Post Incorporation Compliance of A Nidhi Company

POST-INCORPORATION COMPLIANCE OF A NIDHI COMPANY

In accordance with the Section 406 of the Companies Act, 2013 and the rules made thereunder, a ‘Nidhi Company’ means a company incorporated as Nidhi with the object of –

-Cultivating the habit of thrift and savings amongst the members, and

-Receiving deposits from and lending to the members for their mutual benefit, and also duly complying with the rules formed by the Central Government.

We have already discussed the process and other aspects of incorporation of a Nidhi Company as given on https://taxguru.in/company-law/incorporation-nidhi-company.html and under this article, we shall discuss the post incorporation compliances of a Nidhi Company.

 A. Conditions to be satisfied by the Nidhi after Incorporation

A Nidhi Company shall within a period of one year from the date of incorporation –

i. Have minimum 200 members;

ii. Net Owned Funds of Nidhi Company should be INR 10 Lakhs or more; and

iii. Unencumbered term deposits of not less than 10% of the outstanding deposits; and

iv. The ratio of Net Owned Funds to Deposits should not be more than 1:20.

B. Company Law Compliances just after Incorporation by Nidhi Companies

S. No.	Compliances
1.	Holding of Board meeting and pass general resolutions along with the specific resolutions for following matters: • Opening of bank account • Obtaining stationery for the Company • Finalization of draft of membership form for obtaining deposits and giving loans • Issuing of share certificates to the promoters of the Company • Appointment of auditors of the Company • Take note of MOA, AOA, registered office and common seal of the Company
2.	File eForm ADT-1 for appointment of First auditors of the Company within 15 days of appointment.
3.	Apply for share stamping after issuance of share certificates in order to ensure validity of title of the share certificates.
4.	Opening of bank account, remit the amount as subscribed by the promoters of the Company from their respective bank accounts, obtain the bank statement as proof and file eForm 20A as commencement of business of the Company.

C. Practical things not falling under Compliance but Advisable to do by Nidhi Companies

1. A Nidhi Company has to practically maintain a lot of data about the members of the Company including the KYC of each one of them. Also, workings for transferring and allotment of shares needs to be done on a daily basis. Accordingly, it is recommended to purchase a good nidhi software in order to enable these workings easier and smooth.

2. Initially, a Nidhi Company has to issue a lot of shares for taking deposits or giving loans and every time, issuing new capital amounts to compliance of eform PAS-3. Instead, it is recommended that the new shares should be issued to the new members via transferring of capital from promoters from their shareholding.

This is a matter of choice of the management of every Company as although this process would amount to lowering of compliance cost as transfer can be done by the management themselves but on the other hand, also the shareholding of the promoters decreases.

3. Get the application forms for deposit drafted in compliance with the laws.

4. Although for giving loans, no particular format of application form is given but still, it is recommended to get the same drafted in consonance with the generally accepted principles.

D. Important Points for Allotment of Shares by Nidhi Company

1. No body corporate, trust, minor shall be admitted as member of the Nidhi Company.

Provided that deposits in the name of the minor may be deposited in the name of a minor if the same is made by the natural/legal guardian of the minor.

2. The nominal value of shares of a Nidhi Company shall not be less than 10.

3. A Nidhi Company shall allot to each deposit holder at least 10 shares or shares equivalent to Rs. 100 in value. However, a savings account/recurring account holder shall hold at least one share of Rs. 10.

It is pertinent to mention that no services fee shall be levied by a Nidhi Company for issue of shares.

Importantly, it is observed from the interpretation of Nidhi Rules and the Companies Act, 2013, that the intention of the law is that a Nidhi Company should earn from the difference of the interest charged on providing loans and given on accepting deposits. Also, it can also earn the rental income from the locker facilities as provided under the Act. But apart from these two activities mentioned, the law intensifies the Nidhi Company to purely work among its members such that public at large or innocent people are not made fool off or lured in the name of a Nidhi Company.

E. Yearly Compliances of a Nidhi Company

The compliances of a Nidhi Company are much similar to that of a normal Company like holding of board meetings, annual general meetings, maintenance of minutes and statutory register but apart from these, the following forms are required to be annual filed with the government:

S. No.	Forms and Details	Due Date of filing
1.	Form NDH-1 (Return of Statutory Compliance)	Within 90 days from the closure of first financial year
2.	Form NDH-2 (Application for Extension of time)	Within 30 days of closing of first financial year if the Company is not able to meet the conditions as mentioned in serial no. I
3.	Form NDH-3 (Half Yearly Return)	Within 30 days from the conclusion of each half year
4.	Form NDH-4 (Form for filing application for declaration as Nidhi Company and for updation of status by Nidhis)	Within 60 days from the date of expiry of one year of incorporation
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.	Form DIR-3 KYC (KYC of Directors)	On or before 30th September every year for all the directors of the Company.
8.	eForm MSME	Within 30 days of each half year
9.	eForm DPT-3 (Return of Deposit)	On or before 30th April every year
10.	eForm MGT-14	Within 30 days of the event like for example, approval of financial statement and board report

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{The author i.e., Kajal Goyal is a Company Secretary in Practice at Kajal Goyal and can be reached at (M) +91-9999952595 and (E) cskajalgoyal@gmail.com}