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Nidhi Company Compliance

About Nidhi Company Compliance

Nidhi Company is a business structure incorporated under Section 406 of the Companies Act, 2013 and is governed by the Ministry of Corporate Affairs (MCA), and there are certain Nidhi company rules to be followed in India. Nidhi Company Compliance is guided by the Nidhi Rules 2014 and Nidhi (Amendment) Rules 2022. Nidhi company compliance is further tightened by Government of India in 2022 by Nidhi (Amendment) Rules 20022 to safeguard public interest. Nidhi Company Compliance is a relatively complex one and need expert supervision to avoid any non-compliance. We in TRUSTLINK ensure complete peace of mind for the stakeholders of Nidhi companies.

Post-Incorporation Compliances

Total Nidhi Company Compliance can be separated in two parts – Post Incorporation Compliances and Regular Annual Compliances. The post-incorporation compliances are:

Appointment of Auditor: A newly incorporated Nidhi Company must appoint its first Auditor within the 30 days of its incorporation for conducting statutory audit of books of accounts of the company for the financial year. The appointment of Auditor should be intimated to the ROC through ADT-1 form with necessary documents.  The first Auditor shall hold the office till the conclusion of the first Annual General Meeting.

Commencement of Business: Like other companies, new Nidhi Companies also need to file INC 20A (Commencement of Business) by depositing paid up capital to its Nidhi Company Account which is minimum 10 Lakh as per Nidhi (Amendment) Rules 2022

Number of Members: Number of members should be increased to at least 200 within one year of incorporation of the Nidhi Company.

Net Owned Funds: The net owned funds must be Rs 20 Lakh as per Nidhi (Amendments) Rules 2022. The net owned funds and deposits shall be in a ratio not exceeding 1:20.

Maintenance: Maintenance of books of accounts and statutory registers.

Necessity to File NDH-4: It is compulsory to file NDH-4 form within 120 days after the expiry of one year from the date of incorporation of a new Nidhi Company. It is a declaration by a company to work as a Nidhi company by making net owned fund to 20 Lakh and minimum 200 members in the company.

Annual Compliance of a Nidhi Company

Nidhi Company Annual compliances are generally those compliances that include the status and performance of the Nidhi Company in the whole year. The filing of the all the compliances of a Nidhi Company are done as per the Nidhi Rules 2014 and Nidhi (Amendments) Rules 2022. The Annual Compliances of the Nidhi Company are:

NDH-1: This form to be filed within 90 days from the closure of the first financial year and where applicable from the second financial year. In this form details relating to members, deposits, loans, reserves for the financial year are intimated to ROC.

Necessity to File NDH-2 if applicable: Within 30 days from the closure of the financial year, a Nidhi Company has to apply through this form relating to extension of timeline for not meeting requirements of members and deposits if such cases arise.

NDH-3: It is an half yearly return that to be filed within 30 days from the closure of the half yearly relating to members, deposits, loans for the said duration.

NDH-4: It is compulsory to file NDH-4 form within 120 days after the expiry of one year from the date of incorporation of a new Nidhi Company. It is a declaration by a company to work as a Nidhi company by making net owned fund to 20 Lakh and minimum 200 members in the company. For an existing Nidhi Company NDH-4 to be filed within one year of its date of incorporation.

Necessity of NDH-5 if applicable: A Nidhi Company shall not close any branch without intimating at least 30 days prior to such events. This is dine through form NDH-5 detailing formats of advertisements and other details.

AOC-4: Filing of Form AOC 4 detailing all financial documents and all other supporting documents to the Registrar of Companies within 30 days of the Annual General Meeting.

MGT7: It is an annual return detailing the list of members serving the company that to be filed within 60 days of Annual General Meeting.

ITR-6: Income Tax Return by 30th September.

 

Nidhi Company New Rules as stated in Amendment 2022

Nidhi Company Rules 2014 has been amended in 2022 as Nidhi (Amendment) Rules 2022 through the notification of Ministry of Corporate Affairs on 19th April 2022. Major changes made under Nidhi (Amendment) Rules 2022 are:

  • Unlike Nidhi Company Rules 2014, as per amendment made in 2022, the public companies which want to work as Nidhi Company need to obtain a prior declaration by the government of India (Form NDH-4) before accepting deposits. These changes are done to ensure the protection and safety of investors or borrowers.
  • Form NDH-4 should be filed within 120 days of closure of one year from the date of incorporation of the Nidhi Company along with the condition that the Nidhi Company should have minimum 200 members at that time and should have Net Owned funds of Rs 20 Lakhs or more. The Central Government will consider the approval within 45 days of the filing of NDH-4, and if it fails to do so within 45 days, it will be deemed as approved.
  • The Company should also attach a declaration with regard to the fulfillment of fit and proper person by all its directors and promoters with the Form NDH-4.
  • Minimum paid up capital has been increased from 5 Lakh to 10 Lakh
  • Net owned funds have been changed from 10 Lakhs to 20 lakhs.
  • Existing Nidhi Companies incorporated prior to the enforcement of New Nidhi Rules 2022 shall comply with all the requirements within a period of 18 months from the enforcement of the new rules.
  • Requirement of filing of application in Form NDH 1 within 90 days of incorporation of the Nidhi Company shall not be applicable to the Companies incorporated on or after the enforcement of New Nidhi Company Rules 2022.
  • A Nidhi Company shall not raise loans from banks or any financial institutions or any other source to advance the loans of its members.
  • Nidhi Company wants to open more than 3 branches or branches outside the district need to apply with Form NDH 2 along with applicable fees.
  • A Nidhi Company shall not declare dividends exceeding 25% in a financial year.
  • In the amendments of 2022, some changes are made to existing Forms earlier used for filings. Changes are made to Form NDH 2, Form NDH 3 and Form NDH 4. Another new Form NDH 5 has been included.

Documents required for Nidhi Company Compliance

Documents requirements for Nidhi Company Compliance are very simple and only scan copies of the documents required by the authorities.

  • PAN Card, Aadhar Card and Voter ID of Directors and members.
  • Details of Directors
  • Digital Signatures of the Directors
  • Bank statement of the Nidhi Company account/accounts.
  • Details of books of accounts including member details, loans, deposits etc.
  • Incorporation Certificate and MOA of the Nidhi Company.
  • Any other documents as required during the process.

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