Annual or Secretarial Compliances associated with Nidhi Company Registration
Nidhi Company Registration
Do you know what does Nidhi mean? It means treasure in Hindi. Nidhi Company is a firm registered under the Companies Act, 2013 and is a public limited company formulated to serve the only purpose of accepting deposits and lending funds to its members.
It is a form of Non-Banking Financial Company (NBFC) but with the low capital requirement. Moreover, Nidhi Companies are exempted from the provisions of Reserve Bank of India (RBI). Hence, if you want to start your own finance company with low capital requirement then you must obtain Nidhi Company Registration.
Generally, such companies operate in southern India and instil the habit of saving money among its members and works on the principle of mutual benefit.
One of the biggest advantages of commencing Nidhi Company is that there’s a considerably fewer engagement of RBI and hence, it is easy to build. Furthermore, you aren’t required to obtain the license from the Reserve Bank of India.
As the title of the blog suggests, we will be studying the compliances of Nidhi Company. Apart from that, the topics covered in this blog are as follows:
· Minimum requirements for Nidhi Company Registration
· The validity period of Nidhi Company Registration
· Limitations of Nidhi Company
· Compliances to follow after obtaining Nidhi Company Registration
Minimum requirements for Nidhi Company Registration
Requirements before obtaining Nidhi Company Registration
If you’re willing to register your business as Nidhi Company, then you must follow the minimum requirements of the company as follows:
· There must be a minimum of seven members required to start a Nidhi Company out of which three members should be the directors of the company.
· There should be at least seven shareholders in the Nidhi Company at the time of incorporation.
· A minimum of 5 lakh rupees is mandatory as the equity share capital to begin a Nidhi Company. Plus, Nidhi Company can’t issue preference shares.
Requirements to be fulfilled after obtaining registration
· A Nidhi Company must have a minimum of 200 shareholders and comply with other required standards within 1 year of incorporation.
· The net owned capital or fund must not be less than Rs. 10 lakhs after one year of the Nidhi Company Registration.
· The ratio of the net owned funds to deposits shouldn’t be more than 1:20.
· Unencumbered term deposits shouldn’t be less than 10% of the outstanding deposits.
The validity period of Nidhi Company Registration
If we talk about the validity period of the Nidhi Company, then it will remain for lifetime. Since the company has separate legal existence, it’s not affected by the departure of the death of any one or all of its shareholders. Once the registration is obtained, it will be in existence until it is legally dissolved as per the provisions of the law.
Study the essential highlights on Nidhi Company Registration.
Limitations of Nidhi Company Registration
It is said that if something is advantageous, then it will surely have some disadvantages too. Some of the limitations of Nidhi Company Registration are as follows:
· Nidhi Companies cannot run micro finance.
· There are more restrictions on business.
· Such companies cannot invest in any company.
· Nidhi Companies can’t involve themselves in any advertisement.
Compliances to follow after obtaining Nidhi Company Registration
There are various compliances that are supposed to be taken care of like ratio, money laundering, company law, and more. Therefore, a study of every relevant act is important. Furthermore, necessary compliance as per Nidhi Rules and Companies Act are as follows:
· Every Nidhi Company is supposed to file form NDH-1 along with the prescribed fees and duly certified by the company secretary (CS) in practice or a chartered accountant in practice or a practicing cost accountant. It should be filed within 90 days from the close of the first financial year after the company’s incorporation and where applicable, the second financial year.
· Nidhi companies are supposed to file form NDH-2 along with the required fees with the regional director for an extension of time. If the company is not complying with above-described compliance, then within 30 days from the close of the first financial year, it shall apply to the Regional Director in Form NDH-2 with the prescribed extension fee. The Regional Director may consider the application and pass orders within 30 days of the receipt of the application.
Moreover, Nidhi Company is supposed to file form NDH-3. It is a half yearly return required to be filed with the prescribed fees as provided in Companies (Registration Offices and Fees) Rules, 2014 within 30 days from the conclusion of each half yearly duly certified by a practicing company secretary or practicing charade accountant or cost accountant in practice.
Point to consider
The notified Nidhi Companies are exempted by the RBI from the core provisions of the RBI Act and other directions applicable to NBFCs. Till date; RBI doesn’t have any particularized regulatory framework for Nidhi Company. Exemptions for Nidhi Companies are as follows:
· Section 45-IA (Compulsory Registration with RBI)
· Section 45-IB (Maintenance of Liquid Assets)
· Section 45-IC (Creation of Reserve Fund)
Takeaway
Although Nidhi Company doesn’t have much compliance as compared to that of the NBFC, it’s obligatory to follow each annual compliance. If you’re facing any trouble regarding Nidhi Company registration or its compliances, then contact the experts of Swarit Advisors.
