Annual Compliance Checklist of Nidhi Company: Post Incorporation Compliance

Annual Compliance Checklist of Nidhi Company: Post Incorporation Compliance. 
Overview of Nidhi Company

Introduction –
In common parlance, the word “Nidhi” stands for funds, and thus, a Nidhi Company is a non – banking financial company governed by the provisions of the Companies Act, 2013 with the chief objective of inculcating the habit of thrift and savings among its members. Nidhi companies are also known as mutual benefit society as it involves borrowing and lending of funds strictly among its shareholders and members.
As per Section 406 of the Companies Act, 2013, Nidhi means a company which the Central Government may, by notification declare to be a Nidhi company.
 
Applicability –
 
Nidhi Rules 2014, states the applicable norms of a Nidhi company that came into force on the 1st day of April 2014. The rules apply to –

Every company declared as Nidhi or Mutual Society as per section 620A of Companies Act, 1956

Every company functioning as per Nidhi rules whether registered or not

Every company incorporated or declared as a Nidhi company as per section 406 of Companies Act, 2013

Prerequisites for incorporating Nidhi –
 
The following requirements shall be met before registering a Nidhi company –

A Nidhi Company proposed to be incorporated under this act must be a public company

It must have a minimum paid-up equity share capital of Rupees Five lakh (5,00,000)

“Nidhi Limited” must be the part of its name

It should hold only equity shares, no preference shares shall be issued

The object of the Nidhi Company must be to cultivate the habit of savings and exchanging funds among members for mutual benefit

Minor cannot be a member

A trust or a body corporate cannot be a member of the Nidhi Company

Post Incorporation Compliances 
As per Rule 5(1) of the Nidhi Rules, 2014, every Nidhi shall within one year of incorporation, must ensure that it has –

Minimum 200 (Two hundred) members

Net-owned funds of at least Rs.10 Lakh

Net owned funds to deposits proportionate (ratio) not more than 1:20

As per Rule 14 of Nidhi Rules, 2014, At least 10% of the outstanding deposits as unencumbered deposits.
 
Every Nidhi must maintain proper books of accounts, statutory registers and convene statutory meetings from time to time as per prescribed rules.
Annual Compliance Checklist
This checklist contains all the mandatory compliances applicable to a Nidhi as per various laws –
As per Companies Act, 2013 –

Form
Compliance
Due date for filing

Form NDH -1 
Return of Statutory compliances containing details of members, loans, deposits, reserves of the concerned financial year.
It is to be filed within 90 days of the end of the financial year. This form must be certified by a practicing professional.

Form NDH -2
Application for Extension to file NDH -1 This form is required to be filed when –·       The company fails to fulfill the requirement of 200 members in the first year of incorporation·       The net owned funds to deposit ratio of 1:20 is not maintained 
It is to be filed within 90 days of the end of the financial year to the Regional Director.

Form NDH -3
Half–yearly return
Form NDH -3 needs to be filed within 30 days of the closure of half-year (FY) with the ROC. It must be Certified by a professional.

Form NDH -4
Application for declaration as a Nidhi and updating status
For New Companies –NDH – 4 needs to be filed within 60 days of the expiry of the incorporation year. For Existing Companies –Within 6 months from the date of commencement of Nidhi rules, 2019. Failure to file Form NDH-4 will not allow companies to file Form SH -7 (Alteration of Capital) and Form PAS – 3 (Return of allotment)

Form AOC -4
Financial statements including balance sheet, Profit and loss statement along with other supporting documents
This form must be filed within 30 days of the conclusion of the annual general meeting (AGM) with the registrar of companies.

Form MGT-7
Form for filing the Annual return of the company
Within 60 days of the conclusion of the AGM.

Note – Annual General Meeting must be held by 30th September every year except if any extension to the timelines is given by the authorities.
As per Income Tax Act 1961 and its rules –

Form
Compliance
Due date

ITR – 6
Income Tax Return
It needs to be filed by 30th September.

Penalties for Non – Compliance 
The above–discussed compliances are mandatory for every Nidhi Company. Non-compliance of any will be penalized as follows –

The organization and the officers in default will be liable to pay an amount of Rs.5000 each

Continue infringement will lead to an additional fine of Rs.500 per day

Conclusion
Nidhi is a perfect choice of company for those who want to carry out lending business with small amount of investments. Operating a Nidhi Company is not a complicated process as it is governed and regulated by the provisions of Companies Act, 2013. Non – compliance with its provisions will attract a hefty amount of penalties thus it is always advisable to take help from the concerned professionals to enjoy mutual benefits of Nidhi. 
How Can Compliance Calendar Help? 
Compliance Calendar LLP has a team of experienced and professional associates who will help you in making the process easier and stress free. We will assist you at every step, right from the registration as a Nidhi Company to Post Incorporation Compliances. If you have any questions, you can email us to info@ccoffice.in or WhatsApp/Call at 9988424211 and our team will get back to you.

Overview of Nidhi Company

Introduction –

In common parlance, the word “Nidhi” stands for funds, and thus, a Nidhi Company is a non – banking financial company governed by the provisions of the Companies Act, 2013 with the chief objective of inculcating the habit of thrift and savings among its members. Nidhi companies are also known as mutual benefit society as it involves borrowing and lending of funds strictly among its shareholders and members.

As per Section 406 of the Companies Act, 2013, Nidhi means a company which the Central Government may, by notification declare to be a Nidhi company.

Applicability –

Nidhi Rules 2014, states the applicable norms of a Nidhi company that came into force on the 1st day of April 2014. The rules apply to –

Every company declared as Nidhi or Mutual Society as per section 620A of Companies Act, 1956
Every company functioning as per Nidhi rules whether registered or not
Every company incorporated or declared as a Nidhi company as per section 406 of Companies Act, 2013

Prerequisites for incorporating Nidhi –

The following requirements shall be met before registering a Nidhi company –

A Nidhi Company proposed to be incorporated under this act must be a public company
It must have a minimum paid-up equity share capital of Rupees Five lakh (5,00,000)
“Nidhi Limited” must be the part of its name
It should hold only equity shares, no preference shares shall be issued
The object of the Nidhi Company must be to cultivate the habit of savings and exchanging funds among members for mutual benefit
Minor cannot be a member
A trust or a body corporate cannot be a member of the Nidhi Company

Post Incorporation Compliances

As per Rule 5(1) of the Nidhi Rules, 2014, every Nidhi shall within one year of incorporation, must ensure that it has –

Minimum 200 (Two hundred) members
Net-owned funds of at least Rs.10 Lakh
Net owned funds to deposits proportionate (ratio) not more than 1:20

As per Rule 14 of Nidhi Rules, 2014, At least 10% of the outstanding deposits as unencumbered deposits.

Every Nidhi must maintain proper books of accounts, statutory registers and convene statutory meetings from time to time as per prescribed rules.

Annual Compliance Checklist

This checklist contains all the mandatory compliances applicable to a Nidhi as per various laws –

As per Companies Act, 2013 –

Form	Compliance	Due date for filing
Form NDH -1	Return of Statutory compliances containing details of members, loans, deposits, reserves of the concerned financial year.	It is to be filed within 90 days of the end of the financial year. This form must be certified by a practicing professional.
Form NDH -2	Application for Extension to file NDH -1 This form is required to be filed when –· The company fails to fulfill the requirement of 200 members in the first year of incorporation· The net owned funds to deposit ratio of 1:20 is not maintained	It is to be filed within 90 days of the end of the financial year to the Regional Director.
Form NDH -3	Half–yearly return	Form NDH -3 needs to be filed within 30 days of the closure of half-year (FY) with the ROC. It must be Certified by a professional.
Form NDH -4	Application for declaration as a Nidhi and updating status	For New Companies –NDH – 4 needs to be filed within 60 days of the expiry of the incorporation year. For Existing Companies –Within 6 months from the date of commencement of Nidhi rules, 2019. Failure to file Form NDH-4 will not allow companies to file Form SH -7 (Alteration of Capital) and Form PAS – 3 (Return of allotment)
Form AOC -4	Financial statements including balance sheet, Profit and loss statement along with other supporting documents	This form must be filed within 30 days of the conclusion of the annual general meeting (AGM) with the registrar of companies.
Form MGT-7	Form for filing the Annual return of the company	Within 60 days of the conclusion of the AGM.

Note – Annual General Meeting must be held by 30th September every year except if any extension to the timelines is given by the authorities.

As per Income Tax Act 1961 and its rules –

Form	Compliance	Due date
ITR – 6	Income Tax Return	It needs to be filed by 30th September.

Penalties for Non – Compliance

The above–discussed compliances are mandatory for every Nidhi Company. Non-compliance of any will be penalized as follows –

The organization and the officers in default will be liable to pay an amount of Rs.5000 each
Continue infringement will lead to an additional fine of Rs.500 per day

Conclusion

Nidhi is a perfect choice of company for those who want to carry out lending business with small amount of investments. Operating a Nidhi Company is not a complicated process as it is governed and regulated by the provisions of Companies Act, 2013. Non – compliance with its provisions will attract a hefty amount of penalties thus it is always advisable to take help from the concerned professionals to enjoy mutual benefits of Nidhi.

How Can Compliance Calendar Help?

Compliance Calendar LLP has a team of experienced and professional associates who will help you in making the process easier and stress free. We will assist you at every step, right from the registration as a Nidhi Company to Post Incorporation Compliances. If you have any questions, you can email us to info@ccoffice.in or WhatsApp/Call at 9988424211 and our team will get back to you.