Compliance Check List for Nidhi Company

Prashant Panda , Last updated: 14 December 2019
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Nidhi”( or a mutual benefit society) means a company which has been incorporated as a Nidhi with the object of

- Cultivating the habit of thrift and savings amongst its members

– receiving deposits from, and lending to, its members only, for their mutual benefit

Nidhis are created mainly for cultivating the habit of thrift and savings amongst its members.

In order to form Nidhi Company in India, you have to incorporate a Limited under the Company Act 2013. A minimum of 3 directors and 7 shareholders are required to start a Nidhi Company incorporation process.

These are one type of NBFC and RBI is empowered to regulate these categories. However, since NIDHIs are confined only to member-shareholder, RBI has exempted from its regulations and tighter norms. These categories of organization are incorporated under section 406 of the Companies Act 2013 read with Nidhi Rule, 2014 as amended from time to time. After being incorporated as a Nidhi Company, it shall comply with all the provisions and restrictions applicable under Companies Act 2013 as well as Nidhi Rule 2014.

Broad Compliance Requirements:-

To be incorporated as “ Public Limited Company “ with a minimum paid-up equity share capital is Rs 5 Lac
Ensure not to issue preference share. If issued before, the same to be redeemed as per the terms of the issue.
“ Nidhi Limited” should be used as part of the name.
Minor can not be member of a NIDHI
A body corporate or a trust can not be admitted as member of Nidhi
Can not accept deposit more than 20% of NOF(Net owned Funds)
Nidhi can not open branches if it has NOT earned any PAT(Profit after Tax) for continuously three preceding Financial Years.
Director should be member of Nidhi and can hold office upto term to 10 consecutive years
The tenure of Auditor is five consecutive years. Annual Certificate from statutory auditors on compliance is a MUST.
The rate of interest on loan shall not exceed 7.5% above the highest rate of interest offered on deposits.
Fixed deposit period – Minimum is 6 months and the maximum is 60 months.
Recurring Deposits -Minimum 12 months and maximum 60 months.

Compliance Calendar by NIDHI Company

Sl No	Activities /Compliance Parameter	Remarks
1	Open a current account with any scheduled bank in the name of the Company	Immediately
2	File Form 20A accordingly before commencing its business operations.	Within 180 days of incorporation
3	Within a period of one year from commencement of the rule , ensure that it has- (a) not less than two hundred members; (b) Net Owned Funds of Rupees Ten Lakh (Rs. 10,00,000) or more; (c) Unencumbered (i.e. free from any kind of charges) term deposits of not less than ten percent. of the outstanding deposits, and (d) Ratio of Net Owned Funds to deposits of not more than 1:20.	Regular
4	In the event the Company is not complying with (a) or (d) above, it shall within thirty days from the closure of the first financial year, apply to the Regional Director in Form NDH-2 for extension of time.	30 days
5	Comply with the contents of the application form as prescribed.	Application form for deposits
6	For the purpose of identification, take proof of identity and address as prescribed (not older than two months) from depositors.	PAN/AADHAR etc
7	Adhere to norms as prescribed under Rule 20 of the Nidhi Rules, 2014.	Prudential Norms
Filing compliance with ROC/MCA(A Nidhi Company has to meet compliances prescribed in the Companies Act 2013 as well as in Nidhi Rules 2014.
1	Form NDH-1 (Return of Statutory Compliance) NB- This form contains all the details regarding members, loans, deposits, reserves etc for full financial year. E-Form GNL-2 Form for submission of documents with the Registrar.	Within 90 from the close of financial year along with fees .Duly certified by PCA/PCS/CMA
2	Form NDH-2(Application for Extension of time) E-Form RD-1 Applications made to Regional Director.	Application for extension of time for not complying the (a) or (d) mentioned in 3 above with fees to RD. Within 90 days from the closure of the financial year
3	Form NDH-3 (Half Yearly Return) NB- Contains the details of Number of Members admitted during the half year, number of members ceased to be members and total number of members as on the date, Loan granted by Nidhi company along against the particular security and Deposits accepted by the Nidhi company form its members. E-Form GNL-2 Form for submission of documents with the Registrar.	Within 30 days from the conclusion of each half year along with fees. Duly certified by PCA/PCS/CMA
4	Form NDH-4 (Form for filing application for declaration as Nidhi Company and for updation of status by Nidhis.)- NB- Introduced by Nidhi (Amendment )Rule 2019 w.e.f 15th Aug 2019. Note- Failure to file form NDH-4, Companies shall not be allowed to file Form No.SH-7 (Notice to Registrar of any alteration of share capital) and Form PAS-3 (Return of Allotment).	Incorporated after 1^st July 2019- Within 60 days after the expiry of 1 year from the date of its incorporation with fees Incorporated before 1^st July 2019- Within a period of 1 year from its date of incorporation OR within 15th Feb 2020 with fees.
5	Form AOC-4 (Return for financial statements)	Within 30 days of Annual General Meeting;
6	Form MGT-7 (Annual Return)	Within 60 days of Annual General Meeting.
7	Income Tax Return	By 30^th September