December 01, 2023 at 11:52 AM
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.
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.
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.
Following is the annual compliance calendar for Nidhi Company:
Following is the periodic compliance calendar for Nidhi Company:
Periodic filings and submissions with the RoC as required.
Adherence to all rules specified under the Nidhi Rules, 2014.
If applicable, conduct audit committee meetings as per regulatory requirements.
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:
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.
The company is required to have a minimum of 200 members and maintain a net-owned fund (NOF) of Rs 20 lakh.
Nidhi companies must seek consent from the central government to commence operations within 14 months from their incorporation.
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.
The aforementioned compliances are obligatory for every Nidhi Company, and failure to adhere to them will result in the following penalties:
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.