with a share capital of Rs 10 lakh that wishes to be notified as a Nidhi firm must apply to the central government and submit an NDH-4 form within 120 days of its creation.
2. The company must have a minimum of 200 members and a net-owned fund (NOF) of Rs 20 lakh.
3. Within 14 months of its incorporation, Nidhi Company must secure approval from the central government to begin operations.
4. A company's approval is presumed to be granted if it does not receive notification from the central government within 45 days of submitting the NDH-4 form.

If you still have questions about Nidhi Company's compliance, contact Lawgical Adda. Our crew of exceptionally skilled and knowledgeable experts can answer any of your questions about the company's registration and compliance.