Nidhi Company Audit
&
Compliance
Home/ Nidhi Company Audit & Compliance
Home/ Nidhi Company Audit & Compliance
As per the Companies Act, 2013, it is mandatory for a Nidhi Company to submit its annual returns and undergo an audit as part of its statutory compliance. In this article, we will provide a checklist to help with the audit of a Nidhi Company.
*As part of the statutory audit process for Nidhi Company, the Regulatory Authority will provide a list of three auditors for the company to choose from. The selected auditor will be responsible for performing their duties for a continuous period of three-years, unless circumstances require a change.
*At the end of the three year period, a new auditor will be appointed according to the procedure. Along with the annual audit, the auditor is required to send quarterly financial reports to the Regulatory Authority in a specific format that includes important prudential norms.
*If there are any complaints regarding the functioning of the Nidhi or if the quarterly reports of the auditor reveal information that requires further investigation, the Regulatory Authority is authorized to order a departmental inspection and a special audit.
Post Incorporation Compliances of a Nidhi Company.
It is required that the group consists of at least 200 members.
The net owned funds (NOFs) need to be at least Rs. 20 lakhs.
The NOFs & the deposit should be in a ratio not greater than 1:20.
Unencumbered term deposits must not be lower than 10 percent of the outstanding deposit as cited in Rule 14 of Nidhi Rules 2014 and Amended Rules of 2022.
According to the Rule 6 of Nidhi Rules 2014, a Nidhi Company has been restrained from performing given undertakings
Undertake business activities relating to leasing finance, Chit fund, and Hire purchase.
Investing in securities issued by a corporation.
The company can raise funds by issuing debentures, preference shares, or other forms of debt instruments.
Must have limited company status under Company Act, 2013.
It's possible to open a current account that caters to its members.
Make any arrangements or acquisitions or concessions until the same is approved in the General meeting via a special resolution and get the approval of the Regional Director.
Perform other forms of business in its name.
Lending money to, or accepting funds from, a third party.
"Accept funding from the body corporate to lend."
Leveraging partnership arrangement for borrowing or lending operation.
Conducting any form of publicity to obtain deposits.
Members of the company have pledged their assets as security.
Pay any incentive or brokerage for disbursing credits or deployment of funds to channelize deposit from its members.
Note:
If the Nidhi company fulfills all the mentioned conditions, it is allowed to provide locker facilities to its members. However, the income generated from locker services should not exceed 20 percent of the total income of the company at any point during the financial year.
Private circulation of the particulars relating to FD schemes among members bearing the terms “for private circulation to members only” shall not be considered as an advertisement.
There are two types of compliances as mentioned in the Companies Act and Nidhi Company Rules:
Annual compliances of Nidhi Company
Annual Compliances are generally those compliances that include the status and performance of the Nidhi Company in the whole year. The annual compliances are filed annually, but few such compliances are filed after a certain interval of time.
Event-Based Compliances of Nidhi Company
Event-based compliances are only filed at the time of incorporation of Nidhi Company. And again, these compliances are needed to be fulfilled at the time of any alteration in the structure of the Nidhi Company, and such alteration is non periodical. These compliances are not mandatorily to be filed at a fixed interval.
| Form | Due Date | Contents | Noteworthy Points | |
|---|---|---|---|---|
| NDH – 1 Return of Statutory Compliance | Within 90 days of the closure of the first financial year and, where applicable, the second financial year. | These are the details regarding the members, deposits, loans, and reserves for the previous financial years. | E- Form GNL-2 Form relating to the submission of documentations with the registrar | |
| NDH – 2 Application to the Regional Director and Intimation to the Registrar. | Within thirty days after the end of the financial year, an important action needs to be taken. | Following incorporation, an application was submitted to extend the timeline for meeting requirements of members and deposits. | E- Form RD -1 Applications made to Regional Director | |
| NDH -3 application for Half Yearly return | Within 30 days after the end of each half year. | During the specified period, the report contains details on the number of members admitted and ceased, as well as information on deposits and loans. | E- Form GNL-2 Form relating to the submission of documentations with the registrar | |
| NDH -4 |
For New Nidhi Company Within sixty days after the expiration of one year. From the date of incorporation For Existing Nidhi Company Within one year of incorporation or 6 months from Nidhi Rules 2019. |
For filing application for declaration as Nidhi Company and updating of status |
Failure to file form NDH -4 Companies are no longer allowed to submit Form SH-7 to notify changes in share capital to the Registrar. Form PAS -3 (Return of Allotment) |
|
| NDH -5 |
A Nidhi shall not close any branch unless it (a) publishes an advertisement in a newspaper in vernacular language in the place where it carries on business at least thirty days prior to such closure, informing the public about such closure; (b) fixes a copy of such advertisement or a notice informing such closure of the branch on the notice board of Nidhi for a period of at least thirty days from the date on which advertisement was published under clause (a); and (c) gives an intimation to the Registrar within thirty days of such closure. |
Format of advertisement to be given while closing branch | ||
| AOC – 6 | The duration of 30 days starting from the date of the Company's Annual General Meeting. | Filing of Financial Statements | ||
| MGT -7 | Within the duration of 60 days of the AGM | The company should provide an annual report that includes a list of its current members. |
| Passport / Driver’s License / Election ID / Ration Card / Aadhaar ID |
| Identity proof of members |
| Address proof of the company |
| Rental Agreement |
| Residential proof and address proof of the proposed directors and members |
| Memorandum of Association |
| Director Identification Number |
| AOA, i.e., Article of Association |
1. How many people are required to register a Nidhi Company?
A minimum of 3 directors and 7 shareholders are required to register a Nidhi company in India.
2. What are the requirements to be a Director?
The Director needs to be over 18 years of age and must be a natural person.
3. Is an office required to start a Nidhi Company?
An address in India where the registered office of the Company will be situated is required. The premises can be commercial/industrial/residential where communication from the MCA will be received.
4. Do I have to be present in-person to incorporate a Nidhi Company?
No, you don’t have to be present at our office or appear at any office for the registration of a Nidhi Company.
5. What is a Digital Signature Certificate?
A Digital Signature establishes the identity of the sender or signee electronically while filing documents through the Internet. The Ministry of Corporate Affairs (MCA) mandates that the Directors sign some of the application documents using their Digital Signature.
6. What are the documents required for Nidhi Company registration?
Identity proof and address proof are mandatory for all the proposed Directors of the Nidhi Company. PAN Card is mandatory for Indian Nationals. In addition, the landlord of the registered office premises must provide a No Objection Certificate for having the registered office in his/her premises and must submit his/her identity proof and address proof.
7. What is DIN?
Director Identification Number is a unique identification number assigned to all existing and proposed Directors of a Company. It is mandatory for all present or proposed Directors to have a Director Identification Number. Director Identification Number never expires and a person can have only one Director Identification Number.
8. Who regulates the Nidhi Companies?
Ministry of Corporate Affairs regulates Nidhi Company and is also accountable for Nidhi Company Registration.
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