Introduction
Nidhi Company is a Non-Banking Financial Company that has the main object of borrowing and lending money between the members of the company. This Mutual Benefit Company requires filing little annual compliance and it is called Nidhi Company Compliances. The legal compliances associated with Nidhi Company are authorized under the Nidhi Rules 2014 and the Companies Act 2013.
What is Nidhi Company?
Under Section 406(1) of the Companies Act of 2013, the Nidhi Company which means ‘A company has been incorporated as a Nidhi and the principal object of the Nidhi Company is cultivating the habit of prudence and savings amongst its members, receiving deposits from, and lending to, its members only for the mutual benefits between their members.” Nidhi Company is the perfect company for those who want to start a new business with minimum capital investment.
What is Nidhi Company Compliances?
Nidhi Companies Compliances are divided into three parts which are mentioned below:
First is pre-incorporation Compliance
The second is Post –Incorporation compliance
The third is Event-based Compliance.
Types of Nidhi Company Compliances
There are two types of Nidhi Company Compliances under the Companies Act and Nidhi Company Rules which are given following:
1. Annual compliances of Nidhi Company: -
Generally these types of compliances in which include the status and performance of the Nidhi Company in the whole year. It is filed annually, but some compliance is filed after a specific interval of time.
2. Event-Based Compliances of Nidhi Company: -
These compliances are filed at the time of incorporation of Nidhi Company. And these compliances are required to be fulfilled at the time of any alteration in the structure of the Nidhi Company, and the alteration is non-periodical. These compliances are not compulsory to be filed at a fixed interval.
Checklist for Nidhi Company Compliances
Each Nidhi Company must fulfill the compliances within the time and there is an important checklist for Nidhi Company compliances which are as follows:
The Checklist for Annual Compliance:
Form NDH 1
Form NDH 2
Form NDH 3
Form NDH 4
Form NDH 5
Declaration of Nidhi through the Central Government
Form ADT 1
Preservation of Book of Accounts
Statutory Register Protection
Financial statements
Report of Director
Statutory Meetings
Filing of Annual Income tax returns
Form AOC 4
Form MGT 7
The Checklist for Event-Based Compliance:
Name Change of the company
Changes in the address of the Registered Office
Appointment or resignation of a Director
Appointment or resignation of an Auditor
Changes in objectives of the Company
Transfer of shares
Any changes in capital structure
Increase in the authorized capital
Appointment of the Key Managerial Personnel
Penalties for Non-Compliance
Every Nidhi Company filing of compliances within time is mandatory. Non- Compliance by the Company attracts penalties for the Nidhi Companies.
If the company does not meet the compliance then the organization and the concerned officers will be paid a fine of an amount up to Rs.5, 000.
In the case of continuation of infringement then the company will be paid a further fine of Rs.500 per day.
So it is important to hire professionals to help in the procedures of compliance.
The Nidhi Company Amendment Rules, 2022
The Ministry of Corporate Affairs amended the Nidhi Company rules, in 2014, in a circular that is issued in 2022. The Ministry has discovered numerous businesses failing to comply with the essential form of NDH-4 guidelines for submission. According to the Ministry, over Ten Thousand new companies were formed between 2014 and 2019, but just 2,300 companies completed the form of NDH-4.
Some changes are made in the Nidhi Rules, 2022 which are mentioned below:
Nidhi Company must file the form of NDH-4 within 120 days of its incorporation.
The Conditions Laid Down
The Nidhi must have at least 200 members and a Net Owned Fund of at least 20Lakh before filing the form of NDH-24.
The promoters of the company and directors must meet the qualifications for a fit and proper person that is mentioned in the rules. You require knowing about the Nidhi Company Amendment Online Business under Regulatory Act.
The Role of NDH-4
Nidhi Corporation begins operations only after receiving the form NDH-4 clearance and filing form 20A.
The government must allow the filing of the form of NDH-4 within 45 days and if the government does not provide a rejection or approval then the form of NDH-4 will be deemed authorized.
Form 20A must be filed after receiving the approval of form NDH-4; therefore, you are not permitted to begin the Nidhi business operations before receiving approval for the form NDH-4.
After introducing these rules companies founded are free from filing NDH-1 and NDH-2 forms.
Start and Close Branches by Nidhi
According to the mentioned rules, Nidhi can look for the branches from the Regional Director by using the form of NDH-2 to start new Nidhi Branches.
Nidhi must file the form of NDH-2 by Regional Director at least 60 days before program closure, and the plan must be approved at a board meeting. Nidhi also must submit an application form for NDH-5 that must be published in the newspaper, and the form for NDH-2 within the time range stated in the guidelines.
Any place where a Nidhi operates that is not a registered office must be closed within 6 months of the beginning of the Nidhi (Amendment) Rules, 2022, and notification must be given to the Registrar in the Form of NDH-2.
Other Amendments in the Act
Existing entities must have a minimum capital of Rs. 10Lakhs before implementing these updated rules. This rule must be met within 18 months of implementing these rules and regulations.
No Nidhi company can get any loans from banks or other financial institutions to advance loans to its members.
A member may not exchange more than 50% of their Shareholding for the term of the loan or deposit.
The Net Owned Fund limit must be Rs.20Lakh and, therefore, should be satisfied within 120 days of incorporation of the new companies.
Conclusion
It concluded that this Mutual Benefit Company requires filing little annual compliance and it is called Nidhi Company Compliances. The legal compliances associated with Nidhi Company are authorized under the Nidhi Rules 2014 and the Companies Act 2013. The principal object of the Nidhi Company is cultivating the habit of prudence and savings amongst its members, receiving deposits from, and lending to, its members only for the mutual benefits between their members.”
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