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Nidhi Company Annual Compliance

A Nidhi Company is a type of Non-Banking Financial Company (NBFC) in India, established with the primary objective of cultivating the habit of thrift and savings among its members. These companies are allowed to take deposits from and lend to their members, making them a unique entity within the Indian financial landscape. However, like all registered companies, Nidhi Companies must adhere to a set of annual compliance requirements to maintain their legal standing and ensure smooth operations.

Annual compliance for a Nidhi Company is not just a regulatory obligation but also a reflection of its commitment to transparency and good governance. By complying with these requirements, a Nidhi Company assures its members and regulators of its financial health and operational integrity.

Requirements of Nidhi Company Annual Compliance

The following are the key annual compliance requirements for a Nidhi Company in India:

  1. Annual Return (Form MGT-7):
    • Every Nidhi Company must file its annual return in Form MGT-7 within 60 days from the date of the Annual General Meeting (AGM). This return captures details like the company’s shareholding structure, member information, and changes in directorship.
  2. Financial Statements (Form AOC-4):
    • The company is required to file its audited financial statements, including the Balance Sheet, Profit & Loss Account, and Director’s Report, in Form AOC-4 within 30 days of the AGM.
  3. Income Tax Return:
    • A Nidhi Company must file its Income Tax Return for the financial year by 30th September, provided its accounts are subject to audit. For companies not requiring an audit, the deadline is 31st July.
  4. Director Identification Number (DIN) KYC:
    • Every Director of the Nidhi Company must complete the DIN KYC process annually to keep their DIN active. Failure to do so can lead to deactivation and penalties.
  5. Form NDH-1:
    • Nidhi Companies are required to submit Form NDH-1 within 90 days from the end of the financial year. This form provides details of members, deposits, loans, and the ratio of net owned funds to deposits.
  6. Form NDH-2 (if applicable):
    • If a Nidhi Company is unable to meet the compliance requirements for deposits, it must file Form NDH-2 within 30 days of the end of the first financial year, seeking an extension from the Regional Director.
  7. Form NDH-3:
    • This half-yearly return is to be filed in Form NDH-3 within 30 days from the conclusion of each half-year, providing details on deposits, loans, and membership.
  8. Statutory Audit:
    • Like other companies, a Nidhi Company’s accounts must be audited by a Chartered Accountant every financial year.

Why Choose to Make Nidhi Company Annual Compliance?

  1. Legal Standing:
    • Ensuring timely annual compliance helps maintain the Nidhi Company’s legal standing. Non-compliance can lead to severe penalties, disqualification of directors, and even the company’s closure.
  2. Member Confidence:
    • Regular compliance builds trust among the members of the Nidhi Company, assuring them that their investments are secure and that the company is being managed responsibly.
  3. Avoid Penalties:
    • The MCA and other regulatory bodies impose hefty fines for non-compliance. Meeting annual compliance deadlines helps avoid these unnecessary financial burdens.
  4. Operational Continuity:
    • Compliance ensures that the Nidhi Company can continue its operations without legal or regulatory interruptions, allowing it to focus on serving its members.
  5. Ease of Fund Management:
    • Regular compliance and timely reporting ensure that the company’s financial records are up-to-date, facilitating easier management of deposits, loans, and funds.
  6.  

Documents Required for Nidhi Company Annual Compliance

The following documents are typically required to fulfill the annual compliance requirements for a Nidhi Company in India:

  1. For Annual Return (Form MGT-7):
    • List of Shareholders
    • Details of Directors and Key Managerial Personnel
    • Registered Office Address
  2. For Financial Statements (Form AOC-4):
    • Audited Balance Sheet
    • Profit & Loss Account
    • Director’s Report
    • Auditor’s Report
  3. For Income Tax Return:
    • Company’s Financial Statements
    • Tax Audit Report (if applicable)
    • Bank Statements
    • GST Returns (if applicable)
  4. For Form NDH-1:
    • List of Members
    • Details of Deposits and Loans
    • Net Owned Funds Certificate
  5. For Form NDH-2 (if applicable):
    • Application Letter to the Regional Director
    • Justification for Extension
  6. For Form NDH-3:
    • Half-yearly Financial Statements
    • Details of Members, Deposits, and Loans
  7. For Statutory Audit:
    • Books of Accounts
    • Financial Statements
    • Compliance Certificates

Conclusion

Annual compliance is a critical aspect of managing a Nidhi Company in India. By adhering to these obligations, companies not only ensure their legal standing but also build trust with members and regulators, avoid penalties, and secure long-term success. Understanding the requirements, preparing the necessary documents, and adhering to deadlines can help Nidhi Companies maintain smooth operations and achieve their business goals. Whether you are a newly established Nidhi Company or an established one, staying compliant is essential for sustainable growth and member confidence.

Have questions about Private Limited Company?

What happens if a Nidhi Company fails to comply with annual filing requirements?

Non-compliance with annual filing requirements can result in penalties, suspension of operations, and even the company being struck off the MCA register. Directors may also face disqualification.

Is it mandatory for all Nidhi Companies to have their accounts audited?

Yes, every Nidhi Company, regardless of its turnover, must have its accounts audited by a Chartered Accountant annually.

Can a Nidhi Company file its annual returns after the due date?

Yes, a Nidhi Company can file its annual returns after the due date, but it will incur late filing fees and penalties as prescribed by the MCA.

What is Form NDH-1 in Nidhi Company compliance?

Form NDH-1 is an annual return that Nidhi Companies must file to report details about their members, deposits, loans, and the ratio of net owned funds to deposits.

What is the penalty for non-filing of Form NDH-1 and NDH-3?

The penalty for non-filing of Forms NDH-1 and NDH-3 is ₹200 per day per form until the filing is completed, with no upper limit on the penalty.

Is it necessary to hold an Annual General Meeting (AGM) for a Nidhi Company?

Yes, it is mandatory for every Nidhi Company to hold an AGM within six months of the end of the financial year. The first AGM should be held within nine months of incorporation.

Are there additional compliances for Nidhi Companies apart from annual filings?

Yes, Nidhi Companies must also comply with various other regulations, such as maintaining the minimum net owned funds to deposits ratio, filing half-yearly returns, and meeting the minimum number of members.

Can a Nidhi Company request an extension for compliance if it cannot meet the required deposit ratio?

Yes, if a Nidhi Company cannot meet the required deposit ratio, it can file Form NDH-2 within 30 days of the end of the first financial year, requesting an extension from the Regional Director.

What is the importance of statutory audits for Nidhi Companies?

Statutory audits ensure that the company’s financial records are accurate and compliant with regulatory requirements. It helps maintain transparency and trust among the members and regulators.

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