A Nidhi Company, categorized as a Non-Banking Financial Company (NBFC), operates with the principal aim of facilitating monetary transactions within its membership base. The annual compliance responsibilities of this Mutual Benefit Company are commonly referred to as Nidhi Company Compliances. These legal obligations are outlined in the Nidhi Rules of 2014 and the Companies Act of 2013. This article provides an overview of the Compliance Calendar for Nidhi Companies.

Definition of Nidhi Company as per Companies Act, 2013

According to Section 406(1) of the Companies Act, 2013, a Nidhi Company is defined as “A company 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 Companies serve as an ideal business structure for those seeking to commence operations with minimal capital investment.

Nidhi Company Registration in India

The registration of a Nidhi Company is conducted in accordance with the provisions outlined in the Companies Act, 2013. The primary objective of establishing a Nidhi Company is to promote thrift and savings among its members. The minimum capital requirement for initiating a Nidhi Company is Rs. 10 lakhs, a threshold increased through the Nidhi (Amendment) Rules of 2022. Notably, as a Public Limited Company, it is mandatory for a Nidhi Company to conclude its name with “Nidhi Limited.”

In essence, the Compliance Requirements for Nidhi Companies encompass the adherence to statutory guidelines and regulations, ensuring the company operates with transparency and integrity while fulfilling its mission of fostering mutual financial benefit among its members.

Annual Compliance Calendar for Nidhi Company

Following is the annual compliance calendar for Nidhi Company:

Annual Return Filing (Form NDH-4)
Purpose: Submission of annual return containing financial statements and other particulars.
Due Date: Within 60 days from the conclusion of the financial year (by 30th May).
Statutory Audit
Purpose: Conducting an annual audit of the Nidhi company’s accounts.
Due Date: Before the Annual General Meeting (AGM).

Periodic Compliance Calendar for Nidhi Company

Following is the periodic compliance calendar for Nidhi Company:

Filing of Income Tax Returns:
Purpose: Submission of income tax returns.
Due Date: As per the Income Tax Act, generally by 30th September.
Board Meetings:
Purpose: Regular board meetings to discuss financials, compliance issues, and overall governance.
Due Date: At least four board meetings in a calendar year with a maximum gap of 120 days between two consecutive meetings.

Event-Based Compliance for Nidhi Company

Loan Limit Compliance
Purpose: Ensure compliance with the limit on loans provided to members.
Due Date: Continuous monitoring and adjustment as per Nidhi Rules.
Nidhi Rules Compliance (Form NDH-1)
Purpose: Filing of half-yearly return regarding compliance with Nidhi Rules.
Due Date: Within 30 days from the conclusion of each half-year (by 30th April and 31st October).

Other Essential Compliances

Maintaining Nidhi Company’s Objectives
Purpose: Ensure that the company continues to operate in accordance with its declared objectives.
Due Date: Continuous monitoring.
Updating Register of Members
Purpose: Regularly update and maintain the register of members.
Due Date: Ongoing.

Key Considerations

Registrar of Companies (RoC) Compliance

Periodic filings and submissions with the RoC as required.

Nidhi Company Rules Compliance

Adherence to all rules specified under the Nidhi Rules, 2014.

Audit Committee Meetings

If applicable, conduct audit committee meetings as per regulatory requirements.

New Compliance Rules for Nidhi Companies

The Ministry of Corporate Affairs (MCA) has introduced enhanced compliance regulations for Nidhi companies through the Nidhi (Amendment) Rules, 2022. The key provisions are as follows:

Incorporation Requirements

Any public company established as a Nidhi with a share capital of Rs 10 lakh must submit an NDH-4 form and apply to the central government for notification as a Nidhi company within 120 days of its incorporation.

Membership and Net-Owned Fund Criteria

The company is required to have a minimum of 200 members and maintain a net-owned fund (NOF) of Rs 20 lakh.

Consent for Operation

Nidhi companies must seek consent from the central government to commence operations within 14 months from their incorporation.

Automatic Approval Mechanism

In the event that a company does not receive any intimation from the Central government within 45 days of submitting the NDH-4 form, the approval will be deemed to be granted.

These new compliance rules aim to reinforce the regulatory framework governing Nidhi companies, ensuring a more stringent and transparent operational environment. Nidhi companies are required to promptly adhere to these updated regulations to maintain compliance with the latest statutory requirements.

Penalties for Non – Compliance

The aforementioned compliances are obligatory for every Nidhi Company, and failure to adhere to them will result in the following penalties:

The organization and the officers in default will be liable to pay an amount of Rs. 5000 each.
Persistent non-compliance will attract an additional fine of Rs. 500 per day.

Conclusion

Nidhi proves to be an ideal option for individuals seeking to engage in lending activities with minimal investments. Managing a Nidhi Company is a straightforward process, guided and regulated by the provisions of the Companies Act, 2013. Failure to comply with these regulations can result in substantial penalties.

It is crucial for Nidhi companies to meticulously follow this compliance calendar, ensuring not only legal conformity but also the smooth functioning and sustainable growth of the company. Regular monitoring and timely actions will contribute to the company’s credibility and long-term success in the financial services sector. It is recommended to seek professional advice for precise and updated compliance requirements.

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Compliance Calendar for Nidhi Company

Arya Panda

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