Compliances of Nidhi Company

Compliances of Nidhi Company

Nidhi company is a non-banking financial company that is formed to borrow or lend loans among its members only. This kind of company is incorporated under the Companies Act 2013, and they don’t require any kind of license from the Reserve Bank of India (RBI) the company will be treated as a public company and its name should end with Nidhi limited.

What are the Benefits of Nidhi Company Compliance?

• The formation of the Nidhi company is simple and it requires only 7 individuals out of which 3 are directors in order to start a Nidhi company.
• The main objective of forming this company is to encourage small and middle– class families by saving their money or lending them loans with less interest.
• As the company finances with its members only, there will be a minimum risk of not paying off loans.
• This type of company can be started with a capital of 5 lakhs.
• As the company is run by its members only, outsiders cannot involve in financing or in the management of the company.
• No matter what, the company continues to exist even after the retirement or death of a member. It has perpetual succession.

So these are the benefits enjoyed by the members of Nidhi company.

What are the mandatory Compliances of Nidhi company?

Compliances of Nidhi company can be categorized in 3 ways such as,

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

Pre-incorporation compliance

This compliance comes into the picture while registering for the Nidhi company.

1. There must be a minimum of 7 members to start a Nidhi company out of which 3 of them are appointed as directors of the company.
2. The minimum paid-up capital required to start the Nidhi company is? 500000.
3. The loan's rate of interest will not be more than 7.5%.
4. A trust or any corporate cannot be a partner of Nidhi company.
5. The preference shares should not be issued, if issued must be reclaimed according to the terms of the issue.
6. Nidhi limited must be used at the end of the company’s name.
7. Minors are not allowed to be a member of the company.
8. The Nidhi Company cannot accept deposits that are more than 20% net-owned funds.
9. If the company wants to open branches it must earn a profit after tax for 3 financial years continuously.

These are the compliance to be followed before registering the Nidhi company.

Post – incorporation compliance of Nidhi company

These are the compliance that should be fulfilled within the period of 1 year after registering your company. The compliances are stated below.

1. The members of Nidhi company should be increased minimum of 200 within a year of incorporation.
2.   The net owned fund of Nidhi company should be? 10 lakhs or more than that.
3. The net owned funds deposit ratio should not exceed 1:20.
4. According to Nidhi rules 2014, the deposits should not be less than 10% of outstanding deposits.
5. The Nidhi company must maintain books of accounts.
6. The company should also maintain statutory registers.
7. The Nidhi company should conduct annual meetings.

The company must follow these compliances along with that it must update its status to the government by filing annual compliances such as,

• Form NDH – 1 

This compliance is for the return of statutory compliance which should be prepared within 90 days of the end of the first financial year.

• Form NDH – 2 

This application form is for an extension of time and it should be filed within 30 days of the closing of the first financial year.

• Form NDH – 3 

This application form is for filing half-yearly returns and it must be done within 30 days of closing every half-financial year.

• Form NDH – 4.

This application is for declaration as a Nidhi Company Compliance and its status update. This form should be filed within 60 days from the date of expiry of the one-year incorporation.

• Form AOC-4.

This form should be filed for the return of the financial statement within 30 days of the annual general meeting.

• Form MGT-7

This application is for filing an annual return within 60 days of the annual general meeting.

• Form DIR – 3 KYC.

This form must be filled with details of the directors of the company by 30th September of every year.

• An e-form called MSME should be filed within 30 days of every half-financial year
• An e form DPT – 3 should be filed for return of deposits before 30th April of every year.

So these are the annual compliances that must be followed by Nidhi company.

What are Event-based compliances?

Event-based compliance means these are filed only when there are any changes in the company such as an admission of retirement or death of a member or director, change of address, changes in the company name, transfer of shares, change in auditor, etc.

What are the main consequences of not filing compliance?

It is compulsory for Nidhi company to file compliance according to the government, if it is not made, then it will lead to a penalty such as,

1. The prescribed penalty for not meeting its compliance can be up to? 5000.
2. If the company continues to do so, then the company will be liable to pay a further? 500 per day.

So these are the penalty charged for not filing compliance.
 

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