NIDHI COMPANY COMPLIANCES

is a type of Non-Banking Financial Company (NBFC) that has the principal object of borrowing and lending money between its members. This Mutual Benefit Company needs to file little annual compliance and it is famously known as Nidhi Company Compliances.

Following are Nidhi Company Compliances:-

A public business that has been incorporated as a Nidhi and has a share capital of Rs. 101 lakh must file Form NDH-4 along with a minimum of 200 members and a NOF of Rs. 20 lakh within 120 days of its incorporation in order to be recognised as a Nidhi.
The founders and directors of the Company shall comply with the standards of being fit and proper persons.
The new rules further specify that in order to ensure rapid resolution, approval will be taken into account if the Central Government does not communicate a decision within 45 days of receiving applications submitted by firms on form NDH-4. This would be applicable to companies that will be incorporated once the Nidhi (Amendment) Rules are put into effect in 2022.

Pre-Incorporation compliances of Nidhi Company

To receive Nidhi Company Registration, certain requirements must be met by every Nidhi Company. The following is a list of the requirements that must be met:

A Nidhi Company must have a minimum of seven members, of whom three must serve as the company’s directors.

The business must be a public company and have the suffix “Nidhi Limited” in its name.

A Trust, a Body Corporate, and a Minor are not permitted to join Nidhi.

The paid-up share capital must be a minimum of Rs. 5 lakh.

If the Nidhi Company has gone three financial years without a profit after taxes, it is unable to open branches.

The loan’s interest rate cannot be more than 7.5 percent more than the highest rate of interest being provided on deposits.

Preference shares that the firm has already issued before the Act’s start date must be redeemed. The corporation is not permitted to issue preference shares.

8.The company’s main goal must be to instil in its members a habit of saving money.

Post –Incorporation Compliances of Nidhi Company

There are two categories of post-Nidhi Company incorporation compliance:

1.General Compliance

2.Annual Compliance

General Compliance

Immediately after incorporation, a Nidhi company must fulfil the requirements listed below:

Within a year of its incorporation, there should be at least 200 members.
The minimum amount of Net Owned Funds is Rs. 20 lakhs (Modified under Nidhi (Amendment) Rules, 2022).
The ratio of net owned funds to deposits must not be more than one to twenty, or 1:20 for net owned funds to deposits.
In accordance with Rule 14 of the 2014 Nidhi Rules, unencumbered term deposits must represent at least 10% of the total amount of outstanding deposits.
The mandatory Registers and books of accounts for the Nidhi Company must be maintained.
It is necessary for the Nidhi Company to call statutory meetings.

The total of paid-up capital and free reserves is divided by the cumulative and intangible assets as shown on the most recent balance sheet to determine net owned funds.

Annual Compliance of a Nidhi Company

To keep the government informed of the company’s operations and functional divisions, annual compliance is observed.

The following annual compliances are required of Nidhi Companies:

FORM NO.	COMPLIANCES	DUE DATE
Form NDH-1 Return 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-2 Application 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 must be filed with the Regional Director within 30 days from the closure of the financial year along with the prescribed fees.
Half-yearly return form NDH 3	Form NDH 3to be filed with the ROC (Registrar of Companies).	Within 30 days from the conclusion of half a year. It must be duly certified by a practicing professional.
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.

Penalties for Non-Compliance:

Timely filing of compliances is mandatory for every Nidhi company. Non- Compliance attracts penalties for the Nidhi Companies.

If the business does not comply, it, along with the responsible officers, could be fined up to Rs. 5,000.

If the violation persists, the company will be subject to an additional fine of Rs. 500 per day.

Therefore, it is crucial to employ experts to assist with the compliance procedures.