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Necessary Compliance Measures before Incorporation of a Nidhi Company

The following are the essential requirements that must be followed:

•        A Nidhi Company can be started with a minimum of 7 members, with three of them being appointed as Directors.

•        The minimum capital required to incorporate a Nidhi Company is Rs 5,00,000.

•        The interest rate on loans cannot exceed 7.5% over the highest interest rate provided on deposits.

•        A Nidhi Company cannot have a corporate body or trust as a partner.

•        If preference shares are issued, they must be redeemed under the same terms as the initial issue.

•        The company cannot accept deposits exceeding 20% of its Net Owned Funds.

•        Minor individuals cannot be partners in a Nidhi Company.

•        The company name must include "Nidhi Limited" at the end.

•        If the company fails to make a profit for three consecutive financial years, it is not allowed to open any branches.

Compliance Requirements for Nidhi Companies after Incorporation

•        The organization must have at least 200 members within one year of being established.

•        According to Rule 14 of the Nidhi Rules, 2014, the reserves should be at least 10% of the total deposits.

•        The Net owned Fund should be Rs.10 lakh or higher.

•        Evidence or financial records should be provided to support the statements.

•        The ratio of Net-owned Funds to the reserves should not exceed 1:20.

•        Keep the necessary legal records and conduct required statutory meetings.

Benefits of Registering a Nidhi Company

•        The formation of a Nidhi Company can be initiated with a minimum of 7 individuals, where 3 of them will be nominated as directors.

•        The registration process is simplified and can be completed within 10-15 days.

•        A minimum capital investment of Rs. 5,00,000 is mandatory for the commencement of this venture.

•        The invested capital should be deposited within 60 days of registration.

•        This investment option promotes a culture of saving among partners, which makes it a viable option for long-term investments.

•        Nidhi Companies do not require approval from the RBI as they fall under the criteria of NBFC.

•        The risk involved in Nidhi Company registration is minimal, as they operate under the Nidhi Rules 2014, which govern their business activities.

•        Nidhi Companies provide loans to their members at a low interest rate, making it a secure and reliable option.

Compliance requirements and due dates are as follows:

- Annual General Meeting (AGM) should be held by September 30th each year.

- MGT-7 form should be filed within 2 months or 60 days after the AGM.

- AOC-4 form should be filed within 1 month or 30 days after the AGM.

- NDH 1 form should be filed within 3 months or 90 days after the end of each fiscal year.

- NDH 3 form should be filed every 6 months or half-yearly.

- Income Tax Return should be filed by September 30th each year.

Annual Compliance Requirements for Nidhi Companies

•        The Nidhi Company must regularly file annual compliances to ensure they are meeting the requirements set out in the Companies Act 2013 and Nidhi Rules 2014.

•        These compliances provide a comprehensive overview of the company's activities and performance during a specific time period.

•        It is important for the Nidhi Company to adhere to these compliances in order to maintain transparency and accountability.

Annual Compliance Checklist for Nidhi Company

NDH-1

- Filing of form NDH-1 is mandatory for Nidhi Companies

- Submission of the form should be accompanied by payment of requisite fees and certification by an authorized accountant

- The annual return must be filed within 90 days or 3 months from the end of the first or second year after registration.

 NDH-2

To request for an extension of time, it is required to submit form NDH-2 if certain conditions are not met.

These conditions include failing to add at least 200 partners in a year and being unable to maintain a net owned fund to deposit ratio of 1:20.

The NDH-2 form should be filed with the Regional Director along with the necessary fee payment. The director will then review the application and make a decision within a month or 30 days from the date of receiving the application.

 NDH-3

The NDH-3 form is a crucial annual return document that must be submitted by Nidhi Companies, and it is required to be filed twice a year.

 •        Nidhi companies must ensure that they maintain precise records of their financial transaction

 •        Statutory registers are required to be maintained by the Nidhi Company as per the Companies Act 2013 regulations. Filing of annual returns is mandatory to ensure compliance with the stated regulations.

Hold official meetings

Organize legally required meetings. Conduct meetings with the company's directors and shareholders to discuss business matters. Preparing financial reports for the Nidhi Company, such as the Balance Sheet, Cash Flow Statement, and Profit & Loss Account statement. It is mandatory for a Nidhi company to create these financial reports.

Filing Income tax return: Nidhi Company is required to submit their annual income tax returns by the 30th of September in the following fiscal year.

 Submission of AOC-4 for financial statement returns filing

The AOC-4 form contains details of the financial statement or reports of the Nidhi Company. It is accompanied by supporting documents. The Nidhi Company is required to file an annual return to the Ministry of Corporate Affairs (MCA) using Form MGT-7.

 Penalty due to non-compliance

•        Failure of the company to submit the required documents within the specified timeframe may result in punishment and penalties for the Nidhi Bank Operators.

•        In the event of non-compliance, the responsible officials will be subject to a fine of up to Rs 5000.

•        If the violation continues, an additional penalty of Rs 500 will be imposed systematically.

•        Therefore, it is crucial to seek compliance maintenance services from industry experts.