Complete Checklist of Nidhi Company Compliances

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A Nidhi Company is one of the categories of Non-Banking Financial Company (NBFC) that does not require license from Reserve Bank of India (RBI) to commence its operations. Nidhi Company is managed under the supervision of Ministry of Corporate Affairs (MCA) as per Section 406 of the Companies Act, 2013. The primary business objective of Nidhi Company is borrowing and lending money amongst its members.

Like any other form of entity, Nidhi Company is also required to file multiple compliances which are prescribed as per Section 406 of the Companies Act, 2013 and Nidhi Companies Rules, 2014.

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Why the compliances of Nidhi Company are important?

There are various reasons due to which compliances of Nidhi Company are required:

  • To generate accurate insights about the performance and working of the company
  • Every company which is registered under Companies Act, 2013 has to mandatory file the required compliances for the smooth operations of the business.
  • Being a Public Company, Nidhi Company has to safeguard the interests of the stakeholders.
Complete Checklist of Nidhi Company Compliances

Compliances of a Nidhi Company

We can divide the compliances of a Nidhi Company into three parts:

Compliances of a Nidhi Company
  • Pre-Incorporation Compliances: These compliances has to be followed to get registration of Nidhi Company.
  • Post-Incorporation Compliances: These Compliances needs to be done once your Nidhi Company has been incorporated. These are further categorized into General Compliance and Annual Compliance.
  • Event Based Compliances: Such compliances are required to be filed only once during the process of registration of company and are generally done when there is any change in the structure of the company which are non-periodical.

Now let’s try to understand these categories of compliances in detail

Pre-Incorporation Compliances of Nidhi Company

Before you plan to incorporate a Nidhi Company, note down the following checklist of compliances:

  • Minimum seven members are required out of which three must be the directors of the company
  • A Minimum paid up capital of Rs. 5 lakh is required to set up a Nidhi Company
  • The words “Nidhi Limited” must be used as part of name of Nidhi Company
  • A Minor, trust or a body corporate is not allowed to become a member of a Nidhi Company
  • Nidhi Company cannot accept deposits of more than 20% of the net owned funds
  • Nidhi Company cannot open its branches if it has not earned any profit after tax (PAT) for regular three years consecutively.
  • Rate of interest on the loan cannot be more than 7.5% above the highest rate of interest which are offered on deposits.

Post Incorporation Compliance of Nidhi Company

Such compliances needs to take place once your Nidhi Company is incorporated. We have divided the post incorporation compliance into two categories:

  • General Compliances
  • Annual Compliances

Let’s discuss them in detail:

  • General Compliances
    • Within one year of incorporation, a Nidhi Company must increase its members to at least 200
    • Ratio of net owned funds to the deposits must not exceed 1:20
    • Net Owned fund of the Nidhi Company must be Rs. 10 lakh or more
    • Deposits should not be less than 10% of the outstanding deposits as per Rule 14 of the Nidhi Company Rules, 2014
    • Maintaining Statutory Registers and Books of Accounts
    • Convening Statutory Meetings from time to time
  • Annual Compliances
    It is compulsory for a Nidhi Company to follow Annual Compliances as mentioned in the tabular format:
Form No. Compliance Due Date
NDH-1 This form is used to file Return of Statutory compliance which includes details regarding company’s members, loans, deposits, reserves etc. for the complete financial year Within 90 days from the closure of the first financial year after incorporation
NDH-2 This form is used for filing application for extension of time. It must be filed with the Regional Director within 90 days of the closure of financial year.
NDH-3 This form is used for filing Half yearly return with the Registrar of Companies (ROC) Within 30 days from the end of each half year along with prescribed fees. It must be duly certified by a practising chartered account, or company secretary or cost accountant
AOC-4 Filing of financial statements and other related documents with the ROC Within 30 days of the conclusion of the Annual General Meeting
MGT-7 Annual Return Within 60 days of the conclusion of the Annual General Meeting
ITR-6 Return of Income Tax By 30th September of every year
  • Event Based Compliances of Nidhi Company
    Now we come to the third category of compliances of Nidhi Company which are called Event based Compliances. These compliances are required to be filed only once at the time of the registration of the Nidhi Company. Such compliances denote any changes in the company which are to be done. However, they are not required to file repeatedly.
    • Any changes in the name of the company, if required
    • Any change in the registered office address of the company
    • Change in the objects of the company
    • Change in the capital structure of the company. For example: Increase in authorised capital of the company
    • Appointment of Director and Auditor
    • Resignation of Director and Auditor
    • Transfer of shares

Nidhi Company Registration in Jaipur Rajasthan

Penalties for Non-Compliances

Legal Window highly recommends timely filing of compliances as they are compulsory. Any non-compliance will attract unwanted penalties and the company and its officers will be fined upto an amount of Rs. 5000

In case the violation continues, further fine of Rs. 500 every day will be applicable on the company.

Contact Legal Window to help in the procedure related to compliances.

Wrapping Up

The core conclusion from this write-up is that Nidhi Companies are easy to operate as compared to other loan providing entities due to less involvement of RBI. However, compliances provided by Companies Act, 2013 and Nidhi Rules 2014 as discussed above have to be rigorously followed , otherwise you could be subjected to hefty penalties.

In case you still have any doubts related to compliances of Nidhi Company, then you can reach us. We have a team of highly experienced and qualified professionals who can solve your queries related to Nidhi Company Registration and its compliances.

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CA Pulkit Goyal, is a fellow member of the Institute of Chartered Accountants of India (ICAI) having 10 years of experience in the profession of Chartered Accountancy and thorough understanding of the corporate as well as non-corporate entities taxation system. His core area of practice is foreign company taxation which has given him an edge in analytical thinking & executing assignments with a unique perspective. He has worked as a consultant with professionally managed corporates. He has experience of writing in different areas and keep at pace with the latest changes and analyze the different implications of various provisions of the act.

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