Compliance of Nidhi Company

                Overview of Nidhi Company Compliance

Nidhi company is a kind of Non-Banking Financial Company aka NBFC. Because of the benefits Nidhi Company offers it is also called as Mutual Benefit Finance Company. Like every company, Nidhi Company also consists of few annual compliance popularly known as Nidhi Company Compliances. The statutory compliances related to Nidhi Company are disclosed in Nidhi Rules 2014 and the Companies Act 2013.

Provisions of the Section 406(1) of the Companies Act, 2013 defines the Nidhi Company as “A company which has been incorporated as a Nidhi with the object of cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only for their mutual benefit.”

Nidhi Company is the perfect choice for those who want to indulge in lending business with minimum fund investment.

                          Nidhi Company Compliances Requirement

1. Compliances help in forming exact insights about the company’s working performance.
2. It is necessary for every company which is registered under the Companies Act 2013 to file for the compliances.
3. Moreover Nidhi Company falls under the category of public company hence in order to protect the interest of its stakeholders it becomes compulsory for the Nidhi Company to follow the compliances.

                     Benefits of Nidhi Company Registration

Easy Formation

1. A total of 7 persons where 3 will be appointed as Director  form a Nidhi Company
2. Hassle free registration process
3. Will take 10-15 days to register

Cost Efficient Registration

Rs 5,00,000 is the minimum capital requirement for registration of Nidhi Company. The company also provide the opportunity to invest the capital within 2months once the registration is done.

No RBI Regulations

Though Nidhi Company falls under the criteria of NBFC but they do not need any approval from RBI. Nidhi Rules, 2014 are drafted for such companies to regulate their activities and working performance.

High Level Of Certainty In Nidhi Company

The primary motive of Nidhi Company is to boost the habit of savings amongst its member. Hence, Nidhi Company counted as long term investment as its members will not stop savings anytime.

Less Level Of Risk

The level of risk involved in the Nidhi Company is minimal due to its nature of accepting deposit and providing loans to its members as stated in Nidhi Rules 2014. It is a trust and secured way of granting loan also loans provided to members are at a very less rate.

Pre-Incorporation Compliances of Nidhi Company

So,Necessary compliances to be follow are:

• Minimum of seven members  form a Nidhi Company out of which three are appoint as Directors of the company
• Nidhi Company can come into existence with a minimum share capital of Rs 5, 00,000.
• In case preference shares are issued they are to be redeemed as per the same terms of the issue.
• A minor considered as the member of Nidhi Company
• Company  have “Nidhi Limited” in its name.
• Minor  a member of a Nidhi Company
• A trust or a corporate body  be the member of Nidhi Company
• Can’t acknowledge the store of over 20% of Net Owned Funds.

                    Post-Incorporation Compliances of Nidhi Company

• The number of members  less than 200 within one year of its incorporation
• The Net possess Fund ought to be Rs. 10 lakh or more.
• The proportion of Net-possess Funds to the stores surpass 1:20.
• As mention in Rule 14 of the Nidhi Rules, 2014, the stores not be under 10% of the outstanding deposits.
• Support of Books of Accounts.
• Keep up the legal Registers.
• Gather Statutory Meetings.

                  Annual Compliances for Nidhi Company

The nature of annual compliance is periodic in nature.  So,These compliances are presented annually  they are need to be file after regular intervals of time.

The purpose of these compliances is to give a clear picture of the work status and performance of Nidhi Company during a period.

So,It is necessary for Nidhi Company to meet all the compliance as mentioned in the Companies Act 2013 as well as in Nidhi Rules 2014.

List Of Annual Compliance For Nidhi Company

NDH-1

Filing NDH-1is necessary for Nidhi Companies submit the NDH-1 along with the prescribe fees and make sure that it is duly certify by  the chartered accountant, and cost accountant or by the company secretary.

NDH-2

So,The purpose of filing for form NDH-2 is to appeal for request for time extension in case following compliances are not met:

1. Fails to add minimum 200 members in a financial year
2. Inability to keep net own fund to deposit ratio 1:20

NDH-2 form is submit to the Regional Director with the prescribed fee; the director accept it and pass orders within 30 days from the date of receiving application.

NDH-3

It’s a half-yearly return form which is file by the Nidhi Company.

Maintaining Books Of Accounts

Each Nidhi organization needs to guarantee that so it will keep accurate books of accounts.

Maintain Statutory Register

As per Companies Act 2013 it is essential for Nidhi Company to maintain statutory registers. But It is one of the mandatory compliances for a Nidhi Company.

Convene Statutory Meetings

Conducting meeting of Board of Directors and Shareholders

Annual Return Filling (MGT-7-ROC Annual Return)

Nidhi Company is required to file for an annual return with the Ministry of Corporate Affairs (MCA) via Form MGT-7.

                          Important Dates

                           Penalties

Documenting compliances on time is require for each Nidhi organization. Not meeting the equivalent  draw in punishment for the Nidhi Bank Operators.

But If the Company neglects to meet the compliance, the substance and concerned officials will be fine up to the extent of Rs 5000.

If the infringement proceeds, the further fine will be Rs 500 consistently.

Consequently,so, it is vital to take compliance maintenance administrations from industry master experts.