In common language, the word “Nidhi” stands for funds. Since nidhi businesses only borrow and lend money to their shareholders and members, they are also known as mutual benefit societies.
A company that the Central Government may, by notification, declare to be a Nidhi company is considered to be a Nidhi company under Section 406 of the Companies Act of 2013. Through this article, Know about what are the mandatory annual compliances for Nidhi Company?.
The Nidhi Rules of 2014, which came into effect on April 1, 2014, outline the rules that apply to a Nidhi company. These rules apply to:-
- A company declared as Nidhi company by the Section 620 A of companies act 1956
- A company operating as per Nidhi Rules if registered or not
- A company established as Nidhi company according to the section 406 of Companies Act 2013
Requirements for Establishing a Nidhi Company
A Nidhi Company that is proposed to be incorporated under this act must be a public company;
- It must have a minimum paid-up equity share capital of Rs. 5,00,000;
- Its name must include the word “Nidhi Limited”;
- It must only hold equity shares; no preference shares may be issued.
- The Nidhi Company’s goal must be to encourage members to save and trade funds for mutual benefit.
- Minors cannot be members.
- Trusts or body corporates cannot be members.
What are the Basic Nidhi Company Compliances?
- Within a year of its incorporation, the number of members ought to reach at least 200.
- The total funds owned must be Rs. 20 lakhs (Modified by the Nidhi (Amendment) Rules, 2022) The ratio between the net owned funds and the deposits must not exceed Twenty, or the Net Owned Funds: Stores = 1:20.
- Unrestricted term stores ought to be at least 10 % of the remarkable stores as determined in Rule 14 of Nidhi Rules 2014.
- The statutory registers, the Books of Accounts, must be maintained by the Nidhi Company.
- Statutory meetings need to be held by the Nidhi Company.
Now that we are aware of basic compliance for Nidhi Company, it’s time to know the Annual Nidhi Company Compliances:-
| Form No | Compliance | Due Date |
| Form NDH-1Return of Statutory Compliance | Form NDH-1 contains all the details regarding members, deposits, loans, reserves, etc. for the full financial year e-Form GNL-2 is used for submission of the documents with the Registrar. | Within 90 days from the close of the financial year along with fees. |
| Form NDH-2Application for Extension of Time. | This form is filled in case :The company fails to add at least 200 members within one year of incorporation. Failure to maintain the Net owned Fund to deposit ratio of 1:20 | NDH-2 should be filed with the Regional Director within 30 days from the end of the financial year along with the prescribed fees. |
| Form NDH 3 Half-yearly return | Form NDH 3 to be filed with the ROC (Registrar of Companies). | Within 30 days from the end of half a year. The practicing professional must duly certify. |
| Form NDH -4 | For filing an application for a declaration as Nidhi Company and updating of status | For New Nidhi Company – Within 120 days after the expiry of 1 year from the date of its incorporation For existing Nidhi Company – Within 1 year from its date of incorporation OR within 6 months from the date of commencement of Nidhi Rules 2019, whichever is later |
| Form AOC-4 | For filing financial documents and other supporting documents to the Registrar of Companies. | Within 30 days of the annual general meeting. |
| ITR-6 | Income Tax Return | By 30th September |
| Form MGT-7 | Annual Return | Within 60 days of the Annual General Meeting. |
What are the penalties for Non-Filing Annual Compliances for Nidhi Company?
Every Nidhi company is obligated to file Annual Compliances reports.
Non Compliance can invite punishments for the Nidhi Organizations such as:-
- A fine of up to Rs. 10,000 will be imposed on the organization and its officers in the event that the business fails to comply. 5,000.
- The company will be assessed a further daily fine of Rs. 500 if the violation continues.
- As a result, it’s critical to hire experts to assist with compliance procedures.
Need of Compliances in Different Situations:-
Typically, event-based compliances only need to be filed once during the registration process for a company. Moreover, these compliances should be followed when there is any change additionally in the Nidhi organization’s design which is non-periodical.
The following is a list of compliances based on events:
- Any change of the business.
- Change in Enrolled office address.
- Director’s appointment, resignation, or removal.
- Auditor’s appointment, resignation, or removal.
- Any modification to the company’s goal.
- If shares are transferred.
- Expansion in the approved capital of the organization.
- The key managerial personnel are appointed.
- Any additional event-based changes.
Conclusion
It is crucial to adhere to all the legal requirements that are suggested in the above article, by doing the same they can simply win the trust of stakeholders and avoid the risks that can add onto their long term success stories.
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We guarantee a smooth interaction with the government by handling all paperwork. Our team at Startupfino gives best advice on all the queries related to the Nidhi company compliance process.
