Nidhi Company

Lawply | Updated: 12, May 2019 | Category: None

What is Nidhi Company?

Nidhi Company is a kind of company which is registered under the Companies Act, 2013. Nidhi Company is the public limited company which is made with the only purpose of accepting deposits and lending money only to its members. It is also Non-Banking Financial Company (NBFC) that has been exempted from the provisions of Reserve Bank of India (RBI).

In other words, we can say that Nidhi companies are allowed to take a deposit from their members and lend to its members only. As a result, the funds contributed to Nidhi company are only from its members (shareholders) and are used only by the shareholders of the Nidhi Company. Therefore, Nidhi Company is an ideal entity to take a deposit from and lend to the specific group of people.

Annual Compliance for Nidhi Company

Maintain Accounts and Prepare financial statements: - Mandatory at each financial year end

Annual returns: - Once a year.

Income tax return: - Each Year on or before 30th of September.

Annual General Meeting: - Mandatory twice a year.

Audit: - It is compulsory for Nidhi company to conduct an annual audit of its accounts.

Annual Filing of Forms: - Mandatory once a year.

There is various compliance are to be taken care of like ratio, company law, money laundering etc. Hence, a study of all relevant act is important. Further, important compliance as per Nidhi Rules and Companies Act are as follows:

Every Nidhi Company is required to file form NDH-1 along with the prescribed fees and duly certified by the company secretary in practice or a chartered accountant in practice or a cost accountant in practice. It has to be filed within the period of 90 days from the close of the first financial year after its incorporation and where applicable, the second financial year.

Nidhi Company needs to file form NDH-2 along with the prescribed fees with the regional director for an extension of time In case of non-compliance with the following:

To ensure 200 members in a financial year.

To maintain the Net owned funds to deposit ratio of 1:20.

Regional Director may consider the application and pass orders within the period of 30 days of receipt of the application.

Nidhi Company is also required to file form NDH-3. This is a half-yearly return which is required to file for at the end of 30th September and 31st March every time. Under this return details pertaining to Nidhi company including the number of members ( existing, newly admitted and ceased), total deposits, loans etc. are to be disclosed.

In case of non-compliance of Rule 5 sub-rule (1) beyond the second financial year, Nidhi Company shall not accept any further deposits from the commencement of the second financial year till it complies with the provisions contained in rule 5 sub-rule (1) of Nidhi Company Rules2014, besides being liable for penal consequences as provided in the Act.

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