Nidhi company Annual filing Compliance of Nidhi Company in India

Annual filing Compliance of Nidhi Company in India

Annual filing Compliance of Nidhi Company in India

Overview of Nidhi Company and its compliance 

Nidhi Company is a mutual benefit company, which has the principal objects of borrowing and lending of money between its members.

Being a Nidhi Company, it has to stay compliant always. The regulation relating to Nidhi Companies is specified in Section 406 of Companies act 2013 and Companies Nidhi Rules 2014.

In case the Nidhi Company does not comply with the rules and regulations then it has to face various actions by the Registrar of Companies like penalties on company and directors including company strike off. One Important point to be noted here is that the Nidhi Company can only lend and borrow money from its members only. Cannot lend or borrow money to any outsider.

Mandatory ROC Filings required to be done by Nidhi Company

The following are the Mandatory ROC Filings that are required to be done by NidhiCompany :                                              

Form

Time lImit

Explanation

Form NDH - 1

Within 90 days of closure, First / second financial year as the case may  be

Every Nidhi Company is required to file with the registrar of companies a return of statutory compliances in Form NDH – 1

Form NDH – 2

Within 30 days of closure First financial year

If the Nidhi Company has not complied with the requirement of rule 5(1), then the Nidhi Company is required to file with the registrar of companies Form NDH – 2 for extension of time, which shall be provided  by the regional director, to comply with the requirement of Rule 5(1) of Companies Nidhi Rules 2014

Form NDH – 3

30 October/ 30 April

Every Nidhi Company is required to file with the registrar of companies a half-yearly return in Form NDH - 3

Form NDH - 4

Company incorporated on after Nidhi (Amendment) Rules, 2019 - Within sixty days from date of expiry 1 year from incorporation or the period up to which the extension is provided by the Regional Director for completing compliances

Company incorporated before Nidhi (Amendment) Rules, 2019 – up to 15th February 2020

Every Nidhi Company is required to file with the registrar of companies Form NDH - 4, and the central government after being satisfied that the company satisfies the Compliances requirement of being a Nidhi Company shall specify its name in the official gazette.

 

And failure to file Form NDH – 4 will restrict the company from filing Form SH – 7 and Form PAS – 3 until the form is filed with the registrar of companies.

 

Form AOC-4

Within 30 days of the Annual general meeting

Every Nidhi Company is required to file with the registrar of company financial statement in Form AOC – 4 along with the Directors report, Extract of annual return in Form MGT-9, and financial statements of the company

Form MGT-7

Within 60 days of the Annual general meeting

Every Nidhi Company is required to file with the registrar of companies the Annual Return in Form AOC – 4

Form MGT-14

Within 30 days of approval of the director's report by the Board.

Every Nidhi Company is required to file with the registrar of companies Form MGT – 14

Form DIR-3 KYC / web-based KYC

Up to 30th September

Every Nidhi Company is required to file with the registrar of companies Form DIR – 3 KYC or web-based KYC for every director of the company

Other compliances to be made by Nidhi Companies

The following compliances shall be completed by the Nidhi Company:

  • Minimum Number of Members: Every Nidhi Company is required to have at least 200 members within a period of 1 year from the date of its incorporation.
  • Net owned funds:  Every Nidhi Company is required to maintain net owned funds of at least Rupees 10 lac within a period of 1 year from the date of its incorporation.
  • Unencumbered term deposit: Every Nidhi Company shall ensure that within  1 year from the date of its incorporation it has an Unencumbered term deposit of not less than 10% of the outstanding deposits.
  • The ratio of net owned fund to deposit: Every Nidhi Company shall ensure that within  1 year from the date of its incorporation, the ratio of the net owned fund to deposit shall not be more than 1:20
  • Minimum Number of shares to be allotted: Every Nidhi Company shall allow at least 10 shares of the Nominal value of INR 10 each to each deposit holder.
  • Auditor Certificate: Every Nidhi Company is required to have an Auditor Certificate certifying that the company has complied with the Companies Nidhi Rules 2014 and if the company has not complied with these rules then it shall state that also. The auditor certificate shall be annexed to the Auditor report of the company.

Prohibitions of Nidhi Company

No Nidhi Company shall do the following:

  • Accept deposits from or lend to any person, other than its members under the company
  • Pledge any of the assets lodged by its members as security under the company
  • Take deposits from or lend money to anybody corporate 
  • issue preference shares, debentures, or any other debt instrument
  • Open any current account with its members
  • Carry on any business other than the business of borrowing or lending in its own name under the company
  • Issue or cause to be issued any advertisement in any form for soliciting deposit
  • Pay any brokerage or incentive for mobilizing deposits from members or for the deployment of funds or for granting loans.
  • Enter into any partnership arrangement in its borrowing or lending activities under the company
  • Do the business of, leasing finance hire purchase finance, chit fund, insurance or acquisition of securities issued by any body corporate;
  • Takeover another company by taking control of the composition of the Board of Directors of any other company in any manner whatsoever or purchase of securities or enter into any arrangement for the change of its management, until and unless the company has passed a special resolution in its general meeting and also obtained the previous approval of the Regional Director having jurisdiction over such Nidhi

AUDIT OF NIDHI COMPANY

AUDITOR

  • No auditor shall be appointed for more than one consecutive term of 5 years in Nidhi company.
  • No audit firm shall be appointed for more than two consecutive firms of more than 5 years in Nidhi company.
  • Auditor and audit firm can be subsequently appointed after the completion of 2 years.

AUDITOR’S CERTIFICATE

The auditor shall furnish every year the audit report to effect that the company has complied with all the provisions and rules and it is annexed to the audit report and also state the rules which are not complied with.

AUDIT PROCEDURE AND REPORTING

  • Nidhi company shall within one of the commencement of these rules, ensure that it has-
  1. Not less than 200 members.
  2. Not owned fund ten lakhs rupees or more.
  3. Unencumbered term deposit not less than ten per cent of the outstanding deposit.
  4. the ratio of net owned funds is not more than 1:20.
  • As per rule, 3(d) the net owned funds is the aggregate of the paid-up equity share capital and free reserves as reduced by accumulated losses and intangible assets appearing in the last audited balance sheet. The amount representing proceeds of the issue of preference shares, shall not be included for calculating net owned funds.
  • Nidhi company can accept a deposit as a fixed deposit, recurring deposit, and saving deposit from its members by the direction notified by the central government. The aggregate of such a deposit is referred to as a deposit liability.
  • The auditor should ask management for computation of deposit liability and net owned fund based on requirement given this helps him to verify that the ratio of deposit liability to net owned funds is by the requirements.
  • comments of the auditor should be based upon such a statement provided by management and verification of the same by the auditor.

The auditor may report, incorporating the following on at the balance sheet date:

  1. In case of a shortfall, in the ratio is the ratio of net owned funds to the deposits, report the amount of shortfall and state the actual ratio of net owned funds to the deposits.
  2. In case of the shortfall about the minimum amount of ten per cent as unencumbered term deposits, as specified in Nidhi rules, 2014 report the amount thereof.

Frequently Ask Questions (FAQ) on Nidhi Company Compliance 

Q 1 Can a Nidhi Company admit Body corporate or trust as a member?

Ans. No, Nidhi Company cannot admit Body corporate or trust as a member

Q 2 Can a Nidhi Company admit a minor as a member?

Ans. No, but the deposits may be accepted  in the name of a minor if they are made by the natural or legal guardian who is a member of Nidhi

Q 3 Is there any net owned fund requirement for a Nidhi Company?

Ans Yes, the Nidhi Company must maintain A Net owned fund of not less than 10 lacs at all times.

Q 4 Can A Nidhi Company open its branches?

Ans Yes, a Nidhi Company can open its branches only if it has earned net profits after tax continuously during the preceding three financial years.

Further, a Nidhi company can open up to 3 branches in a district.  A Nidhi Company cannot open any branches outside the state.

Q5- for how many years can an auditor or an audit firm is appointed or re-appointed in one term?

Ans.- an auditor or audit firm can be appointed for 5 years in one term.

Q6-for how many terms can an audit firm be appointed as an auditor?

Ans.- an audit firm can be appointed for 2 terms of 5 years.

Q7-after how many years can an auditor be appointed after completion of one term?

Ans.- an auditor can be re-appointed only after completion 2 years after completion of one term.

How Rajput Jain and Associates can Assist

We offer all kinds of Consultancy, Compliances, and Registration Services in relation to Nidhi Companies. We have impaneled various experts to provide expert advisory, Registration, and Compliances services for Nidhi Companies.

The services we provide in Nidhi Company Compliances are:

  1. Advisory relating to annual compliances of Nidhi Companies
  2. Preparation of Financial Statement
  3. Statutory Audit Report under Companies Act, 2013
  4. Tax Consultancy by a Chartered Accountant
  5. Income Tax Return Filing
  6. Annual ROC Filing by Company Secretary
  7. Free tax due-diligence check
  8. Advisory relating to Nidhi Company

Rajput Jain and Associates: Made and posted By Expert : 

Mr Akshay Gupta (Company Secretary) is a diligent and innovative qualified Company Secretary, striving in matters related to Corporate Law. Akshay takes a deep interest in corporate, NBFC and FDI matters and his specialization includes corporate Compliance, FEMA Compliances, and NBFC Registration. As a Company Secretary, Akshay is passionate about matters relating to corporate funding, NBFC, and its compliances

Disclaimer: The content of this post isn't considered to be professional or legal advice, We aren't responsible for any damages arising from your access to the location content & must not be relied on or used as a substitute for legal advice from a lawyer professional in your jurisdiction. CARajput is among India's big digital compliance services platform which committed to helping people have started & developed their businesses. We had started with the goal of creating it easier for start-ups to start out their business. Our main aim is to assist the businessman with applicable laws & regulations compliance and providing support at each & every level to make sure the business stays compliant and growing continuously. For any query, help or feedback you may in touch on singh@carajput.com or Call or what’s-up on 9-555-555-480

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