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Overview of Nidhi Company Compliance

A Nidhi business is a company recognized by the Nidhi Rules 2014 in compliance with section 406 of the Companies Act 2013. Borrowing and lending money among its members are their core functions and come under the Indian non-banking finance market. It is a corporation that has been formed with the express purpose of fostering among its members the habit of thrift and savings. They are known by various names, such as Benefit Funds, Mutual Benefit Funds, Permanent Fund, or Mutual Benefit Corporation.

Nidhi Business is registered in compliance with the regulations of the Companies Act, 2013. The only aim of establishing a Nidhi Company is to cultivate among its members the habit of thrift and savings. To start a Nidhi Business, the minimum capital requirement is Rs.5 lakh. Since Nidhi Company is not bound by a license from the Indian Reserve Bank, it is therefore simple to establish. "In addition, it is registered as a Public Limited Company and must have the last words of its name as "Nidhi Limited. We are now aware of the Nidhi Company Registration process in India, so let's learn about the important enforcement process.

The minimum number of shareholders required for incorporation must be 200 at the end of the first year The Net Owned Fund must be greater than Rs. 10 lakhs The ratio to deposit for the Net Owned Funds must be greater than 1:20 Unencumbered deposits must be more than 10% of the outstanding deposits

Compliances of a Nidhi Company

Compliances of a Nidhi Company are divided into three parts:

  1. Pre-Incorporation Compliances,
  2. Post –Incorporation Compliances, and
  3. Event-based Compliances.

Pre-Incorporation Compliances: In order to get Nidhi Company registration, these compliances must be pursued.

Post-Incorporation Compliances: Once the Nidhi Business has been incorporated, these compliances must be enforced. Both are divided further into General Enforcement and Annual Compliance.

Event Based Compliances: These compliances are expected to be filed only once during the company registration process and are usually performed when there is a non-periodic change in the company structure.

Post Incorporation Compliance of Nidhi Company

  1. General Compliances
  2. Annual Compliances

General Compliances

  • A Nidhi Company must increase its members to at least 200 within one year of incorporation,
  • The ratio of the deposits to the net owned funds must not exceed 1:20
  • The Nidhi Company Net Owned Fund must be Rs. 10 lakh or more.
  • As per Rule 14 of the Nidhi Company Law, 2014, deposits should not be less than 10 percent of the outstanding deposits
  • Maintenance of Statutory Registers and Accounting Books
  • Convening from time to time Legislative Meetings

Annual Compliances

It is compulsory for a Nidhi Company to follow Annual Compliances:

  • 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

  • NDH-2

This form is used for filing application for extension of time.

  • NDH-3

This form is used for filing Half yearly return with the Registrar of Companies (ROC)

  • AOC-4

Filing of financial statements and other related documents with the ROC

  • MGT-7

Annual Return

  • ITR-6
Nidhi Company Compliance

Return of Income Tax

General Compliances to be followed by a Nidhi Company

  • The number of members should increase to at least 200 within one year of its incorporation.
  • The Net owned Fund should be Rs. 10 lakh or more.
  • The ratio of Net-owned Funds to the deposits must not exceed 1:20.
  • As prescribed in Rule 14 of the Nidhi Rules, 2014, the deposits should not be less than 10% of the outstanding deposits.
  • Maintenance of Books of Accounts.
  • Maintain the statutory Registers.
  • Convene Statutory Meetings.

Nidhi Business Event Related Compliances

Now we come to Nidhi Company's third type of compliance, which is called Event-based Compliance. Such consent shall be filed only once at the time of registration of the Nidhi Company. Such agreements suggest any improvements in the organization that are to be made. They are not, however, allowed to file repeatedly.

  • Any changes in the name of the company, if necessary
  • Any modification of the company's registered office address
  • Shift in the company's properties
  • Shift in the company's capital structure. For example: increases in the company's approved capital
  • Manager and auditor appointments

As there is less RBI participation, Nidhi companies are easy to run. Nevertheless, they have to obey the regulations defined for them by the Companies Act, 2013 and the Nidhi Rules, 2014. Failure to comply may be subject to severe penalties. The compliance process is a little difficult, so taking the aid of experts is often recommended in the best advice.

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Frequently Asked Questions

Any person who, according to the standard age verification, is over 18 years old can become an individual of the Nidhi Companies. Legitimate ID Proof and Address Proof should be accessible to the person covetous of turning into a part.

As they are integrated into the definition of the Public Corporation, the 2013 Companies Act rules and guidelines are applicable.

Nidhi Companies are applicable to RBI agreements identified with interest rate payable in store. In any event, RBI's central arrangements are not material to Nidhi Companies as the equivalent has been absolved by RBI from the Nidhi Companies.

  • Nidhi with the object of developing the propensity for thrift and reserve funds among its individuals, accepting deposits from, and lending to, its individuals.
  • The essential object of Nidhi is to carry on the matter of accepting deposits and loaning cash to members.

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