{"id":2562,"date":"2020-01-29T13:23:30","date_gmt":"2020-01-29T13:23:30","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=2562"},"modified":"2022-06-04T11:46:37","modified_gmt":"2022-06-04T06:16:37","slug":"compliances-for-a-nidhi-company-a-complete-checklist","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/compliances-for-a-nidhi-company-a-complete-checklist\/","title":{"rendered":"Compliances for a Nidhi Company: A Complete Checklist"},"content":{"rendered":"\n<p>A Nidhi Company is categorised under the Non-Banking Financial Company\nor NBFC, which does not involve the Reserve Bank of India (RBI) license.\nSection 406 of the Companies Act, 2013 acknowledges a Nidhi Company and is\nmanaged and controlled by the Ministry of Corporate Affairs. Their primary\nfundamental business is borrowing and lending money between its members. Nidhi\nCompany is based on the concept of the \u2018Principle of Mutuality\u2019 or \u2018Paraspara Sahaya\u2019.\nEntities who wish to operate a lending business with low funds investment can\nopt for Nidhi Company. A Nidhi Company functions for the common benefit of all\nits members and shareholders. Section 406 of the Companies Act, 2013 and Nidhi\nRules, 2014 prescribes some major compliance for a Nidhi Company.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/compliances-for-a-nidhi-company-a-complete-checklist\/#Nidhi_Company_Registration_in_India\" >Nidhi Company Registration in India<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/compliances-for-a-nidhi-company-a-complete-checklist\/#What_are_the_Compliances_of_a_Nidhi_Company\" >What are the Compliances of a Nidhi Company?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/compliances-for-a-nidhi-company-a-complete-checklist\/#What_are_the_General_Compliances_to_be_followed_by_a_Nidhi_Company\" >What are the General\nCompliances to be followed by a Nidhi Company?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/compliances-for-a-nidhi-company-a-complete-checklist\/#Changes_made_by_Nidhi_Company_Amendment_Rules_of_2022\" >Changes made by Nidhi Company (Amendment) Rules of\n2022<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/compliances-for-a-nidhi-company-a-complete-checklist\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Nidhi_Company_Registration_in_India\"><\/span>Nidhi Company Registration in India<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Nidhi Company is registered under the provisions prescribed in&nbsp;<strong><em>Companies\nAct, 2013<\/em><\/strong><a href=\"https:\/\/www.mca.gov.in\/Ministry\/pdf\/CompaniesAct2013.pdf\" target=\"_blank\" rel=\"noreferrer noopener\"><strong><em><sup>[1]<\/sup><\/em><\/strong><\/a>. The only objective of forming a Nidhi Company is&nbsp;<strong>cultivating\nthe habit of thrift and savings amongst<\/strong>&nbsp;its members. The minimum\ncapital requirement to start a&nbsp;<strong>Nidhi Company is Rs.10 lakh<\/strong>. Since\nNidhi Company is not bounded to receive a license from the Reserve Bank of\nIndia, hence it is easy to form. Moreover, it is registered as a Public Limited\nCompany and must have \u201c<strong>Nidhi Limited\u201d&nbsp;<\/strong>as the last words of its\nname. Now we are aware of the process of&nbsp;<a href=\"https:\/\/corpbiz.io\/nidhi-company-registration\"><strong>Nidhi Company Registration<\/strong><\/a>&nbsp;so, let\u2019s learn about the crucial compliances.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_Compliances_of_a_Nidhi_Company\"><\/span>What are the Compliances of a Nidhi Company?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>Compliances of a Nidhi Company are divided into three parts:<\/em><\/strong><\/p>\n\n\n\n<ul><li>First is&nbsp;<strong>Pre-Incorporation Compliances<\/strong>,<\/li><li>Second is&nbsp;<strong>Post \u2013Incorporation Compliances<\/strong>, and<\/li><li>Third is&nbsp;<strong>Event-based Compliances<\/strong>.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Know about the Pre-Incorporation compliances of\nNidhi Company<\/h3>\n\n\n\n<p>Every Nidhi Company has to follow some mandatory compliance to obtain\nNidhi Company Registration.<\/p>\n\n\n\n<p><strong><em>The necessary compliances to be followed are mentioned below:<\/em><\/strong><\/p>\n\n\n\n<ul><li>Minimum of seven members is needed to start a Nidhi Company, out of\n     which three members must be the Directors of the Company.<\/li><li>Minimum paid-up equity share capital of Rs. 10 lakh is required to\n     start a Nidhi Company.<\/li><li>Not to issue preference shares and if it is issued the same to be\n     redeemed as per the terms of the issue.<\/li><li>Nidhi Limited\u201d must be used as part of the name.<\/li><li>Minor cannot be a member of a Nidhi Company.<\/li><li>A trust or body corporate cannot be admitted as a member of Nidhi\n     Company.<\/li><li>Net Owned Funds of 20 lakhs or more.&nbsp;<\/li><li>Nidhi Company cannot open branches if it has not earned any profit\n     after tax for consecutive three financial years.&nbsp;<\/li><li>The rate of interest on the loan shall not exceed 7.5% above the\n     highest rate of interest offered on deposits.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">What is the Post \u2013Incorporation Compliances of\nNidhi Company?<\/h3>\n\n\n\n<p><strong><em>Post Incorporation of <\/em><\/strong><em><a href=\"https:\/\/corpbiz.io\/nidhi-company-compliance\"><strong>Nidhi Company compliance<\/strong><\/a><\/em><strong><em> is divided into two:<\/em><\/strong><\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/06\/image.png\" alt=\"Post Incorporation of Nidhi Company compliance\" class=\"wp-image-44133\" width=\"520\" height=\"320\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/06\/image.png 781w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/06\/image-300x185.png 300w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/06\/image-768x473.png 768w\" sizes=\"(max-width: 520px) 100vw, 520px\" \/><\/figure><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_General_Compliances_to_be_followed_by_a_Nidhi_Company\"><\/span>What are the General\nCompliances to be followed by a Nidhi Company?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>The Nidhi Company must ensure the following compliances within a year of\nNidhi Company registration:<\/em><\/strong><\/p>\n\n\n\n<ul><li>The number of members should increase to at least 200 within one\n     year of its incorporation.<\/li><li>The Net owned Fund should be Rs. 20 lakh or more.<\/li><li>The ratio of Net-owned Funds to the deposits must not exceed 1:20.<\/li><li>As prescribed in Rule 14 of the Nidhi Rules, 2014, the deposits\n     should not be less than 10% of the outstanding deposits.<\/li><li>Maintenance of Books of Accounts.<\/li><li>Maintain the statutory Registers.<\/li><li>Convene Statutory Meetings.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">What is the Annual Compliance of a Nidhi Company?<\/h3>\n\n\n\n<p>Annual compliance is followed to keep the Government updated on the\nactivities and functional divisions of the company.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">What is Event-Based Compliances of a Nidhi Company?<\/h3>\n\n\n\n<p>Generally, event-based compliances are required to file only once during the&nbsp;<a href=\"https:\/\/corpbiz.io\/company-registration\"><strong>company registration&nbsp;process<\/strong><\/a>. Furthermore, these compliances must be followed when there is any change also in the Nidhi company\u2019s structure which are non-periodical in nature.<\/p>\n\n\n\n<p><strong><em>Below is the list of event-based compliances<\/em><\/strong>:<\/p>\n\n\n\n<ul><li>Any change in the company\u2019s name.<\/li><li>Change in Registered office address.<\/li><li>Appointment or Resignation or&nbsp;Removal of Director.<\/li><li>Appointment or Resignation or Removal of Auditor.<\/li><li>Any amendment in the company\u2019s objective.<\/li><li>Transfer of shares.<\/li><li>Increase in the authorised capital of the company.<\/li><li>Appointment of the Key Managerial Personnel.<\/li><li>Any other changes that are event-based.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Changes_made_by_Nidhi_Company_Amendment_Rules_of_2022\"><\/span>Changes made by Nidhi Company (Amendment) Rules of\n2022<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The\nfollowings are the said amendments related to the registration of Nidhi Company\nmade under the Nidhi Company (Amendment) Rules, 2022:<\/p>\n\n\n\n<ul><li>No company shall raise the deposit for any member or gives a loan\n     to any of its members if:<\/li><\/ul>\n\n\n\n<ul><li>it does not comply with the rules or requirements of Nidhi Company\n     New Rules,<\/li><li>the central government has rejected the application in Form NDH -4,<\/li><\/ul>\n\n\n\n<p>However, not\nanything written under these rules shall apply to the Company incorporated on\nor after the commencement of these Nidhi Company New Rules.&nbsp;<\/p>\n\n\n\n<ul><li>Any public company wanting to be declared as a Nidhi company shall\n     apply in Form NDH-4 within a period of 120 days from the date of its\n     incorporation for declaration as a Nidhi company after fulfilling the\n     following conditions:<\/li><\/ul>\n\n\n\n<p>&nbsp;\n&nbsp;(i) it has not less than 200 members;<\/p>\n\n\n\n<p>&nbsp;\n&nbsp;(ii) it has Net owned Funds of Rs. 20 lacs or more<\/p>\n\n\n\n<p>After\nexamining the application, the central government conveys its decision within\n45 days to the Company, and if it fails to do so within 45 days, it will be\ndeemed to be approved.<\/p>\n\n\n\n<p>However, the\nCompany shall commence its business only if the central government approves its\napplication.&nbsp;<\/p>\n\n\n\n<ul><li>The Company shall attach a declaration with regard to the      fulfilment of fit and proper person by all of its directors and promotors with the Form NDH-4.<\/li><\/ul>\n\n\n\n<p>The\nfollowing criteria should be looked upon to determine that any promoter or\nDirector is a fit and proper person:<\/p>\n\n\n\n<p>(a)\nIntegrity, honesty, ethical behaviour, fairness, reputation and character&nbsp;<\/p>\n\n\n\n<p>(b) Not\nincurring any of the following disqualifications:<\/p>\n\n\n\n<p>(i) Any\ncomplaint or information under section 154 of CrPC has been filed or is pending\nagainst him<\/p>\n\n\n\n<p>(ii)\nChargesheet filed against him in the matter of economic offences<\/p>\n\n\n\n<p>(iii)\nRestraining, prohibition or department order has been passed against him in any\nmatter related to company law, securities law or financial market in force<\/p>\n\n\n\n<p>(iv)\nConviction order passed against him involving moral turpitude<\/p>\n\n\n\n<p>(v) Declared\ninvolvement and not been discharged&nbsp;<\/p>\n\n\n\n<p>(vi) Unsound\nmind<\/p>\n\n\n\n<p>(vii) Wilful\ndefaulter<\/p>\n\n\n\n<p>(viii)\nFugitive economic offender<\/p>\n\n\n\n<p>(ix)\nDirector of five or more companies&nbsp;&nbsp;<\/p>\n\n\n\n<p>(x) Such\nperson is the Director in five or more than five; or promoter in three or more\nthan three Nidi Companies<\/p>\n\n\n\n<ul><li>The minimum paid-up share capital has been raised from 5 lakhs to      10 lakhs.<\/li><li>Nidhi company existing on the date of enforcement of Nidhi Company      New Rules shall comply with all the requirements within a period of 18      months from the date of such enforcement.&nbsp;<\/li><li>The requirement of filing the application in Form NDH 1 within 90      days from the Company&#8217;s incorporation shall not be applicable to the      companies incorporated on or after the enforcement of Nidhi Company New Rules.&nbsp;<\/li><li>The requirement of Net owned funds for Nidhi company has been      changed from 10 lakhs to 20 lakhs.&nbsp;<\/li><li>In case a Nidhi company wants to open more than three branches      outside the district or any branch outside the district, then it shall now      have to apply in Form NDH 2 along with the fee as required under the      Companies (Registration Offices and Fee) Rules, 2014 and intimate about      such opening to the Registrar within 30 days from the opening. However, it      cannot open branches unless it has filed its financial statement or annual      return to the Registrar. And, it shall not open its Branch outside the      state where its registered office is situated.<\/li><li>In the Annexure, an amendment has been made in the Forms (NDH 2      Form: heading, serial no. 4, serial no. 6, in Form NDH 3 and NDH, also,      after NDH 4, another Form of NDH 5 is inserted)&nbsp;<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Nidhi Companies are easy to operate as there is less involvement of RBI. Still, they have to follow the compliances set up for them by the Companies Act, 2013 and the Nidhi Rules, 2014. Not following the compliances can subject to hefty penalties. The compliance process is a bit complicated, so it is always suggested in the best advice to take the help of professionals. You can contact&nbsp;Corpbiz, we have highly qualified CA\u2019s, CS and other professionals who can help you sail through this complicated process.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our Article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/nidhi-company-incorporation-step-by-step-approach\/\">Nidhi Company Incorporation: A Step By Step Approach\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A Nidhi Company is categorised under the Non-Banking Financial Company or NBFC, which does not involve the Reserve Bank of India (RBI) license. Section 406 of the Companies Act, 2013 acknowledges a Nidhi Company and is managed and controlled by the Ministry of Corporate Affairs. Their primary fundamental business is borrowing and lending money between [&hellip;]<\/p>\n","protected":false},"author":11,"featured_media":44135,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[120],"tags":[33],"acf":{"service_id":"321"},"authorName":"Deepti Shikha","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/01\/Deepti-Shikha.jpg","authorDescription":"Deepti is a Law graduate with an avid interest in reading and very proficient in summarizing legal cases. She has enough experience in handling legal affairs of the company. In the initial days of her career, she has worked as a legal researcher and has 3+ years of experience.","postViews":18463,"readingTime":5,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/2562"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/11"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=2562"}],"version-history":[{"count":26,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/2562\/revisions"}],"predecessor-version":[{"id":44140,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/2562\/revisions\/44140"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/44135"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=2562"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=2562"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=2562"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}