Introduction:
ences of a Nidhi Company in India. The minimum capital requirement stands at Rs. 10 lakh. Moreover, a Nidhi Company must be registered as a Public Limited Company and have "Nidhi Limited" as the last words of its name.
Compliance Requirements of a Nidhi Company
Compliance requirements for Nidhi Companies can be categorized into three main parts:
Pre-Incorporation Compliances
Before incorporating a Nidhi Company, certain mandatory compliances must be adhered to, including:
- Minimum Membership: A minimum of seven members is required, out of which three must serve as Directors of the Company.
- Legal Status: The company must be registered as a Public Company and bear the suffix "Nidhi Limited" in its name.
- Capital Requirement: The minimum paid-up share capital should be Rs. 5 lakh.
- Branch Limitation: Nidhi Companies cannot open branches without earning profit after tax for three consecutive financial years.
Post-Incorporation Compliances
Following the incorporation of a Nidhi Company, compliance obligations arise, comprising:
General Compliance
Within one year of incorporation, the company must fulfill certain conditions, including:
- Membership Increase: The number of members should reach at least 200.
- Net Owned Funds: The net owned funds should amount to Rs. 20 lakhs.
- Net Owned Funds to Deposits Ratio: The ratio of net owned funds to deposits should not exceed 1:20.
- Bookkeeping: Maintain books of accounts and statutory registers.
- Statutory Meetings: Convene statutory meetings.
Annual Compliance
Annual compliance activities aim to keep the government informed about the company's activities and financial status. These include:
- Filing Returns: Submit Form NDH-1 within 90 days from the close of the financial year.
- Extension Requests: File Form NDH-2 in case of failure to meet certain conditions within 30 days from the closure of the financial year.
- Half-Yearly Return: File Form NDH-3 within 30 days from the conclusion of half a year, duly certified by a practicing professional.
- Application for Declaration: Submit Form NDH-4 within specific timelines.
- Financial Filings: File Form AOC-4 and ITR-6 within the stipulated deadlines.
- Annual Return: File Form MGT-7 within 60 days of the Annual General Meeting.
Penalties for Non-Compliance
Failure to comply with the prescribed regulations attracts penalties, including fines up to Rs. 5,000 and additional charges for continued non-compliance.
Event-Based Compliances
Event-based compliances are necessary during changes in the company's structure, including:
- Change in Company's Name or Address
- Directorial Changes
- Appointment or Removal of Auditor
- Share Transfers
- Increase in Authorized Capital
- Appointment of Key Managerial Personnel
New Compliance Rules for Nidhi Companies
Recent amendments in the Nidhi (Amendment) Rules, 2022, have introduced stricter compliance measures, including:
- Mandatory Notification: Public companies incorporating as Nidhi with a share capital of Rs. 10 lakh must apply for notification within 120 days.
- Membership and Funds Requirement: Maintain a minimum of 200 members and Rs. 20 lakh net-owned fund.
- Consent Requirement: Obtain consent from the central government within 14 months of incorporation.
- Deemed Approval: Lack of response from the central government within 45 days implies approval.
FAQs (Frequently Asked Questions)
What is a Nidhi Company?
A Nidhi Company is a type of NBFC that facilitates borrowing and lending among its members for mutual benefit.
What are the pre-incorporation compliances for a Nidhi Company?
Pre-incorporation compliances include minimum membership, legal status, and capital requirements.
What are the penalties for non-compliance by a Nidhi Company?
Non-compliance may result in fines up to Rs. 5,000 and additional daily charges for continued infringement.
What are the annual compliance requirements for a Nidhi Company?
Annual compliance involves filing returns, maintaining financial records, and convening meetings.
What are the event-based compliances for a Nidhi Company?
Event-based compliances include changes in the company's structure, such as directorial appointments or address alterations.
What are the new compliance rules introduced for Nidhi Companies?
The new rules mandate notification, membership, and fund requirements, along with obtaining consent from the central government.
What is the process for filing annual returns for a Nidhi Company?
Annual returns must be filed within 60 days of the Annual General Meeting using Form MGT-7.
How often should a Nidhi Company file Form NDH-3 for half-yearly returns?
Form NDH-3 must be filed within 30 days from the conclusion of half a year, certified by a practicing professional.
What is the significance of the net owned funds in compliance for Nidhi Companies?
Net owned funds determine the financial stability and compliance eligibility of Nidhi Companies.
How does the Nidhi Company registration process differ from other NBFCs?
Nidhi Companies focus on promoting thrift and savings among members, with specific compliance requirements tailored to this objective.
In conclusion, compliance requirements under Nidhi Companies are crucial for ensuring legal adherence and financial stability. With distinct pre-incorporation, post-incorporation, and event-based compliances, Nidhi Companies must navigate a complex regulatory landscape. Adhering to these requirements not only fosters regulatory compliance but also enhances the trust and confidence of stakeholders. As the regulatory environment evolves, staying updated on new compliance rules and fulfilling obligations in a timely manner is paramount for the sustained success of Nidhi Companies.