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Nidhi Company Compliance
Nidhi Company is a type of Non-Banking Financial Company and also known as NBFC. Like any other company, Nidhi Company also needs to file few annual compliance and it is famously known as Nidhi Company Compliances. The legal compliances associated with Nidhi Company are prescribed in Nidhi Rules 2014 and the Companies Act 2013. Nidhi Company is the perfect type of company for those who want to start a business with minimum capital investment. As per the provisions of the Section 406(1) of the Companies Act, 2013, the Nidhi Company as ‘A company which has been incorporated as a Nidhi with the object of cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only for their mutual benefit.”
Advantages of Nidhi Company Registration
Easy to Form the Company
With 7 persons in which 3 of them will be appointed as Director can start a Nidhi Company
Easy registration process
Just 10-15 days needed to register
Cost Efficient Registration
With Rs 5,00,000 as the minimum capital investment, the registration process of Nidhi Company can be started. Additionally the company also offers the chance to invest the capital within 60 days of time once after the registration process is done.
High Level of Certainty In Nidhi Company
The primary aim of Nidhi Company is to promote the habit of savings among its partners. Thus, Nidhi Company can be considered as a long term investment as its partners will not stop the habit of saving anytime.
No RBI Regulations
As the Nidhi Company comes under the criteria of NBFC there is no need for any approval from RBI. The rules of Nidhi Rules, 2014 are drafted for such companies to govern their business activities and working operation.
Low Level of Risk
The risk level involved in the process of Nidhi Company registration is minimal as its nature of having deposit and giving loans to its partners as per the Nidhi Rules 2014. It is a secured and trustworthy way of providing loans to its members at a very less interest rate.
Documents required to Nidhi Company Compliances
Necessary compliances to be followed are:
- Annual Compliances of Nidhi Company help in forming an exact perception of the company’s working pattern and performance.
- It is mandatory for every company to register as per the Companies Act 2013 to submit the annual compliances.
- In case preference shares are issued they are to be redeemed as per the same terms of the issue.
- Furthermore Nidhi Company comes under the criteria of a public company hence it helps to protect the interest of its members, it becomes mandatory for every Nidhi Company to follow the compliances rules.
Pre-Incorporation Compliances of Nidhi Company
Essential compliances to be followed are:
- Minimum of 7 members can start a Nidhi Company in which three of them are appointed as Directors of the nidhi company
- Nidhi Company can be incorporated with a minimum capital of Rs 5, 00,000.
- The rate of interest on the loan will not exceed more than 7.5% over the most remarkable pace of intrigue provided on deposits.
- A corporate body or a trust cannot be the partner of Nidhi Company
- If the preference shares are issued or distributed they are to be ransomed under the same terms of the issue.
- Can’t recognize the store of more than 20% of Net Owned Funds. A minor individual cannot conceived as the partner of Nidhi Company
- Company must hold ‘Nidhi Limited” at the back of the company name.
- Nidhi Company is not allowed to open any branches if it fails to gain any profit after the inspection for consecutive three money related years.
Post-Incorporation Compliances of Nidhi Company
- The number of members must not be less than 200 members within one year from its incorporation
- As per the Rule 14 of the Nidhi Rules, 2014, the stores should not be below 10% of the outstanding deposits.
- The Net owned Fund should be Rs.10 lakh or more.
- Support of statements or books of Accounts.
- The proportion of Net-owned Funds to the stores should not exceed 1:20.
- Maintain the legal Registers.
- Collect Statutory Meetings.
Important Dates
Pre-Incorporation Compliances of Nidhi Company
Essential compliances to be followed are:
- Minimum of 7 members can start a Nidhi Company in which three of them are appointed as Directors of the nidhi company
- Nidhi Company can be incorporated with a minimum capital of Rs 5, 00,000.
- The rate of interest on the loan will not exceed more than 7.5% over the most remarkable pace of intrigue provided on deposits.
- A corporate body or a trust cannot be the partner of Nidhi Company
- If the preference shares are issued or distributed they are to be ransomed under the same terms of the issue.
- Can’t recognize the store of more than 20% of Net Owned Funds. A minor individual cannot conceived as the partner of Nidhi Company
- Company must hold ‘Nidhi Limited” at the back of the company name.
- Nidhi Company is not allowed to open any branches if it fails to gain any profit after the inspection for consecutive three money related years.
Post-Incorporation Compliances of Nidhi Company
- The number of members must not be less than 200 members within one year from its incorporation
- As per the Rule 14 of the Nidhi Rules, 2014, the stores should not be below 10% of the outstanding deposits.
- The Net owned Fund should be Rs.10 lakh or more.
- Support of statements or books of Accounts.
- The proportion of Net-owned Funds to the stores should not exceed 1:20.
- Maintain the legal Registers.
- Collect Statutory Meetings.
Annual Compliances for Nidhi Company
The annual compliance of the Nidhi Company is periodic and often these compliances are filed annually thus they are required to be filed regularly after certain intervals of time. The purpose of these annual compliances is to present a clear picture of the company’s work status and Nidhi Company’s performance during the particular time period. It is necessary for Nidhi Company to meet all the compliance as mentioned in the Companies Act 2013 as well as in Nidhi Rules 2014.
List of Annual Compliance for Nidhi Company
NDH-1
Filing the form NDH-1 is mandatory for Nidhi Companies to submit the NDH-1 with the given fees and it should be duly certified by the authorized chartered accountant, company secretary or by the cost accountant. The company should file the annual return within 3 months or 90 days that begin from the end date of the first or second year once your registration is done.
NDH-2
Filing the form NDH-2 is necessary to request for time extension if the following compliances are not satisfied:
- If the company fails to add minimum 200 partners in a year
- If the company unable to maintain net owned fund to deposit in the ratio of 1:20 NDH-2 form is filed to the Regional Director with the fee payment; after which the director can pass the orders within a month or 30 days from the date of receiving the application.
NDH-3
It is also an essential annual return form which is filed by the Nidhi Company and it is done half-yearly.
Books of Accounts
Every Nidhi company needs to ensure that the company will maintain accurate books of accounts
.
Maintain Statutory Register
According to the Companies Act 2013 it is mandatory for Nidhi Company to keep up the statutory registers. It is one of the essential compliances for a Nidhi Company to file its annual returns.
Convene Statutory Meetings
Conducting Board meeting with the Directors and Shareholders of the company Preparation of Financial Reports or Statements Financial statements of the Nidhi Company which includes Balance Sheet and Cash Flow Statement, Profit & Loss Account statement, it is mandatory for a Nidhi company to prepare financial reports and statements.
Income Tax Returns
Nidhi Company must file the annual income tax returns on or before 30th September of the next financial year.
Financial Statement Returns Filing (AOC-4)
The form AOC-4 consists of subtleties of the budget statement or reports of the Nidhi Company. This form is maintained by other documents that are supported to transfer along this form. Annual Return Filing (MGT-7-ROC Annual Return) Nidhi Company is needed to file for an annual return to the MCA or Ministry of Corporate Affairs (MCA) through Form MGT-7.
Penalties
If the company fails to comply with the needed documents on time can draw in punishment and penalty for the Nidhi Bank Operators.
If the Company fails to meet the compliance, the concerned officials will be fined with a penalty of up to the extent of Rs 5000.
If the violation proceeds, the further penalty will be Rs 500 systematically.
Consequently, it is important to take compliance upkeep administrations from industry master experts.
Frequently Asked Questions
Nidhi Company is a type of Non-Banking Financial Company and also known as NBFC. Like any other company, Nidhi Company also needs to file annual compliance and it is famously known as Nidhi Company Compliances.
- Easy to Form the Company.
- Cost effective Registration
- High Level of Certainty In Nidhi Company
- No RBI Regulations
- Low Level of Risk
Any person who is over 18 years old as per the standard age verification can turn into a member of the Nidhi Companies. The individual envious of turning into a part should legalize ID Proof and Address Proof.
Nidhi with the aim of developing the tendency for thrift and saving funds among its members, it lends and accepts deposits from its members of the company. The main aim of Nidhi Company is to carry on the subject of accepting deposits and lending cash to its members.
The Nidhi Company utilizes the assets in loaning to investors according to Nidhi Rules. It loans such cash as little credit for business and funds.
- The number of members must not be less than 200 members within one year from its incorporation
- As per the Rule 14 of the Nidhi Rules, 2014, the stores should not be below 10% of the outstanding deposits.
- The Net owned Fund should be Rs.10 lakh or more.
- Support of statements or books of Accounts.
- The proportion of Net-owned Funds to the stores should not exceed 1:20.
- Maintain the legal Registers.
- Collect Statutory Meetings.
