A nidhi company must file the tax and compliance form annually like any other type of company. Compliances play an important role as they help generating insights about the functions and performance of a company.
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A Nidhi Company is a kind of non-banking financial company registered under the Companies Act, 2013. Main purpose of a Nidhi Company comprises borrowing and lending money with its members.
Nidhi Companies are also called Mutual Benefit Finance Company.
Every Nidhi Company is needed to satisfy the rules and regulation according to the Companies Act, 2013 and Nidhi Companies Rules, 2014.
If a Nidhi Company doesn't follow the required compliances, then both the company and executives that are in default would be punished.
Registration of Nidhi Company is done according to the Companies Act, 2013. Hence, it is necessary for each company to be registered under this act and stick on the recommended compliances.
Nidhi Company has the position of Public Limited Company. It can protect the interest of stakeholders which is one of the most important duties of the company. Therefore, it's compulsory to follow the compliances of Nidhi Company.
In order to ensure smooth operations of the company, it is recommended to prevent any legal problem. It is mandatory to follow the compliance carefully.
After the incorporation, Nidhi Companies are essential to follow a couple of compliances which are as follows :
As per Nidhi Rules, 2014, there are a few compulsory compliances that have to be met by each Nidhi Company within one year of incorporation. Those compliances are as follows :
Compliances should be followed within 1 year of incorporation of Nidhi Company
The number of members must be increased to minimum 200 within 1 year of the company's incorporation
Net Owned Fund (NOF) of the Nidhi Company should be Rs. 10 lakh or more
The ratio of Net Owned Fund to the deposit shouldn't exceed 1:20
According to Rule 14 of Nidhi Rules, 2014, the unencumbered deposits shouldn't be less than 10% of the outstanding deposits
Although annual compliance of Nidhi Company must be filed annually yet, a few of them is needed to be filed after a certain interval of time
Generally, such compliances include the status and performance of Nidhi Company operations all over the year
According to the Nidhi Rules, 2014 and the Companies Act, 2013, a Nidhi Company is required to satisfy annual compliances as recommended.
Important checklist for Nidhi Company compliances are described below that each Nidhi Company must satisfy within the due time. Those compliances are as follows :
Form NDH 1
It is compulsory to file Form NDH-1 within 90 days from the close of financial year. Besides, this form must be certified by the practicing chartered accountant or company secretary or cost accountant. One requires filing this return with the required prescribed fees.
Form NDH 2
The form NDH-2 should be filed if the company cannot fulfil the following compliances :
Adding minimum 200 members within one year of incorporation
Ratio of Net Owned Fund to deposit is 1:20
The company needs filing NDH-2 with the Regional Director within 90 days from the end of the financial year along with the prescribed fees
Once application is examined, the regional director will pass orders within 30 days of the receipt of the NDH-2 application. If the company cannot perform the same within the due time limit, filing of application to request for extension of time in order to submit above compliances is important.
Form NDH 3
NDH-3 is known as a half-yearly return that requires to be filed with the ROC (Registrar of Companies). Each Nidhi Company should file this form along with the prescribed fees within thirty days since the end of every half year. The form should be signed by the practicing chartered accountant or cost accountant or company secretary duly.
NDH 4 - Form to be filed for application for declaration as Nidhi Company and for updating status by Nidhi Company.
In the said regulations, after rule 3, the following rule shall be added, that is :
"3A. Declaration of Nidhis — The Central Government, on receiving of application (in Form NDH-4 with fee thereon) of a public company to declare it as Nidhi and on being satisfied that the company satisfies the criteria under these rules, shall inform the company as a Nidhi in the Official Gazette :
Only if a Nidhi registered under the Act on or after the beginning of the Nidhi (Amendment) Rules, 2019 shall file Form NDH-4 within sixty days since the date of expiry of :
(a) one year since the date of its registration; or
(b) the period up to which extension of time has been approved by the Regional Director under sub-rule (3) of rule 5 :
Given further that nothing in the first proviso shall prevent a Nidhi from filing Form NDH-4 before the period stated therein :
Given also that in the case a company does not follow the needs of this rule, it shall not be allowed to file Form No. SH-7 (Notice to Registrar of any change of share capital) and Form PAS-3 (Return of Allotment).".
ADT-1, Auditor's appointment
According to Section 139 of the Companies Act, 2013, every company requires informing the ROC (Registrar of Companies) about the appointment of auditor in a prescribed format. ADT-1 includes the essential form to inform Registrar Of Companies about the appointment of auditor.
Preservation of Books of Accounts
Each Nidhi Company should keep the books of accounts on a timely basis. Books of Accounts are required to manage due to the reason of Income Tax.
Every company whose gross receipts is more than Rs. 1, 50,000 in three preceding years requires maintaining the books of accounts
Protection of Statutory Registers
According to the Companies Act, 2013, each company registered with the Ministry of Corporate Affairs needs to manage the statutory registers compulsorily. Besides, each company requires producing the register before Registrar Of Companies within specific time with the recommended fees.
Overall, the statutory register is known as a record of the company's shareholders, directors and the meetings organized.
Making Financial Statements
Whether it's Nidhi Company or any other, creating financial statements is essential for every entity. Financial statements include balance sheet, profit & loss account, cash flow statement of the company and others.
According to the Companies Act, 2013, Director's report is one of the compulsory compliances that are required to be followed by each Nidhi Company.
A director's report incorporates a record of the company and its fulfilment with a collection of financial, accounting and corporate social responsibility standards created by the board of directors.
Carry out Statutory Meetings
It is compulsory for each Nidhi Company to organize statutory meetings such as shareholder's meeting and Board of Director's meetings.
Filing Income Tax Returns
Each Nidhi Company must file the annual Income Tax Returns by 30th September of the subsequent financial year.
Filing of Financial Returns in Form AOC-4,
For every company, it's very important to file the financial return with the Ministry of Corporate Affairs. AOC-4 is the prescribed format to file the financial statements of the company.
Financial statements require to be filed each year within 30 days since Annual General Meeting of the company. Besides, the form must be certified by the Chartered Accountant who is in practice or a Company Secretary in practice too.
MGT-7, Filing of ROC Annual Returns
Ministry of Corporate Affairs offers the form MGT-7 to all the companies to produce the details of their annual return. Therefore, every Nidhi Company is recommended to file MGT-7 within the due time as recommended by the Ministry of Corporate Affairs.
Normally, event-based compliances are those needed to file only once during the company incorporation procedure. Besides, such compliances are to be pursued when there's any alteration in the company structure that is non-periodical. Unlike the annual compliances of Nidhi Company, these compliances aren't compulsory to be filed at certain interval.
Following is the list of event-based compliances that each Nidhi Company must follow while any alteration in the organization takes place :
Change of name of the company
Alteration of registered office address
Appointment or resignation of a director
Appointment or resignation of an Auditor
Modifications in the objective of the company
Transfer of shares
Alteration in capital structure of the company
Increase of the company's Authorised Capital
Appointment of the Key Managerial Personnel (KMP)
If a Nidhi Company does not comply according to the provisions of Companies Act, 2013 and Nidhi Rules, 2014, then following penalties will be imposed :
The company with each executive in non-payment or default will be accountable and would be subject to fine up to Rs. 5000
The company will be liable to pay Rs. 50 per day till the default persists
Nidhi Company must ensure to follow the compliances in time. Following are the due dates for filing Nidhi Compliances on time :
|Compliance of Nidhi Company||Due Dates|
|Annual General Meeting||30th September|
|AOC-4||Within 30 days since annual general meeting|
|MGT-7||Since 60 days of annual general meeting|
|NDH-1||Within 90 days of financial year|
Company incorporated on or after 1st July, 2019
|Within 60 days after the end of 1 year from the date of its incorporation or the time up to which extension of time has been approved by the Regional Director.|
Company incorporated before 1st July, 2019
|Within a period of 1 year from its date of incorporation OR within a time of 6 months from the date of beginning of Nidhi Rules 2019, whichever is later|
Company under previous Company Law
|Within a time of 6 months since the date of starting of Nidhi (Amendment) Rules, 2019.|
|Income Tax Return||30th September|
A current account is to be opened with any scheduled bank in the name of the Company and file Form 20A duly before starting business operations
Within 1 year, it is compulsory to ensure the following :
a. The company does not have less than two hundred members
b. Its Net Owned Fund is Rs. 10,00,000 or more
c. Unencumbered term deposits are not less than 10% of the outstanding deposits
d. Ratio of Net Owned Funds to deposits is not more than 1:20
If the Company is not following (a) or (d) above, it must apply to the Regional Director in Form NDH-2 for expansion of time within thirty days since the closure of first financial year.
Fulfil the contents of the application form as recommended.
For the purpose of identification, evidence of identity and address as recommended is to be taken from depositors. It should not older than 2 months.
Follow rules as suggested according to Rule 20 of the Nidhi Rules, 2014.
Continuing business of the following :
Hire purchase finance
Insurance or acquisition of securities allotted by a corporate body
Opening any current account with its members
Issuing preference shares, debentures or any other debt instrument by any name or in any type whatever
Acquiring a different company by buying securities or manage the work of the Board of Directors of a different company in any means whatever or go into into any agreement for the alteration of its management, unless special resolution has been approved and received prior approval from Regional Director;
To do a business except borrowing or lending in its own name, provided that the Nidhi Company may offer locker benefits and receive rental income thereof but such income shall not cross 20% of the gross income.
Take deposits from or lend to any individual except its members
Assure any of the assets blocked by its members as security
Accept deposits from or lend money to any minor or corporate or trust
Entering into a partnership arrangement regarding its borrowing or lending task
Issuing or cause to be issued an advertisement in any type that asks deposit
Payment of any brokerage or incentive to mobilize deposits from members or for operation of funds or for grant of the loans
Service charge for issue of shares is to be imposed
Minimum 10 equity shares or shares equivalent to Rs 100 is to be allotted to each deposit holder
Both a savings account holder and a recurring deposit account holder must hold minimum 1 equity share of Rs 10
Loan needs to be offered only to members of the Company. However it is subjected to the following limits :
|Total amount of Deposits||Loan Amount (in Lacs)|
|Less than 2 crores||2|
|More than 2 crores but less than 20 crores||7.50|
|More than 20 crores but less than 50 crores||12|
|More than 50 crores||15|
If the Company fails to make profits continuously in the last 3 years, it should not make fresh loans more than 50% of the aforesaid amount
The loan is needed to be offered only against the following :
Gold, silver and jewellery
National Savings Certificates
Fixed deposit receipts
Other Government Securities
The rate of interest is to be imposed on any loan offered by a Nidhi shall not cross 7.5% above the maximum rate of interest offered on deposits by Nidhi and reducing balance method is followed to calculate it.
The maximum interest on savings account shall not surpass 2% what is being by the nationalized banks
The rate of interest being given on fixed and recurring deposits shall not go beyond the rate of interest recommended by the Reserve Bank of India. Non-Banking financial companies can pay this on their public deposits
The Nidhi Company should invest an unnumbered term deposits with a scheduled commercial bank or post office that should not less than 10% of the outstanding deposits at the closure of business on the last working day of the second previous month.
The director must be the member of Nidhi and hold office for a time up to 10 subsequent years on the Board of Nidhi.
Once it can earn net profits after deducting tax constantly during the past 3 years, branches can be opened around the state
Nidhi cannot open branches outside the State where its registered office is located
Nidhi cannot open branches until financial statement and up to date annual return are filed with the Registrar
Any branch cannot be closed by Nidhi unless advertisement is not published by it, a copy of such advertisement must be fixed on the notice board of Nidhi Company and offers instruction about its closure to the Registrar.
It should not accept deposits more than twenty times of its Net Owned Funds according to its last audited financial statements
Fixed Deposits shall be taken for minimum 6 months and maximum 60 months
Recurring Deposits must be accepted for at least 12 months and maximum 60 months.
The maximum balance in a saving account is eligible for interest shall not go beyond Rs 1 Lac at any point and the rate of interest on the same shall not surpass 2% above whatever is paid by nationalized banks.
Annual Filing refers companies registered under the Companies Act 1956 or Companies Act 2013, must file the following eForms with the Registrar of Companies (ROC):
Form AOC-4 : To file financial statement and other documents
Form MGT-7 : To file Annual Return by companies having share capital
Form NDH-1 : Statutory compliance
Form NDH-3 : half yearly compliance
Form NDH-4 : Statutory compliance
Every company needs to ensure the following within 1 year.
Minimum net owned fund must be at least Rs.10,00,000.
Minimum members should not be less than 200.
The ratio between net owned funds and deposits should not be more than 1:20.
No trust or body corporate must be admitted to it as its member.
A minor needs to be a part of it.
If the Nidhi Company satisfies post incorporation needs, then the company must file NDH-1 duly certified by a practicing CA/CS/CWA with the recommended fees within 90 days from the end of first financial year after incorporation.
If at the end of first financial year, Nidhi cannot meet post incorporation needs, it should apply to the Regional Director in form NDH-2 for extension of time with the recommended fees within 30 days from the close of first financial year.
If even after second financial year Nidhi cannot meet the above needs, then the Nidhi Company shall not take any deposits further till it follows the provisions and Nidhi will be responsible for penalty.
Each Nidhi company shall file half yearly return with the Registrar in Form NDH-3 with prescribed fee as stated in Companies (Registration Office and Fees) Rules, 2014 within thirty days from the end of each half year duly certified by a chartered accountant or company secretary or cost accountant in practice.
Form NHD-4 is for filing application for declaration as Nidhi Company and for updation of status by Nidhis.